Korea Zinc said it will immediately appeal a first-instance ruling that annulled its March 2025 regular shareholders' meeting resolutions. It argues that the court's refusal to recognize the voting restriction, on the grounds that it was meant to defend management control, conflicts with a Supreme Court decision.
Civil Division 29 of the Seoul Central District Court (presiding judge Ko Seung-il) ruled in favor of the plaintiffs on the 12th in a suit filed against Korea Zinc by the Young Poong-MBK Partners alliance. In a statement the same day, Korea Zinc said it "will immediately appeal the first-instance ruling in this shareholders' meeting resolution annulment suit."
The court treated the resolutions on amending the articles of incorporation and electing directors and audit committee members, which were passed while Young Poong's voting rights were blocked, as subject to annulment. It held that a reciprocal shareholding provision cannot be used to freeze an existing shareholder's voting rights for the purpose of defending management control.
Under the Commercial Act, when one company holds more than 10% of another company's shares, the voting rights the latter holds in the former are restricted. In January last year, Korea Zinc had its Australian grandchild company Sun Metals Corporation (SMC) acquire a stake of 10% or more in Young Poong. After a court partially suspended the effect of the extraordinary shareholders' meeting resolutions, it moved SMC's 10.3% stake in Young Poong to Sun Metals Holdings (SMH). On that basis, it blocked Young Poong from exercising its voting rights at the regular shareholders' meeting as well.
Korea Zinc argued that the reciprocal shareholding provision must be applied uniformly according to objective requirements and that "it is not a matter to be judged by taking subjective intent into account." It also cited the Supreme Court's First Division, which on April 2 dismissed an appeal filed by the Young Poong-MBK side in an injunction case over voting rights at the same shareholders' meeting. It plans to rely on this legal principle to explain the flaws in the first-instance ruling on appeal.
The Young Poong-MBK side said, "The court has once again put the brakes on the act of arbitrarily stripping the largest shareholder of its voting rights by creating a reciprocal shareholding structure with overseas affiliates." It demanded that Chairman Choi Yun-beom's side take responsibility for infringing shareholder rights. The management dispute between the two sides began in September 2024.