Korea Zinc to Stipulate Directors' Duty of Loyalty to All Shareholders in Articles...Accepts Young Poong and MBK Proposals

Agreement Reached to Put Cash Dividends and Treasury Share Cancellation on the Agenda
Stock Split and Introduction of Executive Officer System Not Accepted

Many of the shareholder proposals demanded by Young Poong and MBK Partners, which are in a management control dispute with Korea Zinc, will be put on the agenda as official items at the regular general shareholders' meeting. The meeting is expected to deal with matters such as including in the articles of incorporation directors' duty of loyalty to all shareholders, as stipulated in the amended Commercial Act, and strengthening shareholder returns.

According to Young Poong and MBK on the 23rd, Korea Zinc held a board meeting that day and finalized as agenda items for next month's regular general shareholders' meeting the proposals made by Young Poong and MBK, including: explicitly stipulating directors' duty of loyalty to all shareholders, and securing resources for interim dividends.

Once directors' duty of loyalty is specified in the articles of incorporation, "the interests of all shareholders" will become the standard of judgment in matters such as new share issuance, capital transactions, and large-scale investments that have a significant impact on the company's value. Young Poong and MBK explained, "This has laid the starting point for shifting the decision-making structure, which has long been criticized for being management-centered, to a shareholder-centered structure."

Various measures to strengthen shareholder returns will also be discussed. The company confirmed as an agenda item the approval of a cash dividend of 20,000 won per share. This exceeds the proposal by Young Poong and MBK to convert 392.5 billion won of discretionary reserves into dividend resources (retained earnings). Based on the closing price of 1,723,000 won that day, this corresponds to a dividend yield of 1.2%.

The company also decided to put on the agenda a plan to cancel 50% of its treasury shares, for which it had been postponing the announcement of a disposal plan, and to use the remaining 50% over 10 years for employee performance-based compensation.

In addition, the two sides agreed to overhaul how the board of directors is operated. They plan to change the notice period for convening board meetings from one day before the meeting to three days before. The intent is to enable the board to substantively review the agenda items. They also decided to explicitly stipulate the right to request information for the protection of minority shareholders.

However, Korea Zinc did not accept the proposals on stock split and the introduction of an executive officer system. Young Poong and MBK had proposed splitting Korea Zinc's shares into one-tenth to increase stock liquidity and improve access for individual investors. They had also proposed introducing an executive officer system to separate supervisory and executive functions and thereby strengthen the independence of the board of directors.

Young Poong and MBK stated, "This board decision is the opening chapter in improving Korea Zinc's governance structure," adding, "We will continue to pursue the remaining governance improvement tasks, including ensuring that the board operates based on the interests of all shareholders and restructuring the board."