This article was published on Dec. 16, 2024, at 3:50 p.m. on the Chosun Biz Money Move (MM) site.
Chairman Choi Yun-bum's team, which is in a confrontation with the Youngpoong-MBK Partners alliance over control of Korea Zinc, has decided to announce the convening of an extraordinary general meeting on the 23rd. The two sides have been engaged in a war of nerves over the announcement date of the general meeting.
From Youngpoong-MBK's perspective, the announcement must be made before Chairman Choi's team can determine what agenda items they will propose and can begin the proxy battle. Conversely, from Chairman Choi's standpoint, delaying the announcement will shorten the time Youngpoong-MBK has to respond and potentially allow for a more advantageous position. Under these circumstances, Chairman Choi's team has decided not to postpone the announcement to next month, allowing Youngpoong-MBK to possibly begin the proxy contest as early as the 30th without extending into the new year.
According to investment banking (IB) and legal circles on the 16th, Chairman Choi’s team submitted a document to the Seoul Central District Court stating that they would announce the convening of the general meeting on the 23rd. Earlier, Youngpoong filed for a provisional measure to seek permission for an extraordinary general meeting on the 25th of last month, and it was eventually concluded that the general meeting would be held on Jan. 23 of next year, but the provisional measure has not yet been canceled, as a convening announcement from Korea Zinc has not been made.
Youngpoong-MBK and Chairman Choi’s side have continued to confront each other over the timing of the announcement. Youngpoong-MBK previously urged on the 6th that Korea Zinc needs to conduct the convening announcement of the general meeting promptly. Only when Chairman Choi's team quickly confirms and publicly discloses the agenda and items of purpose can Youngpoong-MBK review those details and begin soliciting proxy voting. The solicitation for proxy voting can commence two business days after submitting proxy documents and relevant reference materials.
Korea Zinc has maintained that the earliest possible date for the convening announcement and notification of the extraordinary general meeting would be the 2nd of next month. With the record date for shareholder confirmation set for the 20th, the Korea Securities Depository will provide ownership details only on the 27th, meaning that the convening announcement and notification can only take place afterward. Individual notifications must be sent to shareholders holding over 1% equity, while those holding less than 1% need only receive a general announcement. Therefore, to issue a convening "notification," it is necessary to identify who the shareholders are, which means that after receiving the ownership details, notifications or announcements can only be made at the earliest on the 2nd of next month.
However, Youngpoong-MBK has claimed that under circumstances where identification of shareholders is not clear, an "announcement" can be made on the 20th without waiting until the 27th. It is possible to make an announcement to an unspecified audience. According to the Commercial Act, the convening notification and announcement do not necessarily have to be made simultaneously, but the announcement must not take place later than the notification.
So far, IB and legal circles have viewed that Korea Zinc might not issue the convening announcement for the general meeting until Jan. 8 of next year. This is because the announcement only needs to be made two weeks before the convening date (Jan. 23). If Korea Zinc delays the announcement to release the agenda slowly, it also delays the timing for Youngpoong-MBK to initiate the proxy battle.
An attorney specializing in capital markets noted, "If Korea Zinc's convening announcement and solicitation for proxy voting are released late in the afternoon, the opposing side can submit their solicitation reference materials only the following day at the earliest, meaning the proxy fight can only commence after two business days." He added, "Because of this, many companies strategically choose to issue their general meeting announcements on Wednesdays." If Korea Zinc issues its convening announcement late in the afternoon on Jan. 8 (Wednesday), proxy fights could begin on Jan. 11 (Saturday). In this scenario, Youngpoong-MBK could submit solicitation reference materials no earlier than Jan. 9 (Thursday), and the proxy fight would only become possible after 2 business days on Jan. 14 (the following Tuesday). This represents a considerable loss of time.
Given this situation, with Korea Zinc deciding to issue the convening announcement for the general meeting on the 23rd, Youngpoong-MBK can potentially commence the proxy fight as early as the 27th of this month. However, considering that time is needed to review the proposals from Korea Zinc, it is realistically expected that this will take place on the 30th of this month.