As the first hearing date was held for the shareholder derivative suit that Young Poong filed against Korea Zinc and Chair Choi Yoon-beom and other executives, the court hinted that determining whether damages occurred is separate from assessing a breach of the duty of care. The stance effectively underscored the need to secure evidence to examine Korea Zinc's decision-making process.
The Civil Agreement Division 29 of the Seoul Central District Court (Presiding Judge Ko Seung-il) on the 2nd held the first hearing for the shareholder derivative suit of 400.5 billion won that Young Poong filed against Korea Zinc Chair Choi Yoon-beom and other executives, and reviewed the main issues and the scope of the motion for an order to submit documents.
The bench explained, "The issue in this case is whether there was a breach of the duty of care." The intent was that, more than the performance of individual investments or whether losses have been finalized, the core will be whether the required duty of care was fulfilled in the decision-making process at the time. It added, "Whether the mere fact that damages have not been finalized can limit the proof itself of a breach of the duty of care is a separate matter," lending some weight to Young Poong's argument.
Whether to grant the order to submit documents has emerged as a key issue. The bench partially acknowledged the need for the plaintiff's requests for fact-finding and an order to submit documents, saying they "can be viewed as background facts for judging the issues."
At the hearing, Young Poong pressed its case, calling the One Asia Partners fund investment and the Ignio Holdings acquisition a "don't-ask investment" that breached the duty of care. It argued that securing internal materials—such as board reporting and approval procedures, investment review materials, and the circumstances of contract execution—is essential to confirm whether there was reasonable review in the investment and acquisition process.
It also took issue with Korea Zinc's response to the fact-finding request, saying it "did not clearly disclose even the decision-making structure for the fund investment or the responsible personnel." It stressed that a compulsory order to submit documents is unavoidable. It countered that the discovery proceedings underway in the United States are a separate matter from this lawsuit and cannot serve as grounds for delay.
By contrast, Korea Zinc's executives, including Chair Choi, flatly denied any breach of the duty of care. Regarding the One Asia Partners investment, they argued it was "a reasonable management decision to maximize returns by using surplus funds," and said they complied with relevant laws and internal procedures in the decision-making process. On the Ignio Holdings acquisition, they countered that it underwent sufficient review through bodies including the Investment Review Committee and was deemed to have profitability.
This lawsuit targets three transactions: ▲ the One Asia Partners fund investment ▲ the Ignio Holdings acquisition ▲ the CSD Design Group contract. Young Poong argues that these transactions were carried out without board approval or without sufficient prior review, causing losses to the company. It also raised suspicions that private relationships of management influenced the One Asia Partners investment in particular.
The bench ordered both sides to submit additional briefs within 10 days and to specifically identify whether items constitute trade secrets or personal information. As a result, legal disputes over the scope of the order to submit documents are expected to continue until the next hearing. The next hearing is scheduled for Jun. 18.