The management dispute between Youngpoong and Korea Zinc continues as Youngpoong has lost a shareholder derivative lawsuit against Korea Zinc's Chairman Choi Yoon-beom and other directors.
On October 22, the Seoul Central District Court's Civil Division 30, led by Judge Kim Seok-beom, ruled in favor of the defendants in a lawsuit where Youngpoong sought approximately 837 billion won in damages.
The court determined that the Korea Zinc board acted within its rights after reviewing legal advice and considering funding options through premium stock buybacks. The court concluded that the board's decision was not significantly unreasonable and did not violate fiduciary duties or the company's articles of incorporation.
Youngpoong filed the lawsuit in November 2024, claiming that the Korea Zinc directors failed to fulfill their fiduciary duties, resulting in damages of 837 billion won to the company. A shareholder derivative lawsuit allows shareholders to pursue claims on behalf of the company when the board neglects its responsibilities.
Youngpoong argued that Korea Zinc conducted a buyback at 890,000 won per share, while the stock was valued at approximately 560,000 won, leading to significant losses based on the difference multiplied by the number of shares acquired, totaling 2,043,000 shares.
In October 2024, Youngpoong sought a court injunction to halt the buyback process, but the court dismissed the request. On October 30 of the same year, Korea Zinc announced a plan for a public offering worth about 2.5 trillion won, which was later withdrawn on November 13 due to regulatory demands and market backlash.
Following the ruling, Youngpoong announced its intention to appeal, stating, "The illegal management actions that turned Korea Zinc into a personal vault for Chairman Choi Yoon-beom, while imposing a massive debt burden, cannot be justified as 'director discretion.' We will appeal immediately to restore the damaged shareholder value and rights."
Youngpoong also claimed that Korea Zinc took on over 1.6 trillion won in debt to defend its management rights and emphasized its commitment to holding Chairman Choi and the management accountable for the public offering that followed the buyback, which it views as an attempt to shift the debt burden onto ordinary shareholders.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.