Korea Exchange, the sole securities exchange operator of South Korea, has formally requested that HYBE Labels, currently rumored to be considering a public purchase of major SM Entertainment stocks, disclose an official statement to clearly identify its intentions. 

The request comes at a critical time, as a general shareholder's meeting is set to take place at SM Entertainment in early March.

Recently, SM Entertainment's management board, led by co-CEOs Lee Sung Soo and Tak Young Joon as well as COO Park Joon Young, allied with investment company Align Partners against the company's founder and largest shareholder, Lee Soo Man. Kakao was then enlisted as another ally on February 7.

In light of the unexpected developments, Lee Soo Man is busily searching for ways to obtain the upper hand. According to business reports, Lee Soo Man is currently lobbying various options, including an alliance with the game development company Com2uS Studios, as well as a potential alliance with Bang Si Hyuk and HYBE. 

In particular, the word among those in the investment banking industry is that HYBE has been considering making a major public purchase of SM Entertainment's shares since a while ago, including a portion of Lee Soo Man's shares plus smaller independent shares. And each time such rumors became public, SM Entertainment witnessed a sharp rise in stock prices. 

If HYBE Labels were to side with Lee Soo Man, investment experts predict that HYBE could soon become SM Entertainment's largest shareholder, with Lee Soo Man maintaining a high-standing position as the second largest shareholder. 

Meanwhile, all executive positions within SM Entertainment's general board will be up for expiration or renewal come March. For Lee Sung Soo and Tak Young Joon, the preferred scenario is for their executive positions to be renewed for an additional three years, with external director Ji Chang Hoon (Lee Soo Man's high school classmate) stepping down. The position would preferably be then filled by three external directors appointed by Align Partners. 

In Lee Soo Man's case, his strategy thus far seems to be to form an alliance with a company which can guarantee SM Entertainment's internal and external growth, while also allowing him to remain in an executive position within the general board.

Thus, in order to prevent the market's excessive fluctuations, Korea Exchange is demanding that HYBE Labels publicly disclose its intentions by February 9 at 6 PM KST. In other news, HYBE America just acquired Atlanta-based hip-hop agency QC Media Holdings as of February 8 EST.