MBK Partners and Youngpoong filed a request for an injunction to prohibit Korea Zinc from disposing of its own shares, which were acquired through a public offering. The request targets 2.04 million shares (9.85%).
MBK Partners and Youngpoong noted that they submitted this request for an injunction to the Seoul Central District Court on Nov. 11.
A representative from MBK Partners said, “Despite the ongoing demands for the disposal, Korea Zinc has only mentioned plans for disposal while postponing specific execution. There are concerns that they might attempt to secure voting rights by granting or lending their own shares to a third party on the record dates for the extraordinary and regular shareholders' meetings scheduled for Dec. 20 and 31.”
He added, “Such actions are likely to create legal issues related to the disposal of treasury shares,” explaining the background of the injunction request.
Korea Zinc previously acquired 2,040,30 shares through a public offering and announced disposal plans through a board resolution on Oct. 2. Since then, they have repeatedly mentioned their disposal policy in performance announcements and conference calls, but they have not disclosed a specific timing for the disposal, leading MBK Partners to express concerns that Chairman Choi Yoon-bum's side might utilize the treasury shares in other ways.
According to the Capital Markets Act, treasury shares cannot be disposed of or lent within six months of acquisition. If this rule is violated and treasury shares are disposed of, it may be regarded as a violation of disclosure regulations and fraudulent transactions, resulting in legal liability including sanctions and fines from the Financial Services Commission.
Additionally, if the disposal of treasury shares is enforced, further losses such as dividend payments will be unavoidable. MBK Partners believes that if measures restricting the issuance of securities are imposed, it could severely impact the company's funding capabilities, leading to losses.