Young Poong lost in the appeal trial regarding the provisional injunction requesting the suspension of the resolution of the Korea Zinc regular shareholder meeting. Young Poong has stated its intention to appeal immediately.
On the 24th, the 25-3rd civil division of the Seoul High Court dismissed all of Young Poong's requests for a provisional injunction to suspend the resolution of the regular shareholder meeting against Korea Zinc.
After the Seoul Central District Court dismissed the provisional injunction allowing the exercise of voting rights filed ahead of the regular shareholder meeting, Young Poong changed its application to request the suspension of the resolution of the regular shareholder meeting.
The Seoul High Court ruled, "At the time of the regular shareholder meeting, Korea Zinc's Australian subsidiary, Sunmetal Holdings (SMH), held 190,226 shares of Young Poong, and the creditor (Young Poong) held shares (Korea Zinc shares) as of the record date of the regular shareholder meeting, December 31, 2024. It is difficult to see that the debtor (Korea Zinc) limited the exercise of the creditor's voting rights under Article 369, Section 3 of the Commercial Act as unlawful."
It also considered that creating so-called cross shares was a legitimate means of defending management rights. The court stated that "the provision limiting the voting rights of cross-held shares (Article 369, Section 3 of the Commercial Act) is a rule intended to take defensive measures to prevent domination by other companies and ensure stability of management rights."
Young Poong's claims that the act of acquiring shares during the process of forming cross shares with Korea Zinc and its subsidiaries constituted breach of trust and violations of the Capital Market Act, among other things, as well as violations of the Fair Trade Act regarding prohibited circular investments, were all rejected.
The court added, "It is difficult to conclude that the debtor (Korea Zinc) limiting the creditor's voting rights regarding these shares constitutes abuse of the right of defense or a violation of good faith principle, thus rejecting the creditor's request."
With this ruling, Korea Zinc is now able to proceed without any setbacks on matters decided at the regular shareholder meeting, including setting a limit on the number of directors (no more than 19), appointing an outside director as the chair of the board, and changing the record date for dividends.
MBK Partners, a private equity firm, and Young Poong expressed their intention to appeal to the Supreme Court against the Seoul High Court's decision to reject the provisional injunction allowing the exercise of voting rights for Korea Zinc.
The side of MBK and Young Poong stated, "Limiting the shareholder rights legitimately exercised as a major shareholder of Korea Zinc through cross shares is an act that deceives the legal order" and "It is difficult to agree with the High Court's decision that there should be sufficient time to discuss whether the voting rights proposal is illegal in the main litigation."