언론보도

Young Poong and MBK Partners, the largest shareholders of Korea Zinc, announced on the 16th that they have filed for an injunction with the Seoul Central District Court to prohibit the third-party allotment capital increase approved by the company’s board of directors.

The shareholders emphasized that the injunction should not be interpreted as opposition to Korea Zinc’s plan to build a smelter in the United States. “Our action does not target the U.S. smelter project itself,” they said. “The injunction is necessary because the new share issuance was structured to preserve Chairman Yun-Birm Choi’s control in the midst of an ongoing governance dispute—an act that is strictly prohibited under the Commercial Act and consistently rejected by Supreme Court precedent.”

On the 15th, Korea Zinc’s board approved several agenda items related to the U.S. facility. Although those items were not subject to sufficient review, Young Poong and MBK Partners reiterated that they do not oppose the project itself, and therefore did not include those resolutions in the court filing.

In their injunction request, the shareholders highlighted that Article 418(2) of the Korean Commercial Act allows third-party allotments only when objectively required for a legitimate business purpose. Courts have repeatedly held that during a control dispute, issuing new shares to a specific party in a manner advantageous to incumbent management is impermissible. Young Poong and MBK Partners stated, “Allocating new shares to a friendly third party to reinforce Chairman Choi’s position during an active governance conflict lacks legal basis and severely distorts shareholder rights and the company’s governance structure.”

They also noted that the joint venture receiving the third-party allotment includes funding from Korea Zinc’s current or potential U.S. customers, meaning the issuance cannot be characterized simply as an allotment to a U.S. government entity.

The shareholders raised serious procedural concerns as well. Korea Zinc scheduled the board meeting—covering approximately KRW 11 trillion worth of investments and guarantees—for 7:30 a.m. on Monday, the 15th, but notified directors only after 5 p.m. on Friday the 12th. Directors were not provided with key materials in advance. Despite the far-reaching impact on Korea Zinc’s governance, long-term capital structure, and investment strategy, the items were approved collectively with virtually no time for due diligence. Young Poong and MBK described this as a potential breach of directors’ duty of care and fiduciary obligations.

They further argued that Korea Zinc’s choice of a third-party allotment demonstrates that the issuance was designed not to raise capital but to protect the chairman’s control. Young Poong and MBK had already made clear their willingness to participate in a shareholder-allotted rights offering, which would have been the most fair and transparent financing method. Instead, Chairman Choi and management opted for a structure that would deliver favorable voting shares to selected outside parties, reshaping the company’s control dynamics in their favor.

The shareholders stressed the urgency of the court’s intervention. If the new shares are issued as planned, any subsequent judicial ruling declaring the issuance invalid would be ineffective, as the shareholder vote would already have taken place under an altered capital structure. “Once governance distortions of this kind occur, they are effectively irreversible,” the filing noted.

Young Poong and MBK also underscored that the U.S. government has already secured the rights it needs for the project—including warrants and priority offtake rights—through the local U.S. entity involved. The issue, they said, arises from Chairman Choi’s attempt to use the smelter project as a justification for a broad third-party allotment involving private U.S. corporations in addition to public-sector participants, in a manner that would influence the Korean governance dispute.

“The problem is not the overseas investment itself,” they stated. “The problem is the attempt to pair that investment with a third-party allotment designed to preserve managerial control—an archetypal governance distortion prohibited by law. Despite the availability of alternative financing methods that would not affect control dynamics, the company chose instead to use this moment for Chairman Choi’s benefit.”

Young Poong and MBK Partners concluded, “As Korea Zinc’s largest shareholders, we will act in accordance with legal and market principles to protect shareholder rights and ensure that Korea Zinc’s governance structure is restored to a sound and lawful state.”