Min Hee-jin to stay as ADOR CEO, court says ahead of shareholders' meeting

ADOR CEO Min Hee-jin [YONHAP]

ADOR CEO Min Hee-jin will retain her executive role at the label — at least for the time being — following the court’s approval of her injunction that prevents HYBE, the parent company, from exercising its voting rights to remove her during Friday’s shareholders’ meeting.

The Seoul Central District Court reached the verdict on Thursday, one day before ADOR’s shareholders’ meeting on Friday. The primary agenda of the meeting was to dismiss Min and other ADOR executives within the label’s board of directors — a motion that was likely to succeed as HYBE has a controlling 80-percent stake in ADOR.

The court also ruled that if HYBE breaches the verdict, it will be mandated to pay Min an indirect compulsory fine of 20 billion won ($14.5 million).

“Based on the claims and materials submitted so far, HYBE’s alleged grounds for Min’s dismissal or resignation have not been sufficiently provided,” the court said. “It is clear that Min Hee-jin sought ways to either remove NewJeans from HYBE’s control or pressure HYBE to sell its stake in ADOR, thereby weakening HYBE’s control over ADOR and allowing Min Hee-jin to independently control ADOR.”

However, the court ruled that Min’s actions cannot be regarded as a breach of trust to ADOR.

“It is difficult to conclude that these attempts went beyond just seeking methods to concrete actions,” it stated. “While such actions could be seen as a betrayal against HYBE, they do not necessarily constitute a breach of trust to ADOR.”

The verdict also sets a precedent for restricting controlling shareholders’ voting rights through shareholder agreement clauses.

The main issue of this lawsuit was whether the clause regarding Min’s tenure, as mentioned in the shareholder agreement between Min and HYBE, would be prioritized over the shareholder voting rights guaranteed under the Commercial Act.

The clause within the contract explicitly states that “HYBE must exercise its voting rights at ADOR’s shareholders’ meetings to maintain Min’s positions as CEO and inside director of ADOR for five years from the establishment of ADOR on Nov. 2, 2021.”

Min argued that this clause is a right that should be preserved through an injunction application that would limit HYBE’s voting rights, while HYBE argued that the ability to exercise its majority shareholder rights, such as voting rights, should be protected and should not be prohibited in advance through an injunction.

Following the verdict, ADOR claimed that HYBE also lacks evidence to dismiss the two inside directors on Min’s side.

“Any attempt by HYBE to remove CEO Min Hee-jin from her positions, in defiance of the injunction, would be a direct breach of the shareholder agreement,” ADOR said. “Furthermore, since there are no grounds for dismissing Min, and there are also no grounds for dismissing the two inside directors on Min’s side. Any attempt by HYBE to dismiss these directors without just cause would be a clear disregard for the court’s decision.”

HYBE also released a short statement, saying that it will refrain from exercising its voting rights to sack Min on Friday’s meeting.

“HYBE plans to proceed with procedures within the boundaries set by the law, as clearly stated by the court’s decision," said HYBE.

All eyes are now set on the police investigation that is in progress by the Seoul Yongsan Police Station, initiated by HYBE’s report against Min.

HYBE reported Min to police on April 25 for breach of trust, claiming that it had gathered specific evidence that she had led a move “to seize management of the company.”

The Seoul Yongsan Police Station has been summoning HYBE employees to investigate HYBE’s claims.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]