Korea Zinc Prepares Appeal Against Injunction Objection... Youngpoong Also Opposes

Court Rules Voting Rights Restriction on Youngpoong Shares Illegal
Korea Zinc Vows to Contest Decision Until the End
MBK Alliance Also Announces Legal Action

Korea Zinc, which is undergoing a management rights dispute, has filed an objection after losing a provisional injunction to suspend the effectiveness of a shareholders' meeting resolution, and it has been confirmed on the 13th that they are already preparing an appeal. The opposing parties in the dispute, Youngpoong and MBK Partners (MBK alliance), also protested against the measures taken by Chairman Choi Yoon-beom of Korea Zinc, who once again restricted their voting rights, and announced legal action.

According to a comprehensive report by this newspaper, Korea Zinc is considering an appeal in case the objection filed on the 11th at the Seoul Central District Court against the provisional injunction to suspend the effectiveness of the shareholders' meeting resolution and the injunction to suspend the execution of directors' duties, issued on the 7th, is not accepted. They intend to fight to the end to overturn the court's ruling that restricting the exercise of voting rights on 25.4% of shares held by Youngpoong based on the mutual voting rights restriction provisions of the Commercial Act ahead of the January extraordinary shareholders' meeting was illegal.

Earlier, the Korea Zinc side transferred 10.3% of Youngpoong's shares to Sun Metal Corporation (SMC), a grandchild company and Australian subsidiary, the day before the extraordinary shareholders' meeting, creating a circular shareholding structure of 'Korea Zinc → SMC → Youngpoong → Korea Zinc.' Based on this, they restricted Youngpoong's voting rights at the extraordinary shareholders' meeting. However, the MBK alliance filed a provisional injunction, claiming their voting rights were unfairly restricted, and the court accepted it.

The objection filed by Korea Zinc against this decision was assigned to the Civil Division 50 of the Seoul Central District Court (Chief Presiding Judge Kim Sang-hoon), which handled the previous provisional injunction case. The court is scheduled to hold a hearing on the 24th. Since the result of Korea Zinc's objection is directly linked to the voting rights at the regular shareholders' meeting scheduled for the end of this month, the court is expected to make a decision before the shareholders' meeting.

The MBK alliance is also preparing for legal disputes. They are raising issues with Korea Zinc's move to restrict Youngpoong's voting rights based on the fact that Sun Metal Holdings (SMH), an Australian subsidiary and corporation, received 10.3% of Youngpoong's shares held by SMC as a stock dividend in kind. The MBK alliance argues that SMH did not hold any Youngpoong shares as of the shareholders' meeting record date, December 31 of last year, and therefore should not be subject to the voting rights restriction provisions. A representative of the MBK alliance stated, "We will take all civil and criminal measures."

As the confrontation between the two sides escalates into various forms of legal battles, the industry is concerned that the regular shareholders' meeting will also enter a deadlock phase.