Private equity fund MBK Partners has officially noted that confirmation from the Ministry of Trade, Industry and Energy is needed to determine whether its hostile takeover attempt of Korea Zinc falls under 'foreign investment.' Corporations that hold core national technologies require government approval for overseas transfer or sale due to economic security concerns. If MBK Partners is recognized as a 'foreign investment,' the government will intervene in the acquisition of management rights and the resale process.
On the 9th, the National Assembly's Legislative Research Service stated that confirmation of the facts from the Ministry of Trade, Industry and Energy is necessary to view MBK Partners' acquisition of management rights in Korea Zinc as 'foreign investment' under the National Advanced Strategic Industry Act and the Industrial Technology Protection Act. This was raised by Lee Hak-young, the vice speaker of the National Assembly, marking the first time the Legislative Research Service has requested confirmation from the Ministry regarding the management rights dispute over Korea Zinc.
The Legislative Research Service emphasized, 'Whether the acquisition attempt by the MBK consortium qualifies as foreign investment requires confirmation of facts by the Ministry, which is the authority for technology protection according to law.' It added, 'Although all entities in the MBK consortium (MBK Partners, Youngpoong, Korea Corporate Investment Holdings) are domestic corporations, the major shareholder of MBK Partners, who is known to lead this public offer (Chairman Kim Byung-joo), is a foreigner, leading to numerous reports that this case should be regarded as foreign investment.'
'Foreign investment' as defined by the Industrial Technology Protection Act and National Advanced Strategic Industry Act includes ▲ individuals who do not hold the nationality of the Republic of Korea ▲ corporations established under foreign law ▲ institutions that act on behalf of foreign governments' external economic cooperation duties.
The Legislative Research Service pointed out, citing media articles, 'Chairman Kim is known to hold the only veto power within the investment review committee, which appears to grant him the authority to dominate Korea Zinc's acquisition decision.'
It also suggested the need to consider amending the law to include 'corporations established under domestic law but controlled by foreigners' within the scope of foreign nationals. This is based on the rationale that, considering the importance of economic security, there is a need to expand the purview of the technology protection authority.
In September of last year, when the management rights dispute intensified, Korea Zinc applied to the Ministry of Trade, Industry and Energy to have its 'high-nickel precursor processing patent technology' recognized as a core national technology, and about two months later, the Ministry notified that Korea Zinc's precursor manufacturing technology qualifies as core national technology. If a corporation holds core national technology, it must undergo government review when it is sold or transferred. Consequently, overseas sales become exceedingly complicated for the protection of key industries.