Young Poong, the largest shareholder of Korea Zinc, and MBK Partners issued a document to the Korea Zinc board on the 18th, urging an immediate investigation into Young Poong's acquisition of shares in Sun Metal Corporations (SMC).
On the day before the extraordinary shareholders meeting, on the 22nd of last month, Korea Zinc's 100% subsidiary SMC suddenly announced the acquisition of 10.33% equity from the Choi family and Young Poong Precision Corporation. Since Young Poong already held a 25.42% stake in Korea Zinc and Korea Zinc also indirectly acquired shares in Young Poong, the Choi chairman's side blocked Young Poong from exercising voting rights over Korea Zinc. This is the reason why Young Poong's voting rights were restricted in this extraordinary shareholders meeting and the Choi chairman's side was able to achieve a complete victory.
Young Poong-MBK claimed, "Due to illegal activities related to the acquisition of Young Poong shares for the disruption of the extraordinary shareholders meeting, the rights of all Korea Zinc shareholders, except for Chairman Choi Yoon-beom's side, have been severely limited or harmed, causing significant damage to the company."
Young Poong-MBK emphasized that Korea Zinc's private utilization of SMC's assets worth 57.5 billion won for the benefit of a specific shareholder, namely Chairman Choi, constitutes a breach of duty and has caused damage to Korea Zinc.
As of the end of last year, most of SMC's cash reserves were generated not from operational profits but due to Korea Zinc's payment guarantees. SMC had turned to a loss. An MBK official noted, "In that situation, SMC utilized a significant portion of its funds to purchase Young Poong shares worth 57.5 billion won from the Choi family and Young Poong Precision Corporation just hours before the extraordinary shareholders meeting of Korea Zinc."
Young Poong-MBK said, "The valuable assets of Korea Zinc's subsidiary were used by registered directors of Korea Zinc, Chairman Choi and CEO Park Ki-deok, leading to a conflict of interest between specific shareholders and the company." They further stated, "Moreover, Korea Zinc executives involved in the conflict of interest between Chairman Choi's shareholders and all other shareholders (especially the major shareholders) have violated their duty of loyalty, which requires them to act in the best interest of the company."
Article 382-3 of the Commercial Code stipulates that directors must faithfully perform their duties for the company. According to Article 401-2 of the same law, a person who uses their influence over the company to instruct a director in conducting business shall be jointly liable for damages to the company if they intentionally or negligently engage in activities that violate laws or articles of incorporation or neglect their duties. In this case, the term 'a person who has instructed a director in the execution of business using their influence over the company' includes not only individuals but also corporate controlling companies.