Exclusive
Kolon Global, With 10 Billion Won Investment Vanished, in Accounting Dispute with Investee

[비즈한국] It has been confirmed through BizHankook’s reporting that Kolon Global003070 has filed for and recently received an injunction to compel Olle Farm, a smart farm company in which it holds an equity stake, to disclose its accounting books. Kolon Global has invested a total of 10 billion won into Olle Farm to date and sought the injunction after the company repeatedly refused requests to open its books. Meanwhile, the value of Kolon Global's 33.3% stake in Olle Farm, acquired for 10 billion won, was written down to zero at the end of last year due to the company's accumulated net losses and impairment charges.

On the 2nd, the 31st Civil Division of the Suwon District Court granted the application for an injunction to allow inspection of books filed by Kolon Global against Olle Farm. In June, Kolon Global had filed for the injunction, requesting access to accounting books and documents from 2022 to last year related to overseas business, service contracts, selling and administrative expenses, salmon import and distribution, company receivables and payables, loans from the CEO, and new share subscription agreements. Under the Commercial Act, a shareholder holding at least 3% of the issued shares of a joint-stock company may request the inspection of accounting books and documents by submitting a written application with reasons. The company cannot refuse this unless it can prove the shareholder's request is unjust.

The court ordered, "Olle Farm must allow Kolon Global or its representatives to inspect and copy each document and book at the Olle Farm head office from 9:00 to 18:00 for 30 days, excluding Saturdays and public holidays, starting from the day it receives this decision. Kolon Global or its representatives may be accompanied by assistants such as lawyers or certified public accountants." The court further ruled, "If this obligation is not met, Olle Farm shall pay Kolon Global 1 million won for each day of violation from the day after the expiration of the period until the obligation is fulfilled."

This is not the first time Olle Farm has been requested to open its books by Kolon Global. Previously, Kolon Global requested the provision of accounting records several times starting around July 2023 to verify the usage of investment funds, but Olle Farm refused. Even before this current injunction, Kolon Global filed for an injunction on the same grounds in December last year and received an approval decision in April. Nevertheless, Olle Farm did not provide the requested records.

Olle Farm is a smart farm company in which Kolon Global holds an equity interest. It was established in February 2019 with the goal of building farms that use advanced technology to automatically manage growing environments for crops or livestock. The company gained attention in May of the same year when it showcased a closed-type smart farm cultivating "Seolhyang" strawberries at the Seoul Urban Agriculture Expo. It subsequently focused on developing strawberry and salmon smart farm technology. Kolon Global invested a total of 10 billion won in Olle Farm—5 billion won in June 2020 and another 5 billion won in August 2022—to acquire a 33.3% stake.

Olle Farm also attempted to enter overseas markets with Kolon Global. In 2022, the two companies signed a three-way MOU with FAIDH, a Saudi Arabian food company, for a smart farm project. The structure involved Kolon Global conducting market analysis and feasibility studies with their local partner, FAIDH, while Olle Farm provided modular smart farm technology and domestic strawberry seed production technology. Leveraging this, Olle Farm signed an MOU the following year with the UAE agricultural firm Mirak to establish a smart farm joint venture.

However, the value of Kolon Global's stake in Olle Farm has essentially dropped to zero. According to business reports, Olle Farm recorded a net loss of 1.1 billion won in 2020, the year of the initial investment, followed by net losses of 1.3 billion won in 2021, 2.6 billion won in 2022, 1.4 billion won in 2023, and 1.8 billion won in 2024. The value of Kolon Global's 33.3% stake, acquired for a total of 10 billion won, fell from 8.9 billion won at the end of 2022 to 4.4 billion won at the end of 2023, and then to 0 won by the end of 2024. Kolon Global treated the 4.4 billion won stake as a loss (impairment loss) last year, citing expectations of negative cash flow.

A Kolon Global official explained, "We requested the inspection of accounting books because Olle Farm failed to fulfill its cooperative obligations, and we are currently waiting for compliance. We will review future plans after seeing whether they comply." The official added, "The stake value was inevitably written down as an impairment because we could not inspect the accounting books, which are the basis for the valuation."