Centroid "We Fully Own Management Rights"... F&F "We Also Participate in the Board"

Centroid Acknowledges F&F's Management Consent Rights
"Not a Legal Issue," Company Asserts
Interpretation Differs on Scope: "Only Recognized for Certain Matters"
F&F Remains Reserved... Legal Action Inevitable Depending on Contract Validity
Financial Authorities Investigate Potential Capital Markets Act Violation

Noise is growing over TaylorMade, one of the world's top three golf brands. Controversy has erupted over whether the side agreement between Centroid Investment (hereinafter Centroid) and F&F, made at the time of acquisition, violates the Capital Markets Act. Centroid emphasized that matters related to exercising management rights are entirely under its control and do not constitute a legal violation. Meanwhile, F&F claims that if there is a violation of the Capital Markets Act, Centroid would be the subject of such violation.

According to the investment banking (IB) industry on the 12th, the Financial Supervisory Service is accurately investigating the facts related to the side agreement between Centroid and F&F concerning TaylorMade. Since there are no similar cases, the legal community expects that if financial authorities raise issues, different conclusions may be reached depending on the court's interpretation.

Actor Daniel Henney (fourth from the left), a TaylorMade Golf ambassador, is attending the '2025 TaylorMade Qi35 Unlock Invitational' launch show and taking a commemorative photo. Photo by TaylorMade

Previously, Centroid acquired TaylorMade in 2021 at a corporate value of about 2.1 trillion KRW. At that time, Centroid formed a fund, received investment from F&F, and drafted a separate agreement. This agreement included provisions granting F&F prior consent rights on significant financial decisions such as appointing directors of TaylorMade, sales, and initial public offerings (IPO).

This has led to criticism that it violates Article 249-14 of the Capital Markets Act, which stipulates that the price, timing, and method of trading equity securities by investment companies should not be entrusted to third parties.

Centroid stated, "The management consent rights for TaylorMade are not illegal," and explained, "Matters related to exercising management rights of TaylorMade are entirely pursued and exercised by Centroid as the general partner, with only some matters recognizing F&F's consent rights."

They also rebutted, "Even in cases such as board composition, including the appointment of the CEO or outside directors, Centroid exercises authority, so there is no infringement of voting rights that would violate the Capital Markets Act."

Centroid's acknowledgment of management consent rights while emphasizing that management rights belong to them is interpreted as highlighting that F&F was not given consent rights sufficient to decide on sales, thereby blocking the possibility of F&F obstructing third-party sales through exercising consent rights.

On the other hand, F&F stated that the controversy will be resolved through the financial authorities' investigation and that they plan to actively cooperate once the investigation proceeds. They hold the position that if a violation of the Capital Markets Act is confirmed, the subject of sanctions would be Centroid PE, the GP leading the investment.

If the court deems the contract illegal and invalidates it, Centroid would be able to dispose of TaylorMade shares without F&F's consent. Centroid recently decided to sell the management rights of TaylorMade and has begun contacting potential buyers. This is bad news for F&F, which has shown strong determination to secure TaylorMade's management rights.

Even if the contract is considered valid, it may be concluded as a regulatory violation. Regulatory provisions maintain judicial effectiveness but impose sanctions for violations. In this case, the contract remains valid, but penalties for legal violations may be imposed, leading to potential legal disputes between Centroid and F&F over responsibility.

In any case, disputes between the two sides seem inevitable. Even if management consent rights are recognized, disputes over their scope are expected. If Centroid pushes ahead with the sale, F&F may file a 'sale prohibition injunction' with the court.