Concerns Raised Over Minority Shareholders' Rights Amid Introduction of Focused Voting System at Korea Zinc

Minority shareholders reportedly have no opportunity to recommend directors
MBK Partners "Oppose abuse of cumulative voting system"

Chairman Choi Yoon-beom of Korea Zinc's side has made statements defending the cumulative voting system, saying "the influence of minority shareholders is increasing, and major shareholders should support directors recommended by minority shareholders," but legal and capital market circles have raised criticisms that this could cause misunderstandings.

Legal experts pointed out, “Looking at Korea Zinc’s shareholding structure, if the cumulative voting system is introduced, minority shareholders will actually be unable to appoint directors,” and added, “This is a statement that overlooks the issue of minority shareholders’ rights being infringed.” In particular, it is known that minority shareholders did not even get the opportunity to recommend director candidates at the extraordinary general meeting on the 23rd. They criticize Chairman Choi for proposing the introduction of the cumulative voting system while concealing this fact and ignoring the principle of shareholder equality.

MBK Partners argued on the 2nd at the Korea Zinc shareholders’ meeting that if the cumulative voting system and a cap on the number of directors are introduced, it would be virtually impossible for minority shareholders to appoint directors. Given Korea Zinc’s shareholding structure, where the first and second largest shareholders hold 80-90% of the shares, ordinary minority shareholders face the practical difficulty that they must unite with a majority to include even one director candidate on the board.

MBK Partners stated, “We are not opposed to the cumulative voting system itself, but we oppose Chairman Choi’s attempt to abuse the cumulative voting system by violating the law to secure his position.” They also emphasized that the problem lies in Chairman Choi’s attempt to push for the introduction of the cumulative voting system in a way favorable to himself, despite knowing that this is not in line with the original intent of the system.

Meanwhile, MBK Partners, as the largest shareholder of Korea Zinc, announced plans to respect minority shareholders’ rights by recommending outside directors nominated by minority shareholders in future board compositions and having the largest shareholder support them. They presented measures to protect minority shareholders’ rights and added that after regaining control, they will strive to actively reflect shareholders’ opinions.