MBK Opposes Korea Zinc's Introduction of Concentrated Voting System to Extend Choi Yoon-beom's Term

MBK Partners announced on the 29th that it opposes the introduction of a cumulative voting system aimed at extending the position of Choi Yoon-beom, chairman of Korea Zinc.

However, MBK expressed support for the introduction of the cumulative voting system in a situation where the Korea Zinc board of directors has been normalized and improvements to Korea Zinc’s governance (decision-making system) have been made, allowing the original intent and purpose of the cumulative voting system to be respected.

In a press release issued that day, MBK stated, "We are not opposed to the cumulative voting system itself, which is used as a measure to protect minority shareholders," adding, "We oppose the introduction of the cumulative voting system proposed as an agenda item by Choi’s family side, Yumi Development, at next month’s extraordinary general meeting of shareholders, as it disregards the original intent and purpose of the cumulative voting system and is aimed solely at preserving Chairman Choi’s position."

The cumulative voting system grants shareholders voting rights equal to the number of directors to be appointed, allowing them to concentrate their votes on preferred candidates. This system is used as a measure to protect minority shareholders by increasing the likelihood of electing candidates supported by them.

However, MBK claims that Chairman Choi’s side intends to use their voting rights to concentrate votes on directors they recommend, thereby blocking MBK from securing a majority on the board.

MBK stated, "If Chairman Choi’s side, which holds a significant voting share gap, maintains a majority with the current and newly added directors, the reform of Korea Zinc’s damaged governance will be delayed, and during that period, the power struggle among shareholders will continue, causing harm not only to Korea Zinc but also fully transferring the damage to the shareholders."

Quoting a legal expert, MBK said, "While introducing a cumulative voting system to protect minority shareholders is generally a desirable direction, introducing it with the clear intent of creating a favorable situation for the second-largest shareholder amid a power struggle between the first and second largest shareholders is highly problematic."

They added, "Especially since the National Pension Service and other minority shareholders were unaware of the introduction of the cumulative voting system, it violates the principle of shareholder equality by depriving them of the opportunity to exercise their right to recommend director candidates, which they might have exercised if the system had been applied."

Meanwhile, ahead of the vote battle at the extraordinary general meeting of shareholders scheduled for the 23rd of next month, Chairman Choi and MBK have begun activities to solicit proxy voting rights to secure even one more vote.

Based on the shareholder registry as of the record date on the 20th, they plan to visit shareholders registered in the Korea Zinc shareholder registry and carry out persuasion efforts to win their votes until just before the general meeting.

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