Korea Zinc management gains edge ahead of shareholder vote — Korea Herald
In Seoul, South Korea, the current management of Korea Zinc has gained an advantage ahead of Wednesday's extraordinary shareholders' meeting, according to an assessment by Korea Herald. Eight out of nine major Korean and international voting advisory firms recommended supporting Baek In-gyu, the board's candidate for independent director and audit committee member.
The meeting at the Mondrian Seoul Itaewon hotel is to elect four independent directors, as well as a separate independent director who will join the audit committee. The four regular independent director seats are expected to be split evenly between the sides: the Korea Zinc board and the alliance of MBK Partners and Young Poong have nominated two candidates each.
Vote for the auditor
The greatest attention is focused on the separate vote for the audit committee candidate. Most advisory firms recommended that shareholders not support Park Yoo-kyung, who was nominated by MBK Partners and Young Poong. They cited Baek In-gyu's qualifications as a certified public accountant in South Korea and the United States, as well as his experience at audit firms and in financial consulting.
The National Pension Service, which owns 5.44% of Korea Zinc shares, also said it intends to vote for Baek In-gyu. At the same time, the fund said it would also support Park Yoo-kyung.
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The 3% rule and court decision
The election outcome is affected by the so-called 3% rule provided for by South Korea's Commercial Code. It limits the combined voting rights of a controlling shareholder and affiliated persons to 3% when electing audit committee members. As a result, MBK Partners and Young Poong cannot use their entire combined shareholding in this vote.
The restrictions also apply to the side of company chairman Choi Yoon-beom, as Young Poong and Korea Zinc are still classified as belonging to the same corporate group. Consequently, the votes of institutional and minority shareholders carry greater weight.
The current management's position was also strengthened by a court decision rejecting MBK Partners' and Young Poong's petition to restrict the voting rights of Choi Yoon-beom and affiliated persons. The board currently includes nine directors nominated or supported by management and five directors nominated by MBK Partners and Young Poong.
If each side secures two of the four independent director seats, as expected, the board will consist of 11 directors nominated or supported by the current management and seven representatives of the MBK Partners and Young Poong side. The election of Baek In-gyu will increase the board to 19 members, although his status as an independent director does not necessarily mean an additional vote for management.
