Youngpoong Transfers Korea Zinc Shares to Newly Established Limited Company
Circular Shareholding Structure Among Korea Zinc, SMC, and Youngpoong Resolved
Governance Improvement Expected to Accelerate
Youngpoong and MBK Partners have cut the circular shareholding chain by contributing all of Youngpoong's shares in Korea Zinc to a newly established limited company as an in-kind contribution. This move is analyzed as an effort to fundamentally block the voting rights restriction card at future general meetings of shareholders.
On the 7th, Youngpoong announced that it would contribute 5,262,450 shares (25.4%) of Korea Zinc it holds to the newly established limited company YPC (YPC) as an in-kind contribution. This is interpreted as a countermeasure to resolve the circular shareholding structure of 'Korea Zinc-SMC-Youngpoong-Korea Zinc' formed by Korea Zinc in January.
Earlier, Choi Yoon-beom, chairman of Korea Zinc, formed a circular shareholding structure by securing a 10.3% stake in Youngpoong using Korea Zinc's Australian subsidiary Sun Metal Corporation (SMC) ahead of an extraordinary general meeting. Based on this, Korea Zinc restricted Youngpoong's voting rights in Korea Zinc. Thanks to this, the general meeting held in January ended with a one-sided victory for Korea Zinc's management.
The Youngpoong and MBK Partners alliance filed an injunction with the court, claiming the voting rights restriction was unfair, and the court ruled in favor of the Youngpoong alliance on the 7th. Although the voting rights were restored by the court's ruling, it is interpreted that the circular shareholding chain was cut to fundamentally block the risk. By transferring Korea Zinc shares to the newly established limited company, the existing circular shareholding chain was neutralized. Korea Zinc's mutual share voting rights restriction card also became meaningless.
The Youngpoong alliance has been continuously reviewing ways to resolve the circular shareholding issue. It is expected that they will promote governance improvement through this in-kind contribution.
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