Based on the admitted facts above and the evidence presented, the following facts and circumstances can be recognized. Considering these comprehensively, the actions of plaintiffs A and B in raising the issue of “album pushing” against the defendant cannot be regarded as a material breach of the shareholders’ agreement sufficient to justify its termination.
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A May 17, 2024 article in BT media reported with the headline “BU” and subheading “BV” that “G was encouraged by D to engage in album pushing. Although G was advised that 100,000 units could be pushed to surpass the initial record during the release of CJ albums, G firmly refused because it violated F’s business philosophy. This is already known to be widespread within D’s label, but we request a rigorous investigation and transparent handling regarding whether there have been any transactions with subsidiaries under return conditions or any other transactions that could be perceived as album pushing, and that strict measures be taken accordingly.” This reflected F’s statement dated April 16, 2024 (Exhibit 7-2, 52).
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(i) The defendant CEO V appears to have encouraged F to engage in album pushing by G. Furthermore, on August 4, 2023, D Japan’s Head of Management Planning also used the term “pushing volume,” suggesting that there were internal indications within D that could raise suspicions of album pushing.
(ii) Following plaintiff A’s objections, D conducted an internal audit and confirmed that for two albums in 2023, each 70,000 units (14,000 in total) were sold under returnable conditions, and internal controls were strengthened and company regulations revised to prevent recurrence.
(iii) On October 24, 2024, during a National Assembly inspection, two internal D documents suggested that initial shipment volumes (albums sold within the first week of release) were sold under returnable conditions. Additional purchases of 100,000 units were conducted under returnable conditions after the June performance. Four instances of returnable-condition transactions were cited in the report. D’s Chief Operating Officer BZ also provided responses at the National Assembly inspection on April 22, 2024, consistent with the contents of CEO V’s email.
(iv) It is acknowledged that inflating initial shipment volumes to promote chart rankings constitutes an act that undermines fair distribution and is subject to criticism.
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