Korea Zinc, embroiled in a management dispute with Young Poong and MBK Partners, has proposed the introduction of a cumulative voting system to Young Poong through its affiliate Young Poong Precision Corporation, which holds shares in Young Poong. This aims to address the structure that makes it difficult for external recommended directors to enter the board, as the Chang family, including advisor Jang Hyung-jin, holds 52.65% of the equity.
On the 5th, Young Poong Precision Corporation said, "We requested that the upcoming Young Poong shareholders' meeting include proposals for introducing a cumulative voting system, amendments to the articles of incorporation for cash dividends, and the appointment of an outside director as an audit committee member."
On the 3rd, Young Poong Precision Corporation delivered a letter regarding the 'shareholder proposal for the regular shareholders' meeting agenda' to Young Poong, requesting a response on whether to accept it by the 11th. They added that if there is no reply, they will take necessary legal actions as shareholders, such as filing a motion for the agenda's provisional approval.
Young Poong Precision Corporation is an affiliate of Korea Zinc, controlled by Chairman Choi Yoon-beom and the Choi family. The Choi family holds 3.59% (66,175 shares) of Young Poong's total issued shares. Young Poong Precision reports that the Chang family holds a majority of Young Poong's equity, monopolizing the right to recommend directors. Their plan is to implement a cumulative voting system to allow director candidates recommended by minority shareholders to enter the board, thereby overseeing Young Poong's management.
A cumulative voting system allows shareholders to exercise voting rights equivalent to the number of director positions up for election per share. For example, if three directors are elected, three voting rights are granted per share. This system is evaluated as favorable to minority shareholders over majority shareholders as they can concentrate their votes on specific candidates.
The cumulative voting system is also a card that Korea Zinc raised in last month's extraordinary shareholders' meeting to counter Young Poong and MBK. The court has limited the actual introduction of the cumulative voting system to the next shareholders' meeting while ruling on its agenda to be introduced in the future.
Considering that Young Poong has been in the red for several years, Young Poong Precision Corporation also suggested allowing shareholders to receive benefits not only in cash and shares but also in other assets. They also urged the appointment of independent outside directors and audit committee members with independence and expertise to rationalize Young Poong's management.
Young Poong Precision Corporation noted, "There needs to be a thorough audit regarding the previously problematic underestimation of provisions, expected losses and countermeasures due to the two-month operational suspension of Seokpo smelter, and the specific contents of the management cooperation contract with private equity firm MBK."
In fact, Young Poong recorded an operating loss of 73 billion won in 2021, followed by 108 billion won in 2022 and 142 billion won in 2023, increasing its annual losses. Young Poong plans to review this shareholder proposal according to the internally established procedures.