Court: “Korea Zinc must annul AGM resolutions passed after voting rights were restricted” ... Youngpoong and MBK win at first instance

[Financial News] A court has ruled that Korea Zinc must annul resolutions passed at last year’s annual shareholders’ meeting after the voting rights of the Youngpoong–MBK Partners side were restricted.
On the 12th, the Seoul Central District Court’s Civil Division 29, presided over by Judge Ko Seung-il, ruled in favor of Youngpoong and MBK Partners in their suit against Korea Zinc seeking to annul the resolutions of the 2025 annual shareholders’ meeting. Resolutions passed at Korea Zinc’s annual meeting last March—including an amendment to the articles of incorporation capping the number of directors and the appointment of directors—were subject to annulment because Youngpoong’s voting rights had been excluded.
Before this, as the management-control dispute was underway, the side of Korea Zinc Chairman Choi Yun-beom arranged for its grandchild company, Sun Metal Corporation (SMC), to acquire at least 10% of Youngpoong, creating a circular shareholding structure ahead of an extraordinary shareholders’ meeting in January last year. It then invoked Article 369(3) of the Commercial Act, which restricts voting rights in cases of cross-shareholding, to restrict the voting rights attached to Youngpoong’s approximately 25.4% stake in Korea Zinc.
After a court partially granted Youngpoong and MBK’s application for an injunction suspending the effect of the extraordinary shareholders’ meeting, Choi’s side again restricted Youngpoong’s voting rights. Just before the annual meeting opened in March last year, it established a new cross-shareholding relationship by distributing in kind to its Australian subsidiary, Sun Metal Holdings (SMH), the 10.3% stake in Youngpoong held by SMC.
The panel said, “We did not accept the legal arguments concerning the requirements for cross-shareholding to be established in this case,” adding, “Existing shareholders’ voting rights cannot be restricted by applying cross-shareholding rules for the purpose of defending management control.”
In April this year, the Supreme Court recognized SMH’s status as a subsidiary and dismissed the further appeal filed by Youngpoong and MBK against the injunction ruling. By contrast, the court hearing the main case effectively reached the opposite conclusion, ruling that restricting voting rights to defend management control was unlawful.
Korea Zinc said it would appeal immediately. Since a ruling by a higher court will take time, the decision is likely to have a limited immediate impact on the makeup of the management team.
However, if this first-instance ruling is upheld by a higher court, the cap of 19 directors in Korea Zinc’s articles of incorporation will lose effect. There is also speculation that Youngpoong and MBK, which hold larger stakes, could gain an advantage in securing seats on the board.

[email protected] Lee Chang-hoon Reporter