'Hallyu AI Center' Omits 'Equity Disclosure'... Facing Sanctions for Violating 5% Rule?

[Asia Economy Reporter Yoo Hyun-seok] It has been identified that Hanryu AI Center omitted some details despite holding more than 5% of shares during the acquisition and disposal process of convertible bonds (CB) of InnoWise (formerly Hwashin Tech). Under the current Capital Markets Act, failure to properly disclose information related to the 5% rule results in penalties such as fines. The company stated that it will verify the missing details and make corrections.

According to the financial investment industry on the 21st, Hanryu AI Center announced the acquisition of CB before maturity after the issuance of CB on February 27. At that time, Hanryu AI Center offset the CB held by the company through an agreement with creditors to improve its financial structure. The acquired CB included InnoWise’s 4th and 8th series CB and Kiwi Media Group’s 40th convertible bonds. Subsequently, Hanryu AI Center announced on March 2 that it had disposed of all these CBs.

The issue concerns the whereabouts of InnoWise’s 4th series CB acquired on February 27. Hanryu AI Center disclosed a large shareholder report on March 10, stating that its stake in InnoWise changed from 6.82% (993,360 shares) to 0%.

Examining the detailed changes, the report included information about the CBs of InnoWise that Hanryu AI Center acquired and then sold. Among these, the February 27 entry contains information about the 8th series CB but not the 4th series. A Korea Exchange official said, "The 8th series CB was reported, but the 4th series CB was not. The company said it was unaware and did not report it but has pledged to supplement the report," adding, "If shareholding reports are omitted or delayed, the Financial Services Commission may impose separate sanctions."

Under the Capital Markets Act, investors holding 5% or more of a listed company’s shares or experiencing a change of 1% or more in shareholding thereafter must report their holdings and changes to the Financial Supervisory Service and Korea Exchange within five days. This is known as the 5% rule. Failure to comply with large shareholding, change, or modification reporting obligations may result in caution or warning measures, imprisonment of up to three years, or fines of up to 100 million KRW. Administrative sanctions such as recommendations for dismissal of executives may also be imposed. A Hanryu AI Center official explained, "It seems that some information was missing in the shareholding disclosure. We plan to quickly identify the details and make corrections."

This content was produced with the assistance of AI translation services.