Ahead of Korea Zinc's regular shareholders meeting, the largest shareholders Young Poong and MBK Partners made a shareholder proposal to codify directors' duty of loyalty to shareholders in the articles of incorporation and to split the par value of the issued shares.
Young Poong and MBK Partners issued a press release on the 12th, saying, "Because Korea Zinc's distorted corporate governance has damaged shareholder value, we need to overhaul the institutional framework so the board of directors and the shareholders meeting can perform their original functions."
First, Young Poong and MBK Partners proposed that Korea Zinc's articles of incorporation explicitly stipulate a "director's duty of loyalty to shareholders." This is in line with Article 382-3, introduced through last year's amendment to the Commercial Act (directors must faithfully perform their duties for the company and shareholders in accordance with laws and the articles of incorporation).
An MBK Partners official emphasized, "It is significant in policy and market terms as it is the first case in which a corporation's controlling shareholder has officially proposed this as an agenda item for a regular shareholders meeting."
Young Poong and MBK Partners also said they would institutionally block concerns about shareholder value being damaged by specifying in the articles of incorporation the principle that, when issuing new shares, the board must protect shareholders' interests and treat all shareholders fairly, thereby preventing unlawful new share issuances that had been attempted under the initiative of the existing management.
In addition, to advance the governance structure, Young Poong and MBK Partners proposed the full introduction of the "executive officer system" under the Commercial Act. The aim is to clearly separate business execution and oversight functions and restore the board's role, which has been assessed as having lost its independent monitoring function.
They also proposed amending the articles so that, to ensure the fairness of the shareholders meeting, the chair of the meeting would be the chair of the board, not the CEO, and extending the board convening notice period from the current "one day before the meeting date" to "three days before," so directors have sufficient time to review agenda items.
Financial proposals to enhance shareholder value were also included. Young Poong and MBK Partners proposed a 1-for-10 par value split, lowering the par value from 5,000 won to 500 won, to increase stock liquidity.
They also proposed converting a 392.4 billion won voluntary reserve into undistributed retained earnings available for dividends, so that even if all treasury shares are canceled, quarterly dividends would still be possible. An MBK Partners official explained, "We took into account that there was no interim dividend last year because the shares tendered in the 2024 treasury share tender offer were canceled."
In addition, Young Poong and MBK Partners criticized the current board for operating in a perfunctory manner after losing its check-and-balance function over management, and requested the election of directors based on cumulative voting, along with an agenda item to set the number of directors to be appointed at the number whose terms expire this time (six). An MBK Partners official explained, "To ensure that no single shareholder group monopolizes the board and that diverse shareholders can participate on the board."
As candidates for other non-executive directors, Young Poong and MBK Partners recommended Park Byung-uk, CEO of Cheong Accounting Firm and an outside director at Young Poong, and Choi Yeon-seok, a partner at MBK Partners. As outside director candidates, they recommended candidate Oh Young, candidate Choi Byung-il and candidate Lee Sun-sook.
They also emphasized the need to reasonably revise the excessive severance pay provision that applies the same maximum payout rate to an honorary chair as to a sitting chair, to prevent asset outflows to Chair Choi Yoon-beom's family and to secure financial soundness.
Young Poong and MBK Partners have asked Korea Zinc to reply by the 20th on whether it will accept each agenda item.