As the extraordinary general meeting of Korea Zinc approaches on the 23rd, interest is focused on whether MBK Partners and Young Poong, which are aiming for control of Korea Zinc, can secure a majority on the board of directors after the proposed introduction of a cumulative voting system by Chairman Choi Yun-beom's side fell through. Even if MBK and Young Poong secure a majority on the board, it seems that an uncomfortable coexistence between the two sides will continue until they completely seize control.
Korea Zinc will proceed with the director appointment process via a regular voting method in the extraordinary general meeting scheduled for the 23rd. This follows a court's partial acceptance of MBK and Young Poong's claim that directors should not be elected via a cumulative voting system on the 21st. The cumulative voting system grants voting rights equal to the number of directors to be elected for each share of stock. For example, if 10 directors are elected, each share of stock receives 10 voting rights, allowing the possibility of concentrating votes on specific director candidates, making it a card used by Chairman Choi's side to defend management control given their smaller equity than MBK and Young Poong.
The Korea Zinc board currently consists of 12 members, with 11 classified as Chairman Choi's appointees, excluding Young Poong advisor Jang Hyung-jin. At this extraordinary general meeting, MBK and Young Poong are pushing to appoint 14 new director candidates, while Korea Zinc is proposing 7 candidates. If all 14 candidates recommended by MBK and Young Poong are elected and none of the candidates from Korea Zinc are elected, MBK and Young Poong would have 15 directors, thus obtaining a majority on the Korea Zinc board.
While it is expected that many of the director candidates from MBK and Young Poong will enter the board during this extraordinary general meeting, it remains uncertain how many will succeed. This is due to some overseas institutional investors, including the National Pension Service, only recommending support for some of the candidates recommended by MBK and Young Poong or not stating their intentions clearly.
The National Pension Service decided to evenly support three director candidates recommended by both sides. The global proxy advisory firm Institutional Shareholder Services recommended approval for only four candidates from MBK and Young Poong, while Glass Lewis opposed all candidates. If a large number of shareholders are absent from this extraordinary general meeting and MBK and Young Poong exceed the majority in voting rights, they could secure all 14 members on the board. Currently, MBK and Young Poong have an equity ratio of 46.7%, leading over Chairman Choi's side, which stands at approximately 39% to 40%.
Even if MBK and Young Poong secure a majority on the board, it is highly likely that the management rights dispute will not be resolved in the short term. For MBK and Young Poong to seize control, they would need to remove Chairman Choi and restructure the board, but pushing out sitting directors, who still have terms remaining, is virtually impossible under the current equity structure.
Chairman Choi stepped down from his position as CEO due to an expiration of term last March, but remains the chairman of the board as an inside director. His term lasts until March 2026. According to corporate law, removing a director requires a special resolution of the general meeting, requiring the support of more than two-thirds of the votes from attending shareholders and more than one-third of the total issued shares, which MBK and Young Poong currently cannot meet.
If MBK and Young Poong's directors take a majority, it will restrict Chairman Choi's management activities. Korea Zinc's articles of incorporation stipulate that the board of directors decides on matters related to the execution of company business. The disposal and transfer of significant assets and borrowing substantial amounts must be resolved through board approval according to corporate law.