The management control dispute surrounding Korea Zinc is widening into a question of board responsibility. As minority shareholders filed criminal complaints against outside directors and submitted a petition to financial authorities, the appropriateness of disclosures and the process behind a large-scale fund investment have emerged as new points of contention.
According to the financial investment industry on the 28th, the Korea Zinc minority shareholders' alliance the day before filed a complaint with the Seoul Central District Prosecutors' Office against outside directors over the One Asia Partners fund investment and submitted a petition to the Financial Services Commission. The intent is to have prosecutors determine potential criminal liability and the financial authorities assess issues of disclosure and investor protection, respectively.
At the center of the controversy is roughly 550 billion won that Korea Zinc has put into the fund since 2019. The minority shareholders say it is unclear whether the board's review and approval procedures functioned substantively during this process.
In particular, they flagged as core issues: ▲ the sufficiency of disclosures on the investment structure and cash flows ▲ whether risk information, including potential losses, was provided ▲ disclosure of conflicts of interest between management and the investment operator ▲ and the completeness of information necessary for investment decisions. They argue that, despite being a transaction involving a large amount of capital, the information provided to investors was limited.
They also raised questions about the board's role. The minority shareholders argued that the investment review and decision-making process may have been carried out in a perfunctory manner. They said the entire internal control and decision-making structure needs to be examined.
They also left open the possibility of a future civil response. The minority shareholders' alliance said it would consider claims for damages if actual losses are confirmed. However, they added that whether the outside directors' actions constitute breach of duty must be determined through an investigation.
The matter is expected to proceed on a two-track path, with a prosecution investigation and a review by financial authorities running in parallel. Prosecutors will look into potential criminal liability such as breach of duty, while the Financial Services Commission will examine possible disclosure violations and whether the investor protection framework functioned. It is currently at the stage of complaint receipt, and whether to open a formal investigation rests with prosecutors.
Meanwhile, Korea Zinc has already been embroiled in legal disputes over disclosures. Allegations of violating the Financial Investment Services and Capital Markets Act regarding the adequacy of information provided during a rights offering are under investigation by the Seoul Southern District Prosecutors' Office. Legal circles say that if the latest complaint expands the probe to the company's internal decision-making structure, disclosure responsibility and the board's role could emerge as major issues going forward.