Yeongpung, Korea Zinc File Injunction Request to Suspend Effect of Extraordinary General Meeting

Youngpoong, the largest shareholder of Korea Zinc, announced on the 31st that it has filed an injunction with the Seoul Central District Court to suspend the effect of the resolution made at the Korea Zinc extraordinary general meeting held on the 23rd.

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

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Youngpoong explained the reason for the injunction application, stating, "At the last extraordinary general meeting, our voting rights were unlawfully and unfairly restricted, severely damaging the essence of shareholder rights," and added, "We intend to correct this within the bounds of the law."

On the 22nd, a day before the extraordinary general meeting, the Korea Zinc Chairman Choi Yoon-beom’s side transferred 10.3% of Youngpoong shares held by Youngpoong Precision and the Choi family to Sun Metal Corporation (SMC), a 100% controlling company of Korea Zinc, creating a circular shareholding structure. Based on the legal provision that "if two companies hold more than 10% of each other's shares, neither company can exercise voting rights over the other," Chairman Choi’s side restricted the voting rights of Youngpoong’s 25.42% stake in Korea Zinc (based on issued shares). Through this, they passed the agenda to cap the number of outside directors at 19 and to appoint 7 directors recommended by Korea Zinc. Meanwhile, the agenda to appoint 14 outside directors proposed by Youngpoong and MBK was rejected.

Youngpoong and MBK Partners argue that the mutual share voting restriction resulting from SMC’s acquisition of Youngpoong shares is illegal. They emphasized, "The mutual share restriction regulation applies only to domestic stock companies established under Korean law," and added, "SMC is a foreign company established under Australian law and, considering its closed nature, is closer to a limited liability company rather than a stock company." They further stated, "Chairman Choi’s side is caught in a contradiction by avoiding the application of the Fair Trade Act to the circular shareholding among Korea Zinc and affiliated companies such as SMC, which belong to the Youngpoong Group, a restricted mutual shareholding business group under the Fair Trade Act, by claiming SMC is a ‘foreign company,’ while simultaneously insisting that the mutual share voting restriction should be extended to foreign companies."

They also argued, "Considering the ripple effects of the introduced cumulative voting system and the amendment to the articles of incorporation capping the number of directors, which were adopted contrary to the original purpose of the system, it is necessary to suspend the effect of the last extraordinary general meeting resolution as soon as possible, even temporarily."

Meanwhile, on the same day in the morning, Youngpoong and MBK also reported Korea Zinc and Chairman Choi to the Fair Trade Commission for alleged violations of the Fair Trade Act.

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