The Fair Trade Commission has launched a field investigation to determine whether Young Poong and its subsidiary YPC violated the Monopoly Regulation and Fair Trade Act.
According to the government and others on the 22nd, the Korea Fair Trade Commission (FTC) sent a Researcher to Young Poong's headquarters from the 17th to the 19th of this month to conduct a field investigation. The probe stems from a report by Korea Zinc, another subsidiary of Young Poong. In Oct., Korea Zinc asked the FTC to investigate, saying Young Poong, its parent company, set up YPC to create a new circular ownership link to thwart Korea Zinc's defense of its management rights. Young Poong is in a dispute with Korea Zinc over control of Korea Zinc.
In Mar., Young Poong established YPC with 100% equity and transferred all 5,262,450 shares (25.42% equity) of Korea Zinc it held to YPC as an in-kind contribution. As a result, the corporate governance structure of "Young Poong→Korea Zinc→Sun Metal Holdings (an overseas subsidiary of Korea Zinc)→Young Poong" changed, with YPC added between Young Poong and Korea Zinc, making Young Poong an indirect owner of Korea Zinc.
Korea Zinc reported to the Korea Fair Trade Commission (FTC) that Young Poong created a new subsidiary and engaged in affiliate investment that formed circular shareholding. For corporations subject to restrictions on mutual investment, like Young Poong, creating a new circular ownership link is prohibited under the Monopoly Regulation and Fair Trade Act.
Korea Zinc believes Young Poong established YPC to circumvent the Commercial Act's cross-shareholding restrictions. Under the Commercial Act, if the two companies each hold more than 10% equity in the other, they cannot exercise voting rights in the counterparty. Because, before YPC was established, Young Poong held Korea Zinc shares and Korea Zinc held Young Poong shares through its subsidiary, there was a strong possibility that voting rights would be restricted under the cross-shareholding rule. From Young Poong's perspective, which needs to secure as much of Korea Zinc's voting rights as possible, there was an incentive to resolve this relationship.
Young Poong says a circular ownership link was formed when Korea Zinc's management transferred Young Poong shares to Sun Metal Holdings early this year, and that it established YPC in response.