Yeongpung·MBK Intensify Pressure on Korea Zinc... Injunction Filed to Suspend Duties of 7 Directors

"Youngpoong's Voting Rights Restriction Is Illegal"
A Ruling on the 'Invalidity of the Extraordinary Shareholders' Meeting' Is Needed

Youngpoong, the largest shareholder of Korea Zinc, requested the suspension of duties for the directors recommended by Korea Zinc, citing significant defects in the appointment process. Following the criminal complaint against Chairman Choi Yoon-beom of Korea Zinc and the application for a provisional injunction to suspend the effectiveness of the extraordinary shareholders' meeting, the pressure appears to be intensifying day by day.

The interim shareholders' meeting of Korea Zinc is taking place on the afternoon of the 23rd at the Grand Hyatt Seoul in Yongsan-gu, Seoul. Photo by Jo Yong-jun

On the 4th, Youngpoong and MBK Partners (MBK Alliance) announced that they had filed a provisional injunction to suspend the duties of the seven directors recommended by Korea Zinc at the Seoul Central District Court. Earlier, the MBK Alliance requested the court to suspend the effectiveness of the resolution of the Korea Zinc extraordinary shareholders' meeting held on the 23rd of last month. The court's ruling means that until a final decision is made, these individuals should not perform their duties as outside directors of Korea Zinc.

In a press release on the same day, the MBK Alliance stated, "Chairman Choi Yoon-beom of Korea Zinc, facing the risk of losing control, unlawfully and unilaterally restricted Youngpoong's voting rights in Korea Zinc, which exceed 30% of the shares present, resulting in the illegal appointment of these individuals." They criticized, "If these directors, who are complicit in Chairman Choi's 'boardroom entrenchment' to maintain control, are allowed to participate in board resolutions, the reform of Korea Zinc's governance will be delayed, which is against the interests of the company and all shareholders and investors of Korea Zinc."

The day before the extraordinary shareholders' meeting, Chairman Choi transferred 10.3% of Youngpoong shares held by Youngpoong Precision and himself to Sun Metal Corporation (SMC), an overseas affiliate of Korea Zinc, creating a circular shareholding structure. The MBK Alliance stated, "Chairman Choi engaged in reciprocal and circular shareholding, which is strictly prohibited under current Fair Trade Act, and illegally created the appearance of cross-shareholding, thereby unlawfully and unfairly restricting the voting rights of Youngpoong's Korea Zinc shares and pushing through the shareholders' meeting resolutions in a direction unilaterally favorable to Chairman Choi's side."

Furthermore, they emphasized, "SMC, which suddenly acquired Youngpoong shares, is a foreign company established under Australian law, and considering its closed and small-scale nature, it is a limited company. Therefore, Article 369, Paragraph 3 of the Commercial Act, which restricts voting rights of cross-shareholders and applies only to domestic stock companies, does not apply."

Finally, the MBK Alliance stated, "The purpose of our Commercial Act, which is to allow fair competition for control rights, must be fully realized. The rights of the largest shareholder to regain control of Korea Zinc and reform governance must be exercised legitimately, and therefore, the status of these directors must not be maintained."

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