Korea Zinc 'Alleged Illegal Defense of Voting Rights through Overseas Circular Shareholding'... Fair Trade Commission Initiates Investigation

[Financial News] The Fair Trade Commission has launched an investigation into Korea Zinc's alleged 'defense of voting rights through overseas circular shareholding'.
According to related industries on the 27th, the Fair Trade Commission sent investigators to Korea Zinc's headquarters on the 26th to secure materials related to circular shareholding.
The Fair Trade Commission is reportedly looking into whether Chairman Choi Yun-beom of Korea Zinc's formation of a circular shareholding link using overseas subsidiaries constitutes an illegal act under the Fair Trade Act.
Chairman Choi's side transferred 10.3% of Young Poong shares to the Australian-based grandchild company Sun Metal Corporation (SMC) the day before Korea Zinc's extraordinary general meeting in January. This formed a circular shareholding link of 'Korea Zinc→Sun Metal Holdings→Sun Metal Corporation→Young Poong→Korea Zinc'.
Under the current Commercial Act, companies holding more than 10% of each other's shares cannot exercise voting rights in the other company. As a result, Young Poong's 25.4% stake in Korea Zinc also lost voting rights, allowing Chairman Choi to maintain control.
The Fair Trade Act prohibits mutual shareholding through domestic affiliates. This means that Korea Zinc, a business group subject to mutual shareholding restrictions, cannot form new circular shareholding links. However, there is no explicit regulation on mutual shareholding using overseas affiliates. Young Poong reported to the Fair Trade Commission that forming such a circular shareholding link undermines the purpose of the relevant provisions of the Fair Trade Act and constitutes an illegal act.
After reviewing the report, the Fair Trade Commission has started an on-site investigation and has officially launched an investigation. A Fair Trade Commission official stated, "We cannot confirm the matters under investigation."


mirror@fnnews.com Kim Kyuseong Reporter