MBK sides argue that according to corporate law, shareholder proposals must be submitted six weeks in advance… Therefore, requests based on pre-approval are not valid.
(Seoul=News1) Reporter Choi Dong-hyun: Korea Zinc (010130) has affirmed that resolutions regarding the introduction of a cumulative voting system and director appointments through this system, set as agenda items for next month’s extraordinary shareholders’ meeting, are both valid as they were resolved following proper legal procedures.
Korea Zinc released a statement on the 25th, arguing that there are numerous precedents from other companies where shareholder proposals, assuming amendments to the articles of incorporation, have proceeded at shareholder meetings without any legal issues or defects.
The company referenced a Supreme Court ruling from June 2007, stating, “The effectiveness of a shareholder meeting resolution typically occurs at the time of the meeting,” and added, “Even if a listed company’s articles of incorporation exclude cumulative voting, it is a lawful act under corporate law for shareholders to propose an amendment to introduce it.”
They further emphasized, “Conditional cumulative voting, based on the presumption of article amendment approval during the shareholder meeting, is both legal and lawful according to legal experts.”
Korea Zinc cited precedents where conditional items were set at shareholder meetings, including Hanmi Science’s extraordinary meeting in November last year, Hanjin KAL’s regular meeting in March 2021, and Sambutokon’s extraordinary meeting in November 2018.
Previously, on the 23rd, Korea Zinc’s board of directors confirmed agenda items for the extraordinary shareholders’ meeting on the 23rd of next month, including limiting the board to 19 directors and introducing a cumulative voting system.
The cumulative voting system grants each shareholder as many votes per share as there are directors to be elected when appointing directors. For instance, if 10 directors are to be elected, each share carries 10 votes, which can be allocated entirely to a single director candidate.
This system is considered favorable to minority shareholders rather than majority ones. Even if MBK Partners and Young Poong, contending for management control with Korea Zinc, secure a majority of shares in terms of voting rights, they may still fail to control the majority of the board.
As Korea Zinc set the cumulative voting system as an agenda item for the extraordinary meeting, MBK Partners and Young Poong criticized this on the previous day, calling it a trick by Chairman Choi Yoon-beom to protect his managerial rights under the guise of protecting minority shareholders. They cited a legal expert to argue that Yumie Development’s (with 88% shares held by Choi’s family) proposal for cumulative voting lacks validity since Korea Zinc’s articles of incorporation already exclude cumulative voting, and corporate law stipulates that agenda requests through cumulative voting must be submitted six weeks before the meeting date.
Thus, MBK Partners and Young Poong claim that while Yumie Development’s request to amend the articles of incorporation for cumulative voting is valid, the request for director appointments through this voting system, contingent upon approval, is not valid.
Regarding this issue, Korea Zinc countered on the same day, saying, “The corporate law requirement for shareholder proposals to be submitted six weeks before the meeting ensures that the company has sufficient time to prepare,” and added, “Yumie Development’s shareholder proposal was also notified on the 10th, six weeks prior to the extraordinary shareholders’ meeting, aligning with corporate legal regulations, thus there are no procedural issues.”