The management dispute between Korea Zinc and MBK Partners & Youngpoong is intensifying as both sides prepare for a shareholder meeting on September 9, where they will again face off over the election of four independent directors and one independent audit committee member.
According to industry sources, Korea Zinc will hold the extraordinary general meeting at 10 a.m. at the Mondrian Hotel in Yongsan, Seoul.
The agenda includes amendments to the articles of incorporation to expand the separate election of audit committee members, as well as the election of four independent directors under a cumulative voting system and one independent director based on the 3% voting rights limit for major shareholders.
Currently, Korea Zinc's board consists of nine members aligned with Chairman Choi Yoon-bum and five from MBK and Youngpoong. Following a court decision in June that suspended the duties of independent directors, former outside directors Lee Sang-hoon, Lee Hyung-kyu, Kim Kyung-won, and Lee Jae-yong resigned, necessitating the election of new independent directors.
There are four candidates for the independent director positions: Seo Eun-sook, a professor at Sangmyung University, and Lee Hyung-kyu, an emeritus professor at Hanyang University, are aligned with Chairman Choi, while Lee Jun-bong, a professor at Sungkyunkwan University, and attorney Shim Hye-seop are backed by MBK and Youngpoong. Given the similar voting power of both sides, it is expected that each will secure two allies on the board.
The critical issue is the position of the audit committee member, which oversees the company's accounting and internal controls. Securing this position is as vital as obtaining the chairmanship in the context of the ongoing management dispute.
The election of the audit committee member will be governed by the '3% rule,' which limits the voting rights of the largest shareholders and related parties to a maximum of 3%. This rule applies not only to MBK and Youngpoong but also to major shareholders of Korea Zinc, including Hanwha Group and LG Chem.
Consequently, MBK and Youngpoong are demanding that the definition of related parties for Chairman Choi be expanded. For instance, they argue that P23 Partners, established by Meritz Financial Group to acquire a 2.01% stake in Korea Zinc held by Bain Capital, should be considered a related party of Chairman Choi and thus should not be allowed to exercise separate voting rights at the upcoming meeting.
As a result, the votes of institutional investors, foreign shareholders, and minority shareholders are expected to play a significant role in determining the outcome of the independent audit committee member's election. The opinions of advisory firms will be crucial in influencing these decisions. If the candidate backed by Korea Zinc is elected, the board is likely to maintain a 12 to 7 advantage for Chairman Choi in the near term.
Currently, Baek In-kyu, a partner at Deloitte Anjin, is competing against Park Yoo-kyung, former head of the emerging markets investment division at APG Asset Management, both of whom have been recommended by Korea Zinc and MBK & Youngpoong, respectively. Global advisory firms ISS and Glass Lewis have expressed support for Baek's candidacy.
Additionally, five domestic and international advisory firms, including Egan-Jones Proxy Services, PIRC, Sustainalytics, ESG Research Institute, and Korea's Proxy Advisory, have also endorsed Baek, showing support for Chairman Choi and the Korea Zinc board's decisions.
In contrast, the Korea ESG Standards Institute is the only firm to support Park's candidacy, siding with MBK and Youngpoong.
Industry analysts interpret the advisory firms' decisions as a signal that supporting Chairman Choi is crucial for enhancing Korea Zinc's corporate value, particularly as the establishment of a smelter in the U.S. is expected to proceed smoothly.
* This article has been translated by AI.
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