With about three weeks left before Korea Zinc's regular shareholders meeting, differences of opinion continue between the MBK Partners (MBK)–Young Poong side and Korea Zinc's current management over the meeting's agenda items.
The shareholder proposal submitted by the MBK–Young Poong side includes: ▲ appointment of six directors ▲ introduction of an executive officer system ▲ a 1/10 stock split ▲ conversion of voluntary reserves to retained earnings available for distribution ▲ codifying directors' duty of loyalty to all shareholders when issuing new shares ▲ appointment of the chair of the shareholders meeting by the chair of the board.
The sharpest point of contention is the number of directors to appoint. The MBK–Young Poong side argues for appointing all six directors whose terms expire at this meeting, while Korea Zinc is proposing five.
Korea Zinc argues that if six are appointed, all 19 director seats—the current maximum—would be filled, leaving no room to meet the amended Commercial Act's requirement, effective in September, to separately elect two audit committee members. In that case, it said an extraordinary shareholders meeting might have to be convened to satisfy legal requirements.
In response, the MBK–Young Poong side maintains that appointing six directors to match the number whose terms expire is appropriate.
The two sides also differ in their interpretation of the agenda item to codify directors' duty of loyalty in the articles of incorporation when issuing new shares. Korea Zinc, in line with the purpose of the Commercial Act amendment, is pushing for a general codification of "directors' duty of loyalty to shareholders" in the articles, while the MBK–Young Poong side argues for specifying directors' duty of loyalty in the event of new share issuance.
On this, Korea Zinc noted that codifying directors' duty of loyalty to shareholders even for third-party allotments in paid-in capital increases—which the Commercial Act recognizes as exceptions for managerial needs such as financial or technical reasons—runs counter to the intent of the law.