Seoul High Court Overturns First Trial's Dismissal of Injunction
CEO Cho Dae-woong Suspended from Duties Until Main Lawsuit Verdict
The court granted the provisional injunction to suspend the execution of duties against the CEO of Cellivery, a company noted as the 'first company to list under the growth potential special listing system,' on the 18th.
On the 18th, the 25-3 Civil Division of the Seoul High Court (Presiding Judge Jeong Jong-gwan) issued a provisional injunction in favor of the Cellivery shareholder coalition's application to suspend the execution of duties of CEO Cho Dae-woong. The injunction suspends Cho's execution of duties until the ruling in the main case [Director dismissal lawsuit (Seoul Southern District Court 2024gahap103756)] is delivered.
Previously, the first trial court dismissed the provisional injunction, but the appellate court overturned that decision on this day. According to the court's ruling, Cho's duties will be suspended until the main lawsuit's judgment is finalized. On January 7, the Cellivery shareholder coalition had applied for the suspension of duties of CEO and inside director Cho, citing serious misconduct and violations of laws and the articles of incorporation.
The court stated, "It is reasonable to consider that CEO Cho committed misconduct related to his director duties, and since he is detained and unable to perform his role as CEO, if Cho's duties are not suspended, confusion in company management is expected." The court added, "By deliberately withholding necessary materials for the financial statement audit from external auditors, the company ultimately faced delisting."
The vacancy left by CEO Cho will be filled by Yoon Joo-won, the representative of the Cellivery shareholder coalition. Acting CEO Yoon will be responsible for convening board meetings, calling regular shareholder meetings, and handling disclosures such as business reports and audit reports.
On January 31, CEO Cho was detained and transferred to the Seoul Southern District Prosecutors' Office on charges including violation of the Capital Markets Act and embezzlement and breach of trust in the course of business. He is accused of raising approximately 70 billion KRW by issuing convertible bonds under the name of research and development expenses in 2021 and then using the funds for purposes such as acquiring other businesses, which deviated from the intended use.
Additionally, Cho is also accused of using undisclosed material information by selling several hundred million won worth of nominee stocks in advance, knowing that the audit opinion would be a refusal to express an opinion.
Cellivery was spotlighted as the first company to enter the KOSDAQ market under South Korea's growth potential special listing system in 2018. However, it faced a crisis after receiving a 'refusal to express an opinion' in the 2023 financial statement audit, leading to a delisting decision last year. Cellivery had applied for a provisional injunction to suspend the delisting process at the Seoul Southern District Court, which was initially granted, but the court dismissed the injunction last month, resulting in the company's delisting on the 7th.
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