Korea Zinc Wins Appeal Over New Share Issuance to Hyundai Motor Group... "Legitimate Business Activity Recognized"

Seoul High Court overturns lower court ruling, finds capital increase through third-party allotment lawful
Young Poong: "Share issuance violated articles of incorporation... reviewing further legal action"

Korea Zinc won the appeal in a lawsuit challenging the validity of its new share issuance through a third-party allotment to Hyundai Motor Group.

A view of Korea Zinc's Onsan Smelter. Korea Zinc

On November 13, the Seoul High Court overturned the lower court's ruling in the appeal of a lawsuit filed by Young Poong against Korea Zinc, ruling in favor of Korea Zinc. The court found that the share issuance was a measure taken within the scope necessary to achieve business objectives.

In a statement that day, Korea Zinc said, "The measure was recognized as legitimate and lawful because it was taken within the scope necessary to achieve business objectives," adding, "We respect and welcome the court's decision."

Korea Zinc continued, "We have consistently explained that the decision was made to strengthen strategic cooperation with Hyundai Motor Group and enhance the competitiveness of our global supply chain." It added, "Young Poong ignored these business needs and strategic value, filing a lawsuit that has created unnecessary legal uncertainty for our ordinary business operations."

Korea Zinc also criticized Young Poong and MBK Partners, saying, "This ruling sends a warning to Young Poong and MBK, which have repeatedly filed lawsuits and pursued legal disputes in an effort to secure management control." The company urged them to "stop pursuing excessive legal battles and using even strategic business cooperation as a means in their dispute over management control."

Young Poong, by contrast, expressed regret and objected to the appellate court's decision. In a statement that day, it said, "The third-party allotment of new shares to HMG Global was an unlawful act that clearly contradicted the wording and requirements set out in the company's articles of incorporation," adding, "We deeply regret that the court reached a different conclusion from the first-instance court."

Young Poong also pointed out that Korea Zinc complied with the provisions of its articles of incorporation when it issued new shares through a third-party allotment to the U.S.-based Crucible joint venture in December 2025. It argued, "The requirements for issuing new shares through a third-party allotment, as recognized by the first-instance court, and the importance of protecting shareholders' rights were not adequately reflected in the appellate ruling."

Young Poong said, "This ruling is difficult to accept even in light of the purpose of the amended Commercial Act, which requires all shareholders to be treated fairly." It added, "Once we receive the written judgment, we will carefully review the grounds for the decision and promptly take any necessary further legal action."

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