[Edaily Reporter Kim Hyung-wook ] A court ruling allowing SNT Holdings—which is embroiled in a management control dispute with SMEC CO.,LTD—to inspect and copy SMEC CO.,LTD’s accounting records and other documents has been upheld even after an appeal was filed.

The battle for control between the two sides appears to be escalating beyond the acquisition of shares and securing board seats into a legal dispute over access to the company’s internal information.

According to industry sources on the 14th, the Changwon District Court, on the 12th, rejected SMEC CO.,LTD’s objection and upheld its previous decision regarding the preliminary injunction filed by SNT Holdings against SMEC CO.,LTD to inspect and copy accounting records and other documents.

Previously, on March 26, the court had granted the preliminary injunction requested by SNT Holdings to inspect and copy accounting records and other documents. SMEC CO.,LTD filed an objection on April 7 seeking to have that decision revoked and SNT Holdings’ request dismissed, but this objection was also rejected.

SNT Holdings, as the largest shareholder, has been demanding access to the accounting records, arguing that it needs to verify SMEC CO.,LTD’s major transactions and accounting practices. The right to inspect accounting records is a right recognized under the Commercial Act, allowing shareholders holding a certain percentage or more of the shares to verify the company’s assets and financial condition and to use this information to hold directors accountable or exercise shareholder rights.

An official from SNT Holdings stated, “The court’s decision has once again confirmed that our request to inspect and copy SMEC CO.,LTD’s accounting records was justified,” adding, “SMEC CO.,LTD should now respect the court’s decision and comply with the request to allow inspection and copying of the accounting records.”

SMEC CO.,LTD stated, “We respect the court’s decision to dismiss our objection to the preliminary injunction filed by SNT Holdings regarding the inspection and copying of accounting books and other records,” adding, “We will carefully review the specific intent and scope of the decision and take necessary follow-up measures.”

The backdrop to the dispute over access to the books between the two sides is a management control battle that has been ongoing since last year. SMEC CO.,LTD, which manufactures machine tools, industrial robots, and automation equipment, saw the management control competition intensify when the SNT Group became the largest shareholder during the process of raising funds to acquire HYUNDAI WIA’s machine tool business.

SNT subsequently continued to buy SMEC CO.,LTD shares on the open market and, at the end of last year, changed the purpose of its shareholding from “pure investment” to “exercising management influence.” At this year’s annual general meeting of shareholders, SNT attempted to appoint its own representatives to the board of directors but failed to do so, as candidates backed by the current management were elected in a vote by general shareholders.

SNT continued to acquire additional shares even after the shareholders’ meeting. SNT Holdings announced that on the 27th of last month, it acquired an additional 3.02 million SMEC CO.,LTD shares on the open market, raising its combined stake with SNT MOTIV to 25.69%.

With SNT holding the lead in share ownership and the current management retaining control based on the support of the board of directors and general shareholders, the next key factor in the management control dispute between the two sides is expected to be what information SNT uncovers through its actual review of the accounting books and how it will utilize that information when exercising its shareholder rights in the future.