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Supreme Court dismisses Young Poong’s final appeal, with all three court levels confirming the legality of Korea Zinc’s voting rights restrictions
Final judgment clears Korea Zinc management of all allegations concerning breach of trust and violations of the Fair Trade Act
Ruling secures the stability of Korea Zinc’s governance reforms and strengthens its defense against hostile takeover attempts
SEOUL, South Korea, April 3, 2026 /PRNewswire/ — The Supreme Court of Korea has delivered a final victory to Korea Zinc (KRX:010130), dismissing the final appeal for an injunction to suspend the effectiveness of the resolutions from last year’s regular general meeting of shareholders filed by Young Poong. The Supreme Court ruled on April 2 to uphold the original decision made by the Seoul High Court on June 24 last year.
This ruling re-confirms that Korea Zinc’s action to restrict Young Poong’s voting rights at the regular general meeting of shareholders held on March 28, 2025, was lawful. The measure was based on Article 369, Paragraph 3 of the Commercial Act, following the formation of cross-shareholdings after Korea Zinc’s Australian subsidiary, Sun Metals Holdings (SMH), acquired more than 10% of Young Poong’s shares. All three court levels, including the Supreme Court, have now recognized Korea Zinc’s actions as lawful.
In particular, the court found the lower court’s judgment to be correct in not recognizing charges such as breach of trust or violations of the Fair Trade Act by Korea Zinc’s management. The court ruled as justified the lower court’s determination that “it is difficult to see that Korea Zinc management committed breach of trust or violated the ‘Monopoly Regulation and Fair Trade Act (Fair Trade Act)’ by acquiring the creditor’s shares using SMH and Sun Metal Corporation (SMC) for personal purposes during the management dispute, or that SMC violated the ‘Financial Investment Services and Capital Markets Act (Capital Markets Act)’ in the process of distributing the creditor’s shares as a dividend in kind to SMH”.
Furthermore, the Supreme Court rejected all of Young Poong’s claims, including the argument that ‘the term “subsidiary” in Article 369, Paragraph 3 of the Commercial Act refers only to domestic companies, and SMH is not a joint-stock company’.
According to Article 369, Paragraph 3 of the Commercial Act regarding cross-shareholdings, if a company, its parent, and subsidiary—or a subsidiary alone—holds more than one-tenth of the total issued shares of another company, the shares of the company or parent company held by that other company have no voting rights.
The Supreme Court stated, “Looking at the relevant legal principles and records, the judgment of the lower court is just, and there is no error in misunderstanding legal principles regarding the restriction of voting rights of cross-held shares and abuse of rights, or omitting judgment, which influenced the ruling”.
It further specified, “The lower court interpreted ‘subsidiary’ in Article 369, Paragraph 3 of the Commercial Act to include SMH, a foreign company established under foreign law”. The court added, “The lower court’s judgment, based on the premise that the debtor’s subsidiary SMH is functionally equivalent to a joint-stock company under our Commercial Act, is just and contains no legal misunderstanding”.
As a result, Korea Zinc can proceed without setbacks with its governance improvements and measures to increase shareholder value, such as ‘setting a cap on the number of directors (19 or fewer)’ and ‘appointing an outside director as chairman of the board,’ which were resolved at last year’s regular general meeting.
Moreover, it was confirmed once again that the decisions of Korea Zinc’s management and the board to block the hostile takeover attempts by Young Poong and the private equity fund MBK Partners were measures taken within the legal framework.
Following the regular general meeting in March last year, Korea Zinc succeeded in preventing Young Poong and MBK from seizing control of the board at this year’s regular general meeting, backed by recommendations for approval from various domestic and international proxy advisory firms and overwhelming support from major North American pension funds and general shareholders.
A spokesperson from Korea Zinc stated, “Korea Zinc will continue to improve governance and enhance shareholder value to increase corporate value”. They added, “Based on this, we will continue to defend against hostile takeover attempt with the support of many shareholders and contribute to the national economy, security, and strengthening the U.S.-Korea alliance as a core company in the global critical minerals supply chain”.
