The Financial Supervisory Service (FSS) has referred the case to prosecutors, determining that the large-scale capital increase conducted during the management rights dispute involving Korea Zinc constitutes unfair trading.
According to the financial investment industry on the 7th, the FSS has forwarded the Korea Zinc executives to prosecutors through a fast-track process for suspected violations of the Capital Markets Act related to the approximately 2.5 trillion won capital increase announced on Oct. 30 last year.
The FSS raised concerns that Korea Zinc had planned the capital increase even before the expiration of its public share buyback but did not clearly disclose this. They deemed it a false declaration in the buyback report and unfair trading.
Korea Zinc conducted a public share buyback from Oct. 4 to 23 last year and disclosed that it had "no plans to significantly change its financial structure, etc., after the public buyback." However, it was revealed that Mirae Asset Securities conducted due diligence for the capital increase starting from the 14th of the same month.
In response, FSS Deputy Director Ham Yong-il noted at a press briefing on Oct. 31 last year that, "If the Korea Zinc Board of Directors knew about the plan to retire shares after acquiring them and the repayment plan through the capital increase, and if those procedures were carried out sequentially, there are significant matters missing from the existing buyback report, and the potential for unfair trading is quite high." He added, "If unfair trading is confirmed, we will promptly refer it to the investigative agency."
The FSS has been intensively investigating whether proper reviews were conducted and whether there were unfair trading acts in the processes of public share buyback and capital increase involving Mirae Asset Securities and KB Securities, which served as the joint underwriters for Korea Zinc's public share buyback. Korea Zinc rescinded its capital increase decision on Nov. 13 last year after receiving a request from the FSS to amend its securities registration statement.