MBK and Youngpoong Launch Full-Scale Governance Reform at Korea Zinc
Proposal for Director Appointment and Bylaw Amendment to Introduce Executive Officer System
MBK Partners, the largest shareholder of Korea Zinc, and Youngpoong have officially begun efforts to fundamentally change the governance of Korea Zinc by requesting the convening of an extraordinary general meeting of shareholders.
On the 28th, MBK and Youngpoong announced that they sent a certified letter demanding the Korea Zinc board of directors convene an extraordinary general meeting of shareholders to resolve the appointment of new directors and amendments to the articles of incorporation for the introduction of an executive officer system.
MBK stated, "Since Chairman Choi Yoon-beom took office as CEO of Korea Zinc in 2019, he has unilaterally expanded friendly shares, breaking the partnership that had been maintained for over 70 years since the previous generation. Moreover, he has privatized management rights by engaging in illegal and unreasonable investments." They added, "We believe the existing board system, which has lost its independent executive oversight function, has reached the end of its life. Therefore, we decided to reorganize the board by appointing new directors so that the intentions of all major shareholders, including the largest and second-largest shareholders, rather than a specific shareholder, can be reflected in the board's decision-making."
They also said, "Considering that the shares of the Jang and Choi families are dispersed among many individuals, making it impossible for any single shareholder to take responsible management of the company, and that the current board has been thoroughly paralyzed by resolutions such as the self-stock public tender offer causing significant damage to the company, we have decided to introduce the executive officer system."
The executive officer system that MBK and Youngpoong aim to introduce is intended to overcome the limitations of Korea Zinc's current governance structure, where decision-making on management, execution of decisions, and supervision of execution are all concentrated in the board of directors, and to establish a new governance system.
With the introduction of this executive officer system, the board of directors will faithfully perform the role of deciding important company matters and supervising executive officers on behalf of all shareholders, while executive officers such as the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Technology Officer (CTO) will be responsible for actual execution functions, thereby enhancing operational efficiency.
MBK criticized, "Under Korea Zinc's current governance structure, executives either concurrently serve as directors or act merely as proxies for certain directors, making it difficult for the board to effectively supervise and audit management. Furthermore, most outside directors merely act as rubber stamps, leaving virtually no way to prevent Chairman Choi's privatization of management rights."
MBK further explained, "Shareholders including Youngpoong, MBK, and Chairman Choi intend to step down from management and participate only in the board of directors, allowing executive officers to carry out company management. This means reforming Korea Zinc's governance to prevent repeated governance damage and board paralysis that occurred under Chairman Choi's system, where he served as both board chairman and de facto CEO."
MBK Partners and Youngpoong also proposed an agenda to appoint 12 new outside directors and 2 other non-executive directors to normalize the Korea Zinc board of directors.
The recommended new outside directors are Kwon Kwang-seok (former CEO of Woori Bank), Kim Myung-jun (former head of Seoul Regional Tax Office), Kim Su-jin (lawyer, former vice president of the Korean Bar Association), Kim Yong-jin (professor of business administration at Sogang University, former non-standing member of the Financial Services Commission), Kim Jae-seop (vice chairman and full-time advisor of DN Solutions), Byun Hyun-chul (lawyer, former chief judge of Seoul High Court), Son Ho-sang (POSCO distinguished professor, metallurgy), Yoon Seok-heon (former governor of the Financial Supervisory Service), Lee Deuk-hong (lawyer, former chief prosecutor of Seoul High Prosecutors' Office), Jung Chang-hwa (former head of POSCO Holdings Future Technology Research Institute), Chun Jun-beom (lawyer, vice chairman of the Korea Corporate Governance Forum), and Hong Ik-tae (former head of the Marine Safety and Security Headquarters at the Ministry of Public Safety and Security, equivalent to Commissioner of the Korea Coast Guard) (in alphabetical order). For other non-executive directors, Kang Sung-doo, president of Youngpoong Co., Ltd., and Kim Kwang-il, vice chairman of MBK Partners, were recommended.
An MBK representative said, "We believe that shareholders will empathize with and support the largest shareholder's sincere intention to restore Korea Zinc's corporate governance through the introduction of the executive officer system and the expansion and strengthening of the outside director group." They added, "Fundamental changes to Korea Zinc's governance structure are necessary to resolve Chairman Choi's arbitrary actions and management chaos. We aim to normalize the functions of the Korea Zinc board by inviting the country's top experts in materials industry, law, finance, corporate management and governance, and safety management as outside directors."
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