Yeongpung·MBK File Injunction to Prohibit Proposal of 'Cumulative Voting Director Appointment' at Korea Zinc

4th Injunction Against Korea Zinc

Youngpoong and MBK Partners have filed an injunction, arguing that the proposal to appoint directors based on the introduction of a cumulative voting system at Korea Zinc should not be submitted as an agenda item for the extraordinary general meeting of shareholders scheduled for January next year.

On the 30th, Youngpoong and MBK stated in a press release that the request by Yumi Development, a family company of Korea Zinc Chairman Choi Yoon-beom, to appoint directors through the cumulative voting method did not meet the legal requirements, and they filed an injunction at the Seoul Central District Court on the same day to prohibit the submission of the agenda.

Yonhap News

Earlier, Korea Zinc convened an extraordinary general meeting on the 24th and submitted Yumi Development’s shareholder proposal, "Amendment to the Articles of Incorporation for the Introduction of a Cumulative Voting System," as agenda item 1-1. The proposal to amend the articles of incorporation to set an upper limit of 19 directors to prevent inefficiency in management activities caused by an oversized board was submitted as agenda item 1-2. Korea Zinc set agenda items 2 to 5 depending on the approval or rejection of these two proposals. If agenda item 1-1 is approved, directors will be appointed through cumulative voting, and the number of directors to be elected will be determined based on the approval of agenda item 1-2.

The agenda items for which Youngpoong and MBK filed the injunction are items 2 and 3, which are premised on the approval of agenda item 1-1. Youngpoong and MBK explained, "On December 10, when Yumi Development requested the cumulative voting method, Korea Zinc’s articles of incorporation should have allowed the introduction of the cumulative voting system, but since it did not, this constitutes a violation of the Commercial Act."

Additionally, Youngpoong and MBK emphasized that after investigating shareholder meeting disclosures related to the cumulative voting system on the Financial Supervisory Service’s electronic disclosure system over the past 10 years, there has been no case where an agenda item for appointing directors through cumulative voting was submitted based on a proposed amendment to the articles of incorporation to introduce the cumulative voting system.

Youngpoong and MBK argue that submitting a director appointment agenda in this manner infringes on their right to request the convening of an extraordinary general meeting and violates the principle of shareholder equality. When requesting the convening of the extraordinary general meeting, Youngpoong and MBK recommended 14 candidates for new directors to be appointed through a simple voting method. They added, "The agenda for appointing directors by simple voting and the agenda for appointing directors by cumulative voting cannot be considered identical in terms of the significance, purpose, and expected outcome of the request to convene the extraordinary general meeting."

They further stated, "Chairman Choi’s side suddenly proposed the amendment to introduce the cumulative voting system and requested cumulative voting just before the deadline for shareholder proposals for the extraordinary general meeting, blocking information about whether the cumulative voting system would be introduced from general shareholders." They added, "Because the National Pension Service and other minority shareholders were unaware of the introduction of the cumulative voting system, they were deprived of the opportunity to exercise their rights, such as recommending valid director candidates with a low shareholding ratio if the cumulative voting system were applied."

This is the fourth injunction case filed by Youngpoong and MBK against Korea Zinc. The first and second injunctions, which sought to prohibit Korea Zinc’s repurchase and public tender offer of treasury shares, were dismissed by the court. The third injunction, which sought to prohibit the lending and transfer of treasury shares, was voluntarily withdrawn.

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