Korea Zinc’s aim to change its corporate charter which it claims is needed to pursue future business opportunities has met an aggressive response from Young Poong Corporation, the largest shareholder of the smelter.
Korea Zinc, founded in 1974, has been co-managed by Korea Zinc’s Choi family and Young Poong’s Chang family so far.
But on Monday, Korea Zinc proposed a change to its corporate charter to allow the issuance of new shares to third parties based abroad.
The smelter has proposed the motion for a vote in the regular shareholders’ meeting to be held on March 19 and used its allegedly high shareholder return rate for the past ten years of 68% when asking for shareholder vote in favor of the motion. The management at Korea Zinc argues the charter change is needed for it to secure funds to spend on business opportunities.
On Tuesday, Young Poong countered and claimed that the issuance of new shares to third parties could be used for the personal benefit of Korea Zinc’s management.
It also said the high shareholder return rate was a result of the indiscreet issuance of shares and the drop in profits of the smelter.
The attempt to change the charter without consulting Young Poong, the business partner to Korea Zinc, was a breach of trust, it also added.
Young Poong currently holds a 32% stake in Korea Zinc; management of the smelter needs over two-thirds of shareholders in attendance at next month’s meeting and over one-third of issued shares to vote in favor of the motion for it to pass.
Young Poong is facing difficulties in its other electronics parts business and needs dividends from Korea Zinc to maintain operations, sources said.
