Sun Metals Holdings (SMH) of Korea Zinc increased its equity by acquiring shares of Young Poong from Young Poong Precision Corporation, raising its stake to over 10%. The Young Poong and MBK Partners alliance, which seeks control of Korea Zinc, resolved the voting rights limitation due to intercorporate relationships by distributing 0.04 shares of Young Poong per share of stock the previous day, prompting Korea Zinc to increase its stake again to limit voting rights.
According to the electronic disclosure by the Financial Supervisory Service on the 28th, SMH announced that it has privately purchased 1,350 shares of Young Poong from Young Poong Precision Corporation at 440,000 won per share. As a result, SMH's stake in Young Poong increased to 10.03%. This figure reflects the stock dividends from the previous day.
According to Article 369, Section 3 of the Commercial Code, if two corporations hold more than 10% of each other's equity, neither company can exercise voting rights against the other. If it is below 10%, they are free from that provision. To limit Young Poong's voting rights, Korea Zinc allocated over 10% of Young Poong's equity to SMH.
In response, Young Poong resolved to distribute dividends of 0.04 shares per share, causing SMH's stake in Young Poong to drop below 10%. SMH was not a shareholder on the reference date for Young Poong's regular shareholder meeting (Dec. 31, 2024), so it could not receive the stock dividends. Young Poong claimed that SMH's equity fell below 10%, restoring Young Poong's voting rights in Korea Zinc. However, on that day, SMH again acquired Young Poong's shares privately, surpassing the 10% threshold.
Korea Zinc is expected to again restrict Young Poong's voting rights at today's regular shareholder meeting. The meeting was scheduled to start at 9 a.m. but has yet to begin. There are also projections that conflicts between Young Poong, MBK, and Chairman Choi Yun-bum of Korea Zinc regarding exercising voting rights may disrupt the meeting.
The main agenda items for Korea Zinc's regular shareholder meeting include: ▲ an amendment to set a cap on the number of directors ▲ appointing 8 directors based on a block voting system with the premise that the cap is 19 persons ▲ appointing directors through a block voting system with no cap on the number of directors ▲ appointing committee members of the audit committee ▲ appointing an outside director (Seo Dae-won) to the audit committee.
The Young Poong and MBK alliance holds a stake of 40.97% in Korea Zinc, surpassing Chairman Choi's side at 34.35%. However, if Young Poong's voting rights are restricted, the situation is favorable for Chairman Choi's side. Korea Zinc plans to discuss the appointment of 8 new directors if the proposal to limit the number of directors to 19 passes. The National Pension Service, holding 4.5%, is currently supporting Korea Zinc.