KJ Precision Shareholder Derivative Suit Sparks Dispute Over Young Poong-MBK Agreement

Korea Zinc Management Rights Dispute in Court
"Exercise of Shareholder Rights" vs. "Prove Damages First"

In the shareholder derivative lawsuit related to the management rights dispute at Korea Zinc, a legal battle has erupted over whether to submit the management cooperation agreement signed between Young Poong and MBK Partners (hereafter MBK) as evidence. The plaintiff argued that the entire document is necessary to calculate the amount of damages, while the defendant countered that the burden of proof lies with the plaintiff.

On October 2, during a trial presided over by Judge Kim Seokbeom of the 30th Civil Division at the Seoul Central District Court, the plaintiff, KJ Precision (formerly Young Poong Precision, affiliated with Korea Zinc), requested the submission of the entire management cooperation agreement, stating, "We need to review the entire contract to assess the damages." As of December 2024, KJ Precision, a company controlled by Chairman Choi Yunbeom's family at Korea Zinc, held a 4.39% stake in Young Poong Corporation. Based on this, KJ Precision filed a shareholder derivative lawsuit against Young Poong advisor Jang Hyungjin and the board of directors at Young Poong.

Jang Hyungjin, one of the defendants, argued, "In a shareholder derivative lawsuit, the plaintiff must first prove that the company suffered damages," adding, "It is not appropriate to focus solely on reviewing the management cooperation agreement."

After hearing both sides, the court asked the defendant whether they would cooperate with an 'in camera' review, where the court examines the contract privately. Jang's side replied, "That could be one possible approach."

The contract remains a point of sharp contention outside the courtroom as well. Korea Zinc argues that Young Poong has effectively transferred its status as Korea Zinc’s largest shareholder to MBK. As grounds, they cite: △ the fact that more directors are recommended by MBK, △ voting rights are exercised according to MBK’s proposals, and △ MBK holds joint sale rights. In contrast, Young Poong contends, "Chairman Choi only partnered with MBK to protect the company after shareholder interests were harmed through a paid-in capital increase and other actions," adding, "The contract details have already been disclosed in the public tender offer filing."

The court has scheduled the next hearing for December 11. Whether the 'in camera' document review will proceed is expected to be decided at a later date.

Lee Sangwoo, Law Times Reporter

※This article is based on content supplied by Law Times.

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