Yeongpung, the largest shareholder of Korea Zinc, reported Korea Zinc and Chairman Choi Yoon-beom of Korea Zinc to the Fair Trade Commission on the 31st.
On the same day, representatives from Yeongpung and MBK Partners stated, “We have reported Korea Zinc, Chairman Choi, President Park Ki-duk, and Lee Seong-chae, CEO, and Choi Joo-won, CFO of Sun Metal Corporation (SMC), an Australian company 100% controlled by Korea Zinc, to the Fair Trade Commission for violations of the Fair Trade Act’s prohibitions on cross-shareholding and illegal acts.”
Representatives from Yeongpung and MBK said, “Earlier, on the 23rd, a day before Korea Zinc’s extraordinary shareholders’ meeting, Chairman Choi’s side arranged for SMC, wholly owned by Korea Zinc, to acquire 10.33% of Yeongpung’s shares held by the Choi family and others for 57.5 billion KRW, artificially creating a cross-shareholding structure against Yeongpung, which holds a 25.4% stake in Korea Zinc.”
They added, “SMC’s acquisition of Yeongpung shares is an illegal act to evade the provisions of Article 21 of the Fair Trade Act (Article 36, Paragraph 1 of the Fair Trade Act), and this type of illegal act?‘acquiring or owning shares of an affiliate company (Yeongpung) by using another’s name (SMC) on behalf of oneself (Korea Zinc) who acquires and owns its own shares (Korea Zinc)’?exactly corresponds to Article 42, Clause 4 of the Enforcement Decree.”
Representatives from Yeongpung and MBK stated, “Cornered, Chairman Choi’s side created an illegal investment structure that directly violates the legislative intent of restricting cross-shareholding to limit Yeongpung’s voting rights over Korea Zinc,” and conveyed legal opinions that similar illegal acts to evade the prohibition on cross-shareholding could frequently occur within cross-shareholding restricted business groups in the future, potentially shaking the foundation of corporate group regulations.
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