Young Poong: "Choi Yoonbum Used Company Funds to Defend Management Control" vs Korea Zinc: "Stop the Wasteful Legal Battle"

Request for Management Control Defense Using Company Funds
Allegation of Supporting Voting Rights in Exchange for Compensation

Young Poong, the largest shareholder of Korea Zinc, has filed a criminal complaint against Korea Zinc Chairman Choi Yoonbum, CEO Park Gideok, and Act CEO Lee Sangmok, who represents the minority shareholder platform. The complaint alleges that they used company funds to commission the defense of management control and that the minority shareholder platform accepted this arrangement.

On September 11, Young Poong announced that it had submitted the complaint to the Yongsan Police Station in Seoul through KL Partners law firm.

The company claims that Chairman Choi and CEO Park provided undue benefits using company funds for the purpose of defending management control at the general shareholders' meeting, and that CEO Lee received these benefits, thereby violating the Commercial Act and the Act on the Aggravated Punishment of Specific Economic Crimes.

According to the complaint, Chairman Choi and CEO Park entered into a consulting contract with Act around April last year, valued at 400 million won per year, totaling 800 million won over two years. Through this contract, Act established and operated the Korea Zinc Minority Shareholders' Alliance, collected proxies for the general shareholders' meeting, managed the electronic proxy system, and worked to secure friendly forces.

Young Poong believes these actions are a direct violation of the Commercial Act. Article 634-2, Paragraph 1 of the Commercial Act prohibits directors or management from providing financial benefits using company funds in connection with the exercise of shareholders' voting rights.

A Young Poong representative pointed out, "This contract is merely a means for the management to protect their personal positions and is unrelated to the interests of the company as a whole."

The company also took issue with CEO Lee entering into such a contract and receiving funds from Korea Zinc. Article 634-2, Paragraph 2 of the Commercial Act prohibits receiving benefits in connection with the exercise of voting rights at the general shareholders' meeting.

Young Poong argues that this case is not only a violation of the Commercial Act, but also constitutes breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. The reason given is that company funds were used for the personal purpose of defending management control, causing damage to the company.

The complaint also states, "Korea Zinc's funds should be used for the joint interests of the company and its shareholders, but Chairman Choi Yoonbum and CEO Park Gideok diverted them for personal use," adding, "This clearly constitutes breach of trust in the course of work."

Young Poong also plans to raise the issue that Act, Korea Zinc, and KZ Precision (formerly Young Poong Precision) violated the proxy solicitation system under the Capital Markets Act. According to a document prepared in February, Act contacted multiple shareholders regarding the agendas of Korea Zinc and Young Poong's general shareholders' meetings without distributing proxy forms or reference materials, and Korea Zinc and KZ Precision did not list Act as an agent for proxy solicitation. This is a violation of Article 152 of the Capital Markets Act, and Young Poong claims that it could result in regulatory sanctions such as correction orders or suspension of solicitation by financial authorities, as well as criminal penalties for false statements.

A Young Poong representative stated, "This complaint goes beyond a mere management control dispute; it is an unavoidable measure to ensure sound corporate governance and protect shareholder rights," adding, "We hope the investigative authorities will thoroughly uncover the facts and handle the case strictly according to the law and principles."

Meanwhile, Korea Zinc criticized the move as a wasteful legal battle. A Korea Zinc representative commented, "The Young Poong and MBK sides are preoccupied with hindering Korea Zinc's normal business activities and spreading various slanderous materials, which raises concerns that they are focused on undermining the company's value and credibility," adding, "We sincerely hope that Young Poong and MBK will focus on normalizing their own core business and make greater efforts to resolve the social issues they have caused."

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