Voting Rights of Youngpoong Restricted Due to Cross-Shareholding
Youngpoong and MBK: "Illegal Action... Legal Response"
Board Composition: 11 for Chairman Choi's Faction, 4 for MBK
Choi Yoon-beom, chairman of Korea Zinc, successfully defended against Youngpoong and MBK Partners' attempt to take control of the board of directors in the regular shareholders' meeting vote. All the personnel proposed by Korea Zinc were appointed, resulting in the chairman's faction dominating the board. Youngpoong announced plans for legal action, claiming that Korea Zinc illegally restricted voting rights, signaling that the management dispute between the two sides may escalate into a legal battle.
The court dismissed the provisional injunction filed by Youngpoong and MBK Partners against Korea Zinc, requesting permission to exercise voting rights at the shareholders' meeting. On the 28th, company officials are proposing access to the Korea Zinc shareholders' meeting scheduled to be held at the Mondrian Hotel in Yongsan-gu, Seoul. This shareholders' meeting is expected to have a high possibility of disruption. 2025.03.28 Photo by Yoon Dong-ju
At the 51st shareholders' meeting held on the 28th at the Mondrian Hotel Itaewon in Yongsan-gu, Seoul, Korea Zinc succeeded in defending its management rights by appointing 11 out of 15 directors from Choi Yoon-beom's faction.
Although scheduled to start at 9 a.m., the meeting began around 11:30 a.m. due to verification of the shareholder registry and duplicate proxy confirmations, with heated exchanges from the outset. This was due to intense strategic battles over the exercise of voting rights by Youngpoong, which holds about 25% of shares, including injunctions, surprise dividends, and off-market purchases. Korea Zinc gained the upper hand by restricting Youngpoong's voting rights just before the meeting.
Youngpoong and MBK's combined stake in Korea Zinc is 40.97%, ahead of Chairman Choi's 34.35%. However, with Youngpoong's voting rights restricted on the day, their effective stake was reduced to 15.55%, creating a favorable environment for Chairman Choi's faction in the vote.
The key agenda item, the 'Proposal to Set a Cap on the Number of Directors,' was passed with 71.11% approval of the voting rights present. This proposal, put forward by Chairman Choi's faction, limits the number of directors on Korea Zinc's board to 19. As a result, the path for the 17 new directors recommended by Youngpoong and MBK to enter the board was blocked.
Following this, in the director appointment vote conducted by cumulative voting, a total of eight directors were appointed: five candidates recommended by Chairman Choi's faction and three by Youngpoong and MBK. Among Chairman Choi's candidates, Park Ki-duk, president of Korea Zinc whose term expires this month, Kwon Soon-beom, lead attorney at Law Firm Sol, and Kim Bo-young, professor at Hanyang University, were reappointed. Two new appointees were Jameson Andrew Murphy, senior advisor at Oliver Wyman, and Jung Da-mi, dean of the College of Business at Myongji University. Youngpoong and MBK's director candidates newly appointed were Kang Sung-doo, president of Youngpoong, Kim Kwang-il, vice chairman of MBK, and Kwon Kwang-seok, advisor at Woori Financial Capital.
The court dismissed the provisional injunction filed by Youngpoong and MBK Partners against Korea Zinc, requesting permission to exercise voting rights at the shareholders' meeting. Kang Sung-doo, CEO of Youngpoong, is entering the Korea Zinc shareholders' meeting scheduled to be held on the 28th at the Mondrian Hotel in Yongsan-gu, Seoul. This shareholders' meeting is expected to have a high possibility of disruption. 2025.03.28 Photo by Yoon Dong-joo
As a result, along with current board member Jang Hyung-jin, advisor at Youngpoong, a total of four directors from Youngpoong and MBK can now participate in management.
For the outside director who will serve as an audit committee member, Seo Dae-won, chairman of BnH Tax Corporation recommended by Chairman Choi's faction, was appointed through a separate vote conducted under the '3% rule.'
Thus, the Korea Zinc board structure, which was '5 to 1' in favor of Chairman Choi's faction before the shareholders' meeting, was reorganized to '11 to 4.' Industry consensus holds that Chairman Choi successfully defended Korea Zinc's management rights.
Earlier, the court ruled the previous day that Korea Zinc's restriction of Youngpoong's voting rights by securing a 10% stake in Youngpoong through its subsidiary Sun Metal Holdings (SMH) to form a cross-shareholding relationship was not illegal.
In response, Youngpoong counterattacked at the same day's shareholders' meeting by issuing stock dividends to reduce SMH's stake in Youngpoong below 10%, thereby severing the cross-shareholding relationship. Korea Zinc then launched a counter-counterattack on the morning of the 28th by purchasing Youngpoong shares held by Chairman Choi's faction through KJ Precision (formerly Youngpoong Precision) in an off-market transaction, raising SMH's stake in Youngpoong to 10.03%. This dramatically restricted Youngpoong's voting rights.
Youngpoong and MBK have announced plans to file a lawsuit, claiming Korea Zinc's actions are illegal. The management dispute between the two sides is expected to escalate into a legal battle that will ultimately decide the outcome.
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