Korea Zinc decided to limit Young Poong's voting rights by 25.4% according to the mutual shareholding relationship at the regular shareholders' meeting held on the 28th. The Young Poong-MBK Partners alliance strongly opposed the voting rights restriction, stating that the timing of when Korea Zinc's subsidiary Sun Metals Holdings (SMH) purchased Young Poong shares is unclear.
The regular shareholders' meeting of Korea Zinc started around 11:30 a.m., well past the scheduled time of 9 a.m. Korea Zinc explained that the delay was due to discrepancies between the documents submitted by the shareholder agents and the original documents during the proxy verification process.
The issue at this shareholders' meeting was whether to recognize the voting rights of Young Poong's 25.4% equity (5,162,450 shares) in Korea Zinc, which Korea Zinc decided to limit according to mutual shareholding restriction regulations. According to Article 369, Section 3 of the Commercial Act, if two corporations hold more than 10% of each other's equity, each corporation cannot exercise voting rights in the other company.
Young Poong announced that it declared a stock dividend of 0.04 shares per share the previous day, which caused SMH's ownership percentage in Young Poong to fall below 10%. Then, SMH purchased 1,350 shares of Young Poong at 444,000 won per share from Kjet Precision, increasing its ownership back to 10.03%.
As Korea Zinc's CEO Park Gi-deok declared this, a commotion erupted in the room. Lee Seong-hoon, a lawyer representing Young Poong, noted, "The path and timing of SMH's acquisition of Young Poong shares are unclear. Young Poong has not been informed of SMH's acquisition of Young Poong shares, so the voting rights restriction under mutual shareholding provisions is unjust."
Korea Zinc responded that the transaction between SMH and Young Poong was completed before the start of the shareholders' meeting, thus constituting a voting rights restriction. Korea Zinc's legal representative Ko Chang-hyun said, "We issued a balance certificate at 8:54 a.m. and conveyed the relevant details to Young Poong. We will submit the transaction statement and balance certificate to the meeting inspector."
With Young Poong's voting rights limited, the shareholders' meeting is proceeding in favor of Korea Zinc. As of 1 p.m., the first shareholder proposal raised by Young Poong, Proposal No. 1-2-2 (cash dividend of 7,500 won per common share and the conversion of undistributed retained earnings amounting to 2.777 trillion won), was rejected.