Korea Zinc's Regular Shareholders Meeting on the 28th... Vote Battle Over Securing Board Majority

Seven Agenda Items Including Proposal to Set Upper Limit of 19 Directors
Objection to Injunction and Yeongpung Voting Rights Restriction as Key Variables

Korea Zinc, which is undergoing a management rights dispute, will hold a shareholders' meeting on the 28th and engage in a vote battle with the Yeongpung·MBK Partners (hereinafter MBK Alliance) over securing a majority on the board of directors. However, since Korea Zinc has moved to restrict Yeongpung's voting rights through its Australian subsidiary Sun Metal Holdings (SMH), both sides remain at an impasse, raising the possibility of a deadlock.

On the 13th, Korea Zinc held an extraordinary board meeting and announced that it had resolved to hold the regular shareholders' meeting on the 28th at the Mondrian Hotel in Yongsan-gu, Seoul. Seven agenda items will be presented, including 'Amendment of the Articles of Incorporation regarding the setting of the upper limit on the number of directors' and 'Amendment of the Articles of Incorporation for the appointment of an outside director as the chairman of the board.' Among these, the key agenda is the appointment of new directors. Both sides aim to secure a majority on the board to gain management rights.

The appointment of new directors follows the cancellation by court decision of most resolutions from the Korea Zinc extraordinary shareholders' meeting held in January. In the injunction filed by the MBK Alliance, the court suspended the effectiveness of the amendment to the articles of incorporation setting the upper limit of directors at 19, excluding the cumulative voting system, and the appointment of seven director candidates recommended by Korea Zinc at the January extraordinary shareholders' meeting.

Due to the court ruling, the new appointments will be conducted under the cumulative voting system. The cumulative voting system grants shareholders voting rights equal to the number of directors to be appointed and allows them to concentrate votes on preferred candidates. This system is considered advantageous to Chairman Choi Yun-beom's side, which holds a minority stake. Currently, the MBK·Yeongpung alliance holds 40.97% of Korea Zinc's shares, while Chairman Choi's side, including friendly shareholders, holds 34.35%.

At the shareholders' meeting, a vote on the 'upper limit of 19 directors' will be held before the appointment of new directors. If this agenda item is approved, the 'appointment of 8 directors' under the cumulative voting system will be presented; if rejected, either the 'appointment of 12 directors' or 'appointment of 17 directors' will be voted on and presented.

A variable in this shareholders' meeting is whether the court will accept the objection filed by Korea Zinc against the injunction loss. If the court accepts this objection, the effect of the previous injunction will be suspended. In this case, the amendment to the articles of incorporation setting the number of directors at 19, approved at the January extraordinary shareholders' meeting, will be reinstated, and the seven directors recommended by Korea Zinc and seated on the board will be able to perform their duties. The hearing on Korea Zinc's objection is scheduled for the 24th. The court is expected to reach a decision before the shareholders' meeting, considering the schedule.

Another variable is Korea Zinc's move to restrict Yeongpung's voting rights based on the fact that Sun Metal Corporation (SMC) transferred its 10.3% stake in Yeongpung to SMH as an in-kind dividend. Korea Zinc claims that "a cross-shareholding relationship has been formed between Korea Zinc and Yeongpung," and "Yeongpung's voting rights will be restricted at this regular shareholders' meeting as well." On the other hand, the MBK Alliance rejects this, saying, "Korea Zinc's claim is groundless," and accuses Chairman Choi of "employing a strategy to disrupt the shareholders' meeting."

Industry insiders largely predict that the two sides' continued confrontation will lead to another deadlock at this shareholders' meeting. At the previous extraordinary shareholders' meeting in January, both sides clashed over voting rights restrictions, resulting in the meeting effectively ending in a deadlock. The MBK Alliance is reportedly reviewing and considering all legal measures, including civil and criminal actions, against Korea Zinc's voting rights restriction measures announced the day before.