The Fair Trade Commission has launched an investigation into Korea Zinc, which is suspected of illegal circumvention through circular shareholding.
According to the industry, the day before on the 27th, the Fair Trade Commission sent researchers to the Korea Zinc headquarters in Jongno, Seoul, to secure materials related to the circular shareholding.
The Fair Trade Commission is examining whether Chairman Choi Yoon-beom of Korea Zinc created a circular shareholding chain using overseas subsidiaries and whether such actions constitute violations of the law.
Earlier in January, Chairman Choi transferred 10.3% of equities in Young Poong, the parent company, to the subsidiary Sun Metal Corporation (SMC), headquartered in Australia, amid conflicts over management rights with the private equity firm MBK Partners. This was to eliminate Korea Zinc’s voting rights against Young Poong, which partnered with MBK Partners. Under the Commercial Act, a company that holds more than 10% of equity in another company cannot exercise voting rights for that company.
Through this equity transfer, a circular shareholding chain was created that links Korea Zinc → Sun Metal Holdings → Sun Metal Corporation → Young Poong → Korea Zinc. Young Poong, which is a corporate group restricted from cross-shareholding under the Fair Trade Act, should not form a new circular shareholding chain.
Young Poong has filed a report with the Fair Trade Commission, arguing that Korea Zinc's actions constitute a circumvention of the intent of related provisions in the Fair Trade Act, prompting the investigation.
A Fair Trade Commission official stated, “We cannot confirm the matter under investigation,” and added, “If violations are confirmed, we will impose strict sanctions.”