The Supreme Court upheld a lower court's ruling that Korea Zinc's restriction of Youngpoong's voting rights during a temporary shareholders' meeting last January was illegal.
On the 31st, Youngpoong and MBK Partners reported that the Supreme Court's third division, led by Justice Lee Heung-koo, made this determination on the 28th in a ruling regarding Korea Zinc's appeal against a provisional injunction.
Chairman Choi Yoon-beom of Korea Zinc's side had restricted Youngpoong's voting rights at the temporary shareholders' meeting by allowing Korea Zinc's subsidiary, Sun Metal Corporation (SMC), to acquire more than 10% of Youngpoong's shares, thereby creating a circular investment structure.
According to Article 369, Section 3 of the Commercial Act, if Company A and its parent company, subsidiaries, or affiliates hold more than 10% of Company B's shares, the voting rights of Company B in Company A are nullified. This was used to limit the voting rights of Youngpoong and MBK at Korea Zinc.
In March of that year, the Seoul Central District Court partially granted the injunction filed by the Youngpoong and MBK alliance, ruling that the restriction of Youngpoong's voting rights was unjust.
The Youngpoong and MBK alliance stated, "The Supreme Court has made a clear judicial ruling that Chairman Choi Yoon-beom of Korea Zinc engaged in illegal actions to defend management rights by forming a circular investment structure using overseas affiliates, thereby limiting the voting rights of the largest shareholder, Youngpoong. This decision will be an important consideration for the Fair Trade Commission's review of whether there was an attempt to undermine domestic legal order and shareholder rights through overseas affiliates."
In response, Korea Zinc argued, "The focus of this decision is whether SMC can be considered a company similar to a stock company under the Commercial Act during the temporary shareholders' meeting last January. The MBK and Youngpoong side has distorted and exaggerated the ruling as if the judiciary had deemed Korea Zinc's management system and governance structure, as well as the overall defense of management rights using overseas affiliates, to be illegal."
Meanwhile, Korea Zinc and Youngpoong and MBK are continuing their war of words ahead of Korea Zinc's temporary shareholders' meeting scheduled for September 9. A fierce vote battle is expected over the appointment of one audit committee member at this meeting.
* This article has been translated by AI.
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