Korea Zinc and Young Poong · MBK Partners are once again in dispute over the issue of voting rights restrictions ahead of the Korea Zinc regular shareholders' meeting scheduled for the 28th. Korea Zinc claims that Young Poong's voting rights will be restricted at both the extraordinary and regular shareholders' meetings, while Young Poong is responding with the establishment of a limited liability company and a court injunction. As of the end of last year, Young Poong was the largest shareholder with a 25.4% stake in Korea Zinc and is attempting to secure management rights by entering the Korea Zinc board with MBK Partners. If Korea Zinc restricts Young Poong's voting rights, it will be difficult for Korea Zinc to secure management rights.
At the Korea Zinc regular shareholders' meeting on the 28th, seven proposals will be presented, including the establishment of a cap on the number of directors. The key issue is the appointment of new directors. Korea Zinc aims to maintain a majority on the board while Young Poong and MBK Partners aim to achieve a majority. Young Poong and MBK hold a higher equity of 40.97%, but the introduction of a cumulative voting system, which favors the numerous minority shareholders represented by Chairman Choi Yun-beom of Korea Zinc (34.35%), makes the outcome uncertain. The cumulative voting system grants voting rights equal to the number of directors to be elected per share, allowing votes to be concentrated on specific candidates, which benefits minority shareholders.
In this shareholders' meeting, the fact that Korea Zinc will utilize the cross-shareholding regulation once again, thereby restricting Young Poong's voting rights, has become a significant variable. Korea Zinc announced that its Australian subsidiary and corporation, Sun Metal Holdings (SMH), received a physical dividend of a 10.3% equity in Young Poong from Sun Metal Corporation (SMC).
SMH, which received Young Poong's equity, is a subsidiary wholly owned by Korea Zinc and holds 100% of SMC's equity. Thus, the existing cross-shareholding structure of 'Korea Zinc → SMH → SMC → Young Poong → Korea Zinc' has changed to 'Korea Zinc → SMH → Young Poong → Korea Zinc,' forming a new cross-shareholding relationship, according to Korea Zinc.
Previously, prior to the extraordinary shareholders' meeting held on Jan. 23, Korea Zinc also used the same method to deprive Young Poong of voting rights, but it was annulled by the court ruling. The restriction on cross-shareholdings only applies to corporations, and it was deemed that Korea Zinc's Australian subsidiary and limited liability company, SMC, does not fall under this category.
The restriction on cross-shareholdings refers to the inability of each company to exercise voting rights over the other when each holds more than 10% equity in the other. Korea Zinc claims that its subsidiary and corporation SMH became subject to the restriction as it holds more than 10% of Young Poong's equity.
Young Poong is also actively responding. After the court's injunction ruling concerning the extraordinary shareholders' meeting, Young Poong established a new limited liability company, YPC, and contributed its previously held equity in Korea Zinc as a physical investment. This takes advantage of the fact that cross-shareholding restrictions only apply to corporations. In response, Korea Zinc argued that since the shareholders' list for the March shareholders' meeting was closed on Dec. 31 of the previous year, YPC cannot exercise rights as a shareholder.
On the 17th, Young Poong and MBK applied to the court for an 'injunction allowing the exercise of voting rights.' They criticized Korea Zinc for indicating an intention to deprive them of voting rights again at the regular shareholders' meeting, leading the meeting to disruption. They plan to receive an injunction from the court to allow the exercise of voting rights before the shareholders' meeting.
As conflicts over voting rights restrictions between both parties deepen, there is speculation of disruption at this shareholders' meeting as well. Korea Zinc has prepared up to four acting chairs for the meeting. Even if Young Poong and MBK propose a motion to dismiss the chair of the meeting and attempt to replace the chair, the intent is for a Korea Zinc insider to secure the chair position. Korea Zinc's articles of incorporation state, 'In the event of the CEO's absence, a director designated by the board will act for them.'