Court: "Yeongpung's Voting Rights Restriction Not Illegal"
Chairman Choi Yoonbeom Expected to Maintain Leadership of the Board
The court has restricted the exercise of voting rights at the shareholders' meeting by the Yeongpung·MBK Partners (MBK alliance). As a result, Korea Zinc is expected to continue to hold the leadership of the board of directors.
The Korea Zinc Extraordinary General Meeting of Shareholders is being held on the afternoon of the 23rd at the Grand Hyatt Seoul in Yongsan-gu, Seoul. Photo by Jo Yong-jun
On the 27th, the Seoul Central District Court Civil Division 50 (Chief Presiding Judge Kim Sang-hoon) dismissed the provisional injunction filed by the MBK alliance against Korea Zinc, requesting permission to exercise voting rights at the shareholders' meeting.
The court stated, "As of the record date for the regular shareholders' meeting on December 31 of last year, Yeongpung was the shareholder of Korea Zinc, so the judgment should be based on Yeongpung," and added, "Sun Metal Holdings (SMH), a subsidiary of Korea Zinc, holds 190,226 shares of Yeongpung (10.33% of the total issued shares), so according to Article 369, Paragraph 3 of the Commercial Act, Korea Zinc's decision to restrict Yeongpung's exercise of voting rights on Korea Zinc shares cannot be considered illegal."
With the court's decision on this day, Chairman Choi's side is likely to gain the upper hand in the management rights dispute with the MBK alliance. They have also secured a favorable position at the regular shareholders' meeting scheduled for the morning of the 28th. If the limit of 19 directors is passed and the personnel proposed by Korea Zinc are appointed as directors while Yeongpung's voting rights remain restricted, Chairman Choi's control over the board of directors is expected to become even stronger, according to industry consensus.
The key agenda item of this shareholders' meeting is the appointment of directors. If the articles of incorporation are amended to set the limit of 19 directors, eight directors will be appointed through cumulative voting. If the limit on the number of directors is rejected, the number of directors to be elected at this shareholders' meeting will be decided first, and then they will be appointed through cumulative voting. Korea Zinc proposed 12 directors, while the MBK alliance proposed 17.
Earlier, on January 23, Chairman Choi Yoon-beom's side formed a circular shareholding structure by having Sun Metal Corporation (SMC), a grandchild company of Korea Zinc, acquire more than 10% of Yeongpung's shares to restrict Yeongpung's exercise of voting rights at the extraordinary shareholders' meeting. However, on the 7th, the court partially accepted the provisional injunction filed by the MBK alliance to suspend the effectiveness of the Korea Zinc extraordinary shareholders' meeting resolution, ruling that the restriction on Yeongpung's voting rights was unfair.
In response, Chairman Choi's side formed a new cross-shareholding relationship by having SMH, an Australian subsidiary and corporation, receive the 10.3% (190,226 shares) of Yeongpung shares held by SMC as a dividend in kind, thereby restricting Yeongpung's exercise of voting rights again. Then, on the 17th, the MBK alliance filed a provisional injunction to exercise voting rights, claiming that Chairman Choi's side was trying to deprive Yeongpung of voting rights again at the regular shareholders' meeting and disrupt the meeting.
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