On the 28th, Choi Yoon-bum, chairman of Korea Zinc, successfully defended management rights by maintaining a majority on the board during a regular shareholders' meeting. By limiting some voting rights (25.4%) of the Young Poong and MBK Partners alliance, which is attempting to seize control, he led the meeting from a favorable position. All items proposed by Korea Zinc, including a cap of 19 directors and the appointment of 8 new directors, passed.
The board of directors of Korea Zinc was reorganized to include 11 members from Choi Yoon-bum's side and 4 from Young Poong and MBK. The conflict between the two sides is expected to intensify as Young Poong President Kang Seong-du and MBK Partners Vice Chairman Kim Kwang-il, who have been strongly opposing the current management, entered the board. Young Poong and MBK stated they will hold the company accountable until the legality of the voting rights limitation process is resolved, leading to fierce legal battles.
On that day, Korea Zinc held its annual shareholders' meeting at the Mondrian Hotel in Yongsan, Seoul. Tensions rose as the Korea Zinc labor union staged a protest against Young Poong and MBK near the meeting hall. They held banners reading, "We cannot allow Korea Zinc to become the second Homeplus" and "The public has turned against MBK!"
The meeting was originally scheduled to start at 9 a.m. but began around 11:30 a.m. Korea Zinc explained the delay occurred during the verification process of the proxy materials submitted by shareholder representatives, which differed from the original documents. Meanwhile, MBK claimed that Korea Zinc intentionally delayed the meeting to create a reciprocal shareholding relationship.
The main point of contention during the meeting was whether to recognize the voting rights of Young Poong's 25.4% (5,162,450 shares) stake in Korea Zinc. Chairman Park Gi-deok announced that this should be limited according to regulations on reciprocal shares. According to Article 369, Paragraph 3 of the Commercial Act, if two corporations each hold more than 10% of the other, they may not exercise voting rights in the other company.
The previous day, Young Poong resolved a stock dividend of 0.04 shares per share, claiming that this reduced its stake in Korea Zinc's subsidiary Sun Metals Holdings below 10% and lifted the voting rights limitation. In response, Korea Zinc explained that at 8:54 a.m. on the day of the meeting, SMH purchased 1,350 Young Poong shares from Kjet Precision at 444,000 won per share, increasing its stake to 10.03%, making Young Poong's voting rights limitation legitimate. Young Poong raised concerns over the ambiguity regarding the timing and method of SMH's purchase.
All items proposed by Korea Zinc to limit Young Poong's voting rights passed. All five candidates recommended by Korea Zinc for director positions, including Park Gi-deok, Kwon Soon-beom, Kim Bo-young, James Andrew Murphy, and Jeong Da-mi, were appointed. Auditor Seo Dae-won, recommended by the current management, was also appointed. Three members proposed by Young Poong and MBK, including Kang Seong-du, Kim Kwang-il, and Kwon Kwang-seok, also entered the board.
Chairman Choi successfully defended his management rights at this shareholders' meeting, but legal battles are expected to continue. On that day, MBK strongly opposed, claiming that Chairman Choi's side engaged in illegal activities by creating a third round of circular investments. MBK had previously reported the initial circular investment scheme to prosecutors.