Singer Park Hyo-shin disputes with his former agency over the right to acquire new shares…Winning the first trial of invalidation suit
Singer Park Hyo-shin won the first trial of the new stock acquisition dispute against his former agency. The court accepted Park’s claim to nullify the acquisition of new shares by a third party, which is not recognized for management needs.
According to the legal circles on the 26th, the Seoul Central District Court’s civil agreement division 31 (chief judge Kim Ji-sook) ruled in favor of the plaintiff on the 19th in a lawsuit filed by Park and two other shareholders, A, against Glove Entertainment.
Glove held an extraordinary shareholders’ meeting in February last year and decided to issue 20,000 new common shares. The reason was that “it is difficult to carry out the business with the current capital due to the expansion of the business.” After issuing new shares, Glove reportedly allocated them to B, who was not a previous shareholder, through a third-party allocation method. Glove’s total number of previously issued shares was 59,266.
With the issuance of new shares, Mr. B became Glove’s third-largest shareholder at the same time as the new shares were allocated. Glove CEO C, who was the No. 1 shareholder, and Park, who was the No. 2 shareholder, remained unchanged in the number and ranking of shares held, but the stake ratio changed.
Prior to the issuance of new shares, the combined stake of Plaintiffs Park and A in this case was 50.13%, which was more than half, but the appearance of a new shareholder B prevented them from exceeding the majority. C’s stake, which was 40.64% before, became 55.61% after assigning new shares to B.
In response, Park and others filed the lawsuit seeking invalidation of the issuance of new shares, saying, “Glove issued new shares for the purpose of defending management rights during the process of management disputes.”
Park and others cited the fact that February last year, when the extraordinary shareholders’ meeting was held, was a time of full-fledged management disputes, including an injunction to suspend the execution of C’s duties, and that only 100 million won was financed by Glove through the issuance of new shares.
Singer Park Hyo-shin and others argued, “If issuing large-scale new shares affects shareholders’ previous control, it should be revealed that shareholders’ right to acquire new shares is inevitably excluded before the management dispute is over.”
The intention is to consider the current commercial law, which stipulates that allocation to existing shareholders should be prioritized unless it is an exceptional case when issuing new shares. Since the lawsuit began, Glove has not submitted documents related to the lawsuit, such as a response letter, and the court ruled that all the plaintiffs won the case without going through a defense.
Meanwhile, singer Park Hyo-shin announced in April last year that he had entered a legal dispute, saying, “We have not received any profits from music sources or exclusive down payments for the past three years (from Glove).”