KZ Precision, a shareholder of Young Poong, said on the 4th that it had made a shareholder proposal to Young Poong's board of directors ahead of the company's annual general meeting. The proposals include expanding the separate election of audit committee members, shareholder returns, elevating the ESG committee, and acquiring and canceling treasury shares.
KZ Precision stated accordingly that Young Poong faces issues such as an undervalued share price, deteriorating earnings, environmental pollution and safety problems surrounding the Seokpo Smelter, accounting problems including failure to recognize impairment losses related to environmental pollution that are under investigation by regulators, and concerns about the independence of outside directors.
Expanding the separate election of audit committee members is a proposed amendment to the articles of incorporation to increase the current single separately elected audit committee member to two. Through this, the proposal says the company should proactively reflect the intent of the amended Commercial Act, which takes effect in September this year, and enhance management transparency.
The shareholder return agenda centers on acquiring an appropriate amount of treasury shares this year and canceling all acquired shares by year-end. It also includes amending the articles of incorporation to introduce in-kind dividends and establish a basis for quarterly dividends.
KZ Precision argues that a cash-centered dividends policy alone makes it difficult to sufficiently meet shareholder return demand, and given the need to consider the company's financial condition and investment capacity, the company should be allowed to pay dividends not only in cash or stock but also in other assets such as other companies' shares. Young Poong holds 25.42% equity in Korea Zinc.
The agenda to elevate the ESG committee centers on upgrading it to a board-level committee so that, within the board, independent outside directors can set Young Poong's ESG goals and monitor and review their implementation.
KZ Precision initially asked Young Poong to respond to the shareholder proposals by the 20th of last month, but Young Poong has requested a specific re-explanation to determine whether the acquisition and cancellation of treasury shares qualifies as a lawful shareholder proposal.
KZ Precision said, "We clearly presented the legal basis for acquiring and canceling treasury shares, and the remaining shareholder proposal items also do not violate relevant laws and the articles of incorporation," adding, "We hope Young Poong will take a forward-looking stance and place them on the agenda of the general meeting of shareholders."
KZ Precision is a shareholder holding 680,590 common shares of Young Poong (3.76%) and is a company chaired by Choi Chang-gyu, the uncle of Korea Zinc Chairman Choi Yoon-beom, who is engaged in a management rights dispute with Young Poong. Although classified as an affiliate of the Young Poong Group, the Korea Zinc family holds more equity than the Young Poong owner family.