Korea Zinc Audit Committee Selection: "Expertise vs. Independence" Tensions Rise Between Korea Zinc and Young Poong-MBK

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Korea Zinc and Youngpoong·MBK Partners are facing off once again over the selection of an audit committee member, which will be decided at the extraordinary general meeting of shareholders scheduled for September 9. While Korea Zinc emphasizes that major domestic and international proxy advisory firms highly evaluate the accounting and audit expertise of the board's nominee Baek Ingyu, the Youngpoong·MBK side argues instead that, based on the Korea ESG Standards Institute (KCGS) recommendation, independence from management and checks and balances hold greater importance.

Korea Zinc CI.

According to industry sources on August 30, seven major proxy advisory firms that have so far released analyses of the upcoming extraordinary shareholders’ meeting—including ISS, Glass Lewis, Egan-Jones Proxy Services, PIRC, Sustinvest, ESG Research Institute, and Korea Corporate Governance Service—have all expressed support for appointing the Korea Zinc board-nominated candidate, Baek Ingyu, as an independent director who will serve as a member of the audit committee.

In contrast, the Korea ESG Standards Institute has recommended supporting Youngpoong·MBK’s nominee, Park Yukyung, and voting against Baek. Based on the recommendations publicly disclosed so far, the support is split seven to one in favor of Baek compared to Park.

However, the qualification criteria for audit committee members emphasized by both sides are clearly diverging.

Korea Zinc is highlighting Baek’s expertise in accounting, auditing, and internal controls. Baek holds certified public accountant credentials in both Korea and the United States and has worked for around 30 years as a partner at Deloitte Anjin, where he was engaged in auditing and financial advisory work.

Korea Corporate Governance Service noted the absence of accounting professionals, such as certified public accountants, on Korea Zinc’s current audit committee, pointing to the need to strengthen expertise by appointing Baek. Glass Lewis also positively assessed Baek’s wide-ranging experience in accounting and internal controls.

Korea Zinc argues that continuity in management is crucial—particularly as the company is pushing forward major medium- to long-term projects such as the construction of an integrated smelter in the United States within the global supply chain reorganization. They assert that the broad support from domestic and international advisory firms for Baek reflects comprehensive consideration of both the expertise required for audit committee members and Korea Zinc’s current management challenges.

In contrast, Youngpoong·MBK contends that, rather than purely accounting expertise, it is more important for the audit committee member to independently oversee the use of company funds and major decision-making apart from management.

The Korea ESG Standards Institute, in an issue analysis report released on August 28, judged that this matter is not simply a comparison of accounting and audit expertise, but rather pertains to the substantive function of the audit committee in monitoring whether company funds have been used in the interests of all shareholders and managing potential conflicts of interest with management.

Specifically, the institute sees the need to examine not just accounting treatment, but also investment, usage of company funds, and governance structure regarding issues involving Korea Zinc Chairman Choi Yoonbeom—including investments related to the One Asia Fund, the acquisition of Ignio Holdings, and the large-scale paid-in capital increase.

Questions have also been raised about the check-and-balance function of the current audit committee. The Korea ESG Standards Institute cited instances where current audit committee members supported the large-scale paid-in capital increase despite shareholder rights concerns and took a “wait for external processes” approach when independent investigations were called for regarding One Asia Partners and Ignio Holdings.

The independence of Baek himself has also become an issue. The Korea ESG Standards Institute notes that Baek previously served as Chairman of the Board and ESG Center Director at Deloitte Group Korea, and that Deloitte Group participated in financial due diligence for major strategic projects for Korea Zinc, questioning whether Baek would be able to independently check management.

Conversely, Park's experience at a global asset management firm in analyzing financial performance and investment execution of portfolio companies, as well as overseeing responsible investment and corporate governance, was evaluated positively. It is believed Park possesses the competencies needed to judge whether major company investments and management decisions enhance corporate and shareholder value.

Youngpoong·MBK particularly emphasizes that the system of separate election of audit committee members and the “3% rule” are measures designed to ensure an independent audit committee member, free from controlling shareholder influence. Given the specifics of domestic regulations and Korea Zinc’s business relationships, they claim Park is more suitable for the audit committee’s role.

The Youngpoong·MBK side stated, “The Korea ESG Standards Institute’s recommendation highlights that the core issue at this extraordinary shareholders’ meeting is reinforcing the independence and effective oversight function of the audit committee.” They also insisted that independent investigations into key governance issues—including the One Asia Fund, Ignio Holdings, and the paid-in capital increase—are necessary.

Korea Zinc stated, “While continuously strengthening the independence and expertise of the board of directors, we will also respond to the reorganization of global core mineral supply chains and seamlessly execute future growth projects, including the integrated smelter in the United States, to enhance corporate value and shareholder value.”

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