Korea Zinc's Shareholders Meeting Held 6 Hours Late... "Resumed After Yeongpung Stake Restriction"

Heated Debate Erupts Over Korea Zinc's Decision to Restrict Youngpoong's Voting Rights
"Illegal Decision" vs. "No Issue"

Korea Zinc held its extraordinary general meeting of shareholders (EGM) six hours later than scheduled and ultimately restricted the voting rights of its largest shareholder, Youngpoong (with a 25.4% stake). MBK Partners and Youngpoong argued that this was an illegal act, but Korea Zinc insisted there was no problem and proceeded.

At the EGM held on the 23rd at the Grand Hyatt Seoul in Yongsan-gu, Seoul, Korea Zinc opened the meeting six hours later than the scheduled 9 a.m. and stated, "According to the Commercial Act provisions, Youngpoong cannot exercise voting rights on the shares it holds in the company," adding, "Although Youngpoong requested a postponement of the meeting, since Youngpoong has no voting rights, the postponement request is considered withdrawn."

The day before, Korea Zinc sold Youngpoong’s 10.33% stake, held by its grandchild subsidiary Sun Metal Corporation (SMC), to the Choi family and one of Korea Zinc’s shareholders, Youngpoong Precision, through an off-market transaction worth 57.5 billion KRW. According to Chairman Choi’s side, this created a ‘cross-shareholding’ relationship, making it impossible for the two parties to exercise voting rights over each other. Under the Commercial Act’s ‘cross-shareholding restriction’ system, if two companies hold more than 10% of each other’s shares, they cannot exercise voting rights in the other company. This strategy aims to block the voting rights of about 25% of Korea Zinc shares held by Youngpoong out of the approximately 40% stake held by MBK and Youngpoong.

MBK and Youngpoong immediately protested. They argued that the cross-shareholding restriction applies only to domestic corporations and stock companies, so it cannot be applied to SMC, a foreign company established in Australia and a limited liability company. They pointed out that restricting voting rights on this basis is a serious illegal act.

Youngpoong’s representative lawyer, Lee Seong-hoon, said during the shareholders’ meeting, "As the largest shareholder of Korea Zinc, we have exercised voting rights without any issues for 50 years, but after the 6 p.m. disclosure yesterday, electronic voting closed, and shareholders were unable to take any action, so restricting voting rights feels like being robbed." He criticized, "Korea Zinc’s decision to restrict the largest shareholder’s voting rights after only two hours of legal review is suspicious." He added, "I want to ask whether there is any reason or court ruling that allows the cross-shareholding restriction to be applied to foreign companies, and whether there was any consultation or request for opinions before the shareholders’ meeting." He also criticized, "We waited from 9 a.m. today to exercise our precious voting rights, but the company’s abrupt manipulation turned today’s shareholders’ meeting into a complete mess."

Other shareholders also protested. A lawyer representing other shareholders said, "Foreign companies are not companies under the Commercial Act, and SMC, which acquired Youngpoong’s shares, is a genuine foreign company," adding, "There will definitely be a legal judgment on this matter, and all involved parties must be held accountable."

In response, Korea Zinc stated, "The cross-shareholding regulations in question, such as those concerning subsidiaries and parent companies under the Commercial Act, are generally similar and are understood to apply not only domestically but also to foreign entities." They added, "Since there was an interpretation that subsidiaries include foreign subsidiaries, we concluded that Youngpoong has no voting rights under the cross-shareholding restriction, and the shareholders’ meeting can proceed."

MBK strongly opposed this, calling it a completely unfair interpretation. MBK’s representative said, "If they were confident, they would not have made this decision yesterday without preparation over the past month or two," warning, "They are forcing an unreasonable interpretation, but we will seek a clear legal judgment in court and hold them accountable for illegal and unfair actions."

The Korea Zinc Extraordinary General Meeting of Shareholders is taking place on the afternoon of the 23rd at the Grand Hyatt Seoul in Yongsan-gu, Seoul. Photo by Jo Yong-jun

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