The Korea Music Content Association issued a statement expressing regret after the first-instance ruling related to the shareholder agreement between HYBE and former CEO Min Hee-jin resulted in a victory for former CEO Min Hee-jin.
On the 20th, the Korea Music Content Association (hereafter KMCA) conveyed the association's official position through a press release from the perspective of sustainable development of the music industry and protection of industry order.
That day, KMCA said, "upon receiving the first-instance ruling between HYBE and former CEO Min Hee-jin, we express deep concern as an organization that strives for the development and promotion of the K-pop industry," and added, "the K-entertainment industry, which today draws global attention and praise, has grown on mutual trust between capital investors and contributors of expertise. Without investment, talent is hard to blossom, and investment without contributed expertise has no meaning. Whether large or small, it is an essential collaborative relationship."
It went on to explain, "the core of the K-pop industry is a structure in which, at early stages where success is not guaranteed, agencies shoulder large upfront investment and risk and then share realized results through contracts and trust relationships. If that structure is shaken, the industry's sustainability will inevitably suffer serious consequences."
KMCA said, "in that regard, the content of this ruling shows a significant difference between the standards for judging 'breach of trust' and the standards thought by the industry, viewing essential and indispensable acts of breach of trust too narrowly; conversely, by setting the standard of judgment excessively high, acts that the industry would perceive as tampering (tampering, acts by a third party to induce departure during an exclusive contract period) could be interpreted as legitimate business conduct or be regarded as acts that do not carry practical responsibility, which raises concern."
It emphasized, "one cannot help but question whether the duty of fidelity to the company and shareholders required by the Commercial Act in the execution of a CEO's duties can coexist with tampering. This is because the contractual order and the stability of the investment environment are fundamentally undermined, shaking the foundation on which the K-pop industry stands."
KMCA added, "as with any industry, the K-pop industry in particular operates on trust. If a subsidiary CEO or key executive uses improper methods to extract successful artist IP and seeks independence for a new corporation, it will inevitably deal a serious blow to the stability of governance across the industry and the predictability of investment."
KMCA also appealed, "such actions will lead to a contraction of investment within the industry, which could harm small and mid-size agencies, trainee development, and workers throughout the industry. If such actions are tolerated, which investor would risk long-term uncertainty and put capital into developing new artists and establishing new labels? The moment capital dries up, the first to be shaken are small and mid-size agencies, trainee development, and the many workers on the ground."
Finally, KMCA said, "we strongly request that subsequent legal procedures, including the appeals process, consider the impact of this matter not only on the K-pop industry but on all IP-based industries," and added, "especially in the K-pop industry, which has grown on the trust between investors and creators, we hope the meaning of 'breach of trust' and the duties of fidelity and conflict-of-interest prevention for management will be established with clearer and more balanced standards so they are not reduced to mere formalities. In addition, KMCA promises to make every effort to establish industry order and protect production systems to prevent the spread of tampering and similar acts that could shake the foundation of Korea's K-pop industry."
The full text of the Korea Music Content Association's position follows
The incorporated Korea Music Content Association (hereafter 'KMCA') received the first-instance ruling between HYBE and former CEO Min Hee-jin and, as an organization working for the development and promotion of the K-pop industry, expresses very deep concern.
The K-entertainment industry, which today draws global attention and praise, has grown on mutual trust between capital investors and contributors of expertise. Without investment, talent is hard to blossom, and investment without contributed expertise has no meaning. Whether large or small, it is an essential collaborative relationship.
The core of the K-pop industry is a structure in which, at early stages where success is not guaranteed, agencies shoulder large upfront investment and risk and then share realized results through contracts and trust relationships. If that structure is shaken, the industry's sustainability will inevitably suffer serious consequences.
In that regard, the content of this ruling shows a significant difference between the standards for judging 'breach of trust' and the standards thought by the industry, viewing essential and indispensable acts of breach of trust too narrowly; conversely, by setting the standard of judgment excessively high, acts that the industry would perceive as tampering (tampering, acts by a third party to induce departure during an exclusive contract period) could be interpreted as legitimate business conduct or be regarded as acts that do not carry practical responsibility, which raises concern.
One cannot help but question whether the duty of fidelity to the company and shareholders required by the Commercial Act in the execution of a CEO's duties can coexist with tampering. This is because the contractual order and the stability of the investment environment are fundamentally undermined, shaking the foundation on which the K-pop industry stands.
As with any industry, the K-pop industry in particular operates on trust. If a subsidiary CEO or key executive uses improper methods to extract successful artist IP and seeks independence for a new corporation, it will inevitably deal a serious blow to the stability of governance across the industry and the predictability of investment. Such actions will lead to a contraction of investment within the industry, which could harm small and mid-size agencies, trainee development, and workers throughout the industry. If such actions are tolerated, which investor would risk long-term uncertainty and put capital into developing new artists and establishing new labels? The moment capital dries up, the first to be shaken are small and mid-size agencies, trainee development, and the many workers on the ground.
KMCA believes this matter is not just a problem for the K-pop industry. In all content and intellectual property (IP)-based industries that operate on contracts, how far to tolerate conflicts of interest and breaches of trust by key personnel is an issue that determines norms for the entire market. A precedent once set affects transaction practices and investment judgments across the industry beyond individual cases.
Tampering is not a simple contractual dispute but a fatal act that utterly destroys industry trust and fundamentally undermines the long-term upfront investment structure.
KMCA strongly requests that subsequent legal procedures, including the appeals process, consider the impact of this matter not only on the K-pop industry but on all IP-based industries. Especially in the K-pop industry, which has grown on the trust between investors and creators, we hope the meaning of 'breach of trust' and the duties of fidelity and conflict-of-interest prevention for management will be established with clearer and more balanced standards so they are not reduced to mere formalities. In addition, KMCA will make every effort to establish industry order and protect production systems to prevent the spread of tampering and similar acts that could shake the foundation of Korea's K-pop industry.<
[Photo] Provided by KMCA
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