In the ongoing management dispute at Korea Zinc, Chairman Choi Yoon-beom's side and the alliance of Youngpoong and MBK Partners (MBK) will engage in a vote battle at the extraordinary general meeting of shareholders on the 23rd. The key issue of this meeting is the introduction of cumulative voting. The outcome of whether or not the cumulative voting system passes will determine which side—Chairman Choi's side or the MBK alliance—will secure a majority on the board of directors.

Chairman Choi Yoon-beom's side at Korea Zinc is mobilizing its friendly shares, as well as the National Pension Service and shares from foreign institutional investors, to push for the passage of the cumulative voting system. On the other hand, the MBK alliance is aiming for a reversal by first blocking the cumulative voting and then taking control of the board based on shareholding ratios.

According to business circles on the 20th, the cumulative voting system became the first agenda item of the extraordinary general meeting of shareholders, proposed by Yumi Development, which is effectively a family-owned company of Chairman Choi Yoon-beom of Korea Zinc.

Cumulative voting is a system in which shareholders are given voting rights equal to the number of director candidates for each share they hold, allowing them to concentrate their votes on a single candidate or several candidates. If the cumulative voting system passes, shareholders can allocate their voting rights to a specific candidate or distribute them among multiple candidates. Directors are elected based on the highest number of votes received in order.

At this extraordinary general meeting of shareholders, there are a total of 21 director candidates (7 nominated by Korea Zinc and 14 by MBK). Shareholders holding one share will have 21 voting rights, which they can freely distribute among the director candidates they support.

As of the end of last year, the combined shareholding of Youngpoong and the MBK alliance in Korea Zinc was 46.72%. Chairman Choi's side holds approximately 39.16% when combining Korea Zinc's 19.95% and friendly shares of 19.21%. This means that Chairman Choi's family has about 7 percentage points less voting rights compared to the Youngpoong and MBK alliance.

Chairman Choi's side aims to overcome its disadvantageous shareholding ratio through the cumulative voting system and secure a majority on the board of directors. On the other hand, the Youngpoong and MBK alliance seeks to block the cumulative voting system and leverage its superior shareholding ratio to take control of the board.

This agenda item requires a special resolution, meaning it needs the approval of at least two-thirds of the shareholders present at the meeting. Additionally, the "3% rule" under the Commercial Act limits the voting rights of major shareholders to a maximum of 3%, meaning the voting rights of the MBK alliance will be capped at around 24%.

This could work against the Youngpoong and MBK alliance, which holds a large stake. The National Pension Service (4.51%) has already expressed support for the cumulative voting system, backing Chairman Choi's side. The outcome of this extraordinary general meeting is expected to be a pivotal turning point in the management dispute.

Meanwhile, MBK Partners has filed for an injunction with the Seoul Central District Court to prevent the appointment of directors based on the introduction of the cumulative voting system at Korea Zinc. The court's decision is expected to be delivered by the 21st.

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