Young Poong and MBK Withdraw Lawsuit to Nullify Korea Zinc's Extraordinary Shareholders’ Meeting Resolution: "Objectives Achieved"

All Four Outside Directors of Korea Zinc Resign
"All Objectives of the Lawsuit Have Been Achieved"
Pursuit of Accountability for Unlawful Mutual Shares Continues
Focus Remains on Civil and Criminal Liability of Choi Yunbeom and Park Kideok

On August 4, it was announced that Young Poong and MBK Partners have decided to withdraw their lawsuit seeking to nullify the resolution of Korea Zinc’s extraordinary shareholders’ meeting held in January 2025. They stated that the objectives they sought to achieve through the lawsuit had all been accomplished.

Recently, Young Poong and MBK Partners informed the court of their intent to withdraw the lawsuit; subsequently, on July 30, the court issued a settlement recommendation as part of a process to resolve relations with other shareholders in one step. This procedure involves the court presenting a settlement proposal, which becomes final and has the same effect as a judgment if there are no objections within a specified period.

All Outside Directors Resign and Stock Split Executed... Background to Withdrawal of the Lawsuit

The lawsuit originated from the extraordinary shareholders’ meeting of Korea Zinc held on January 23, 2025. On the eve of the meeting, Korea Zinc, through its Australian affiliate SMC, purchased more than 10% of Young Poong’s shares. According to the Commercial Act, if Company A owns more than 10% of Company B, the shares Company B holds in Company A are deprived of voting rights (Mutual Shares Restriction). Based on this provision, Korea Zinc conducted the shareholders’ meeting while blocking all voting rights attached to the shares of Korea Zinc owned by its largest shareholder, Young Poong.

On March 7 of the previous year, the Seoul Central District Court ruled that CEO Park Kideok’s restriction on Young Poong’s voting rights as the chair of the meeting was unlawful, and issued an injunction suspending the effectiveness of the meeting’s resolution as well as the execution of duties by the outside directors appointed at that meeting. Although Korea Zinc objected, the court’s decision was maintained, and the resolutions in question have remained suspended and are now being addressed in the substantive trial.

The four outside directors whose authority had been suspended by the injunction have recently all resigned. Their voluntary departure has paved the way to restore the board, which had been distorted due to the illegal resolutions, and thus, in Young Poong and MBK Partners' view, there is no longer any real benefit to seeking the annulment of their appointments.

The remaining issue in the lawsuit was the 'stock split and the related amendments to the articles of incorporation.' A stock split is a measure to divide each share into multiple shares, thereby lowering the price per share. It was judged that executing the stock split as is, rather than canceling it due to procedural flaws, would benefit minority shareholders.

Young Poong and MBK Partners commented, "The share price had climbed above 1 million won, making it difficult for average investors to participate," adding, "We expect the stock split to help reduce share price volatility and enhance shareholder value."

Pursuit of Accountability for Unlawful Mutual Shares Continues... Choi Yunbeom and Park Kideok Targeted for Civil and Criminal Responsibility

However, separately from the lawsuit withdrawal, Young Poong and MBK Partners have made it clear that they will continue to pursue both civil and criminal liability, as well as responsibility for violation of the Fair Trade Act, against directors Choi Yunbeom and Park Kideok for unlawfully restricting the voting rights of the largest shareholder by using overseas affiliates to create mutual shares through questionable methods. Both the first and second instance courts handling the injunction case had found that restricting voting rights on grounds of mutual shares was unlawful.

Young Poong and MBK Partners stated, "The decision to withdraw the lawsuit was made after a comprehensive review of the merits regarding the outside directors and the stock split," adding, "However, the responsibility for unlawfully restricting the voting rights of the largest shareholder is a separate matter, and we will continue to pursue all relevant legal liabilities."

This content was produced with the assistance of AI translation services.