Korea Zinc has won its appeal in a lawsuit against Youngpoong regarding the invalidation of share issuance. The court recognized that Korea Zinc's share issuance was necessary for business purposes.
The Seoul High Court's Civil Division 18-3, presided over by Judges Jin Hyun-min, Wang Jeong-ok, and Park Sun-jun, ruled on November 13 to overturn the lower court's decision that had favored Youngpoong and MBK Partners, dismissing their claim for invalidation. The court stated, "The share issuance in question is recognized as being in accordance with the articles of incorporation, and therefore cannot be deemed invalid."
This lawsuit arose from Korea Zinc's third-party allocation of shares to HMG Global, a joint venture of Hyundai Motor Group, in August 2023. At that time, Korea Zinc aimed to strengthen cooperation in the secondary battery materials sector and enhance its competitiveness in the global critical minerals supply chain.
Youngpoong challenged the legality of the share issuance, but the appellate court acknowledged Korea Zinc's business necessity, reaching a different conclusion than the lower court.
Korea Zinc stated that the ruling is significant as it clearly recognizes the company's rational management decisions aimed at securing future growth and strengthening strategic business cooperation.
The company added, "This share issuance was not merely a funding effort but a decision to enhance strategic cooperation with Hyundai Motor Group and improve global supply chain competitiveness. Youngpoong has filed lawsuits without acknowledging these business needs and strategic values, creating unnecessary legal uncertainties for normal management activities."
Following this ruling, Korea Zinc intensified its criticism of Youngpoong and MBK Partners.
Korea Zinc remarked, "This appeal serves as a wake-up call to Youngpoong and MBK, who have repeatedly initiated lawsuits and legal disputes to secure management rights. They must cease using strategic business cooperation as a means to engage in excessive legal battles."
The company emphasized, "Strategic decision-making in the critical minerals industry, which is directly linked to national economy and security, should not be hindered by wasteful disputes. We will continue to strive to become a key player in the global critical minerals supply chain and enhance our corporate and shareholder value."
Meanwhile, the courts have been alternating rulings in favor of both parties on specific issues. On November 12, the Seoul Central District Court's Civil Division 29, led by Judge Ko Seung-il, ruled in favor of Youngpoong and MBK in a lawsuit seeking to annul a shareholders' meeting resolution against Korea Zinc.
This lawsuit was initiated after Chairman Choi's side formed a reciprocal shareholding relationship with its Australian subsidiary, Sun Metal Holdings (SMH), limiting Youngpoong's voting rights ahead of last year's regular shareholders' meeting. The lower court accepted Youngpoong and MBK's claims, ruling that Korea Zinc could not apply reciprocal shareholding provisions to restrict existing shareholders' voting rights for management defense purposes.
* This article has been translated by AI.
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