SM Entertainment announced the agenda for the 2023 regular shareholders’ meeting and revealed candidates for inside directors.
Instead of Bae Jae-hyun, head of Kakao Community Investment, who had originally decided to recommend him as a non-executive director candidate while signing a business cooperation contract with Kakao, Jang Yoon-joong, CEO of Kakao Entertainment America, was nominated as a non-executive director candidate. According to the business cooperation agreement, CEO Jang was scheduled to be appointed as an unregistered executive.
On the 22nd, SM disclosed the agenda for the regular shareholders’ meeting, and revealed candidates such as executive directors to be elected at the shareholders’ meeting.
The SM board of directors recommended Cheol-hyeok Jang, CFO of SM, Ji-won Kim, head of SM Marketing Center, and Jung-min Choi, head of SM Global Business Center, as candidates for inside director positions.
In addition, outside directors include Gyu-Sik Kim (55th, 36th class at the Judicial Research and Training Institute), Chairman of the Korea Corporate Governance Forum, Tae-Hee Kim (48th, 39th class), Representative Attorney at Pyeongsan Law Firm, Jeongbin Moon, Professor at Korea University Business School, Kyung-Hwan Min, Partner at Blocore, and Seung-Min Lee (45th, 36th class). ) Law firm Peter & Kim, Cho Sung-moon, CEO of Chartmetric, and other non-executive directors, Lee Chang-hwan, Align Partners Asset Management CEO, and Jang Yoon-joong, CEO of Kakao Entertainment America, were recommended as candidates.
Meanwhile, when SM Entertainment and Kakao initially signed a contract to acquire new stocks and convertible bonds, SM recommended a person nominated by Kakao Entertainment as a candidate for other non-executive directors at the regular shareholders’ meeting, and another person nominated by Kakao Entertainment was separately appointed. It is known that they signed a business cooperation contract that included the appointment of SM as an unregistered executive.
According to the legal newspaper coverage, the business cooperation contract signed by SM Entertainment, Kakao Entertainment, and Kakao states that SM is a candidate for other non-executive directors to appoint Bae Jae-hyun, general manager of Kakao Community Investment, nominated by Kakao Entertainment, at SM’s 28th regular shareholders’ meeting. It is said that it contains the contents to be recommended by .
In addition, it is said that they will appoint Jang Yoon-joong, CEO of Kakao Entertainment’s US corporation, nominated by Kakao Entertainment, as an unregistered executive in charge of SM’s global music distribution, from the closing date of the transaction according to the contract to acquire new stocks and convertible bonds until the date requested by Kakao Entertainment.
According to this contract, Kakao Entertainment will have one other non-executive director candidate for the SM board of directors in case of a vacancy due to the expiration of the term, resignation, or dismissal of the appointed non-executive director on the premise that Kakao Entertainment will continue to hold all of the new stocks and convertible bonds. It is known that they also have the right to recommend .
SM decided to discuss the recommendation of a successor candidate for Kakao Entertainment at the board of directors, unless the successor is disqualified by law, and if approved by the board of directors, submit the agenda for the appointment of directors to the shareholders’ meeting.
SM and Kakao also decided to sign a contract giving exclusive rights to Kakao Entertainment in relation to the distribution of SM’s domestic albums and music sources.
Kakao Entertainment decided to sign a contract to grant exclusive rights to SM Life Design Group for the production of physical and digital albums to be released.
SM decided to cooperate with Kakao Entertainment to distribute overseas albums and sound sources, as well as domestic performances and fan meeting tickets.
In addition, in the business cooperation establishment clause, Kakao decided to maintain the acquired stake for the purpose of guaranteeing a friendly strategic alliance between Kakao Entertainment and SM.
Regarding this, attorney Jeong Da-joo (47th, 31st class) representing SM said, “The expression ‘friendly’ in the business cooperation contract is an idiomatic expression that SM and Kakao have a friendly partnership as partners in the business.” It has a different meaning from the friendly forces used in disputes over management rights, and is more like a general expression used in contracts related to business partnerships.”
Regarding Kakao’s director recommendation, “Kakao recommended other non-executive directors, not inside directors.” “Other non-executive directors, unlike inside directors, play a supervisory role rather than a leading role in management. Claiming that Kakao has an intention to attack management rights through Moo-sa is a claim that is far from corporate practice.”