A court has ruled that Korea Zinc's actions to obstruct its largest shareholder from exercising voting rights at a shareholders' meeting were illegal. The court recognized the liability for illegal conduct and damages of Park Ki-duk, the Korea Zinc CEO who chaired the meeting at the time. At an extraordinary shareholders' meeting in January 2025, Korea Zinc restricted the voting rights of Young Poong, its largest shareholder, by forming a cross-shareholding relationship through an overseas affiliate.
According to legal circles on the 13th, the 17th Civil Division of the Seoul Central District Court (Presiding Judge Jang Ji-hye) recently accepted the plaintiff's claim in a damages lawsuit filed by Young Poong against Park. The court ordered Park to pay 100 million won in damages and related delay damages.
The court determined that it was an illegal act for Korea Zinc to form a cross-shareholding relationship using its overseas affiliate SMC at the January 2025 shareholders' meeting and to restrict the voting rights of Young Poong, its largest shareholder, on that basis. It found that Park, who chaired the meeting at the time, bore liability for the illegal act and for damages. While there have been injunction decisions assessing the illegality related to that shareholders' meeting, this is the first time a court has issued a formal ruling recognizing illegality and liability for damages.
The court found that Park and others participated in the illegal act for the purpose of defending the management control of Korea Zinc's existing management. Park was involved in forming the cross-shareholding and restricting voting rights while serving as Korea Zinc's CEO, an SMC director, and chairman of the shareholders' meeting. The court determined that although he could have recognized the possibility of infringing shareholder rights in the process of restricting the largest shareholder's voting rights, he ultimately blocked the exercise of those voting rights and thereby had a significant impact on the outcome of the meeting.
Young Poong and MBK said, "This ruling confirms that artificially restricting the largest shareholder's voting rights on the grounds of defending existing management's control cannot be permitted," adding, "By making clear that legal responsibility follows the management that led the illegal act, it will carry significant meaning for corporate governance and the protection of shareholder rights going forward."
