![Korea Zinc CEO Park Ki-deok speaks at the company's extraordinary general meeting in January 2025. [Yonhap]](https://wimg.heraldcorp.com/news/cms/2026/07/13/news-p.v1.20260713.418ca6eb273d438690c819fb4009900a_P1.png)
A court has ruled in a first-instance decision that Korea Zinc acted unlawfully when it restricted the voting rights of its largest shareholder, Youngpoong, at an extraordinary general meeting in January 2025, citing cross-shareholding restrictions as the basis for the move.
Court finds Korea Zinc CEO Park liable for damages
According to legal and investment banking sources Monday, the Seoul Central District Court's Civil Division 17, presided over by Judge Jang Ji-hye, issued a partial ruling in favor of the plaintiffs on Thursday in a damages suit filed by Youngpoong and Korea Corporate Investment Holdings against Korea Zinc CEO Park Ki-deok. The court said Park "significantly violated the duty of care he was obligated to exercise as chair of the extraordinary general meeting."
The court found that Park acted unlawfully in his capacity as EGM chair by restricting Youngpoong's voting rights and pushing through the meeting's agenda items. It ordered Park to pay Youngpoong 100 million won ($66,400) in consolation damages, plus delay damages accrued on that amount.
The extraordinary general meeting held on Jan. 23, 2025, was a pivotal moment in the prolonged management control dispute between Korea Zinc on one side and the Youngpoong-MBK Partners alliance on the other. Both camps came to the meeting prepared to clash over agenda items including cumulative voting and the appointment of directors, each relying on the shares they had secured. Based on share counts at the time, the Youngpoong-MBK alliance held the stronger position.
To reverse that advantage, the camp led by Korea Zinc Chairman Choi Yun-beom played the "cross-shareholding restriction" card the day before the EGM. Korea Zinc sold a 10.33 percent stake in Youngpoong — held by Youngpoong Precision (now KJet Precision) and members of Choi's family — to Sun Metal Corporation (SMC), a granddaughter company controlled by Sun Metal Holdings (SMH), an Australian subsidiary wholly owned by Korea Zinc.
On the day of the EGM, Park, as chair, blocked Youngpoong from exercising its voting rights. His rationale was that a cross-shareholding loop had formed along the Korea Zinc–SMH–SMC–Youngpoong chain, which meant Youngpoong's 25.42 percent stake in Korea Zinc was subject to a voting restriction. Under the Commercial Act, if Company A — including its subsidiaries and granddaughter companies — holds more than 10 percent of Company B's shares, Company B cannot exercise voting rights over any shares it holds in Company A. The Youngpoong-MBK side demanded the meeting be suspended, but Park proceeded anyway.
Youngpoong and MBK argued that SMC, as a limited liability company under Australian corporate law, did not qualify as a company subject to cross-shareholding voting restrictions, and filed the lawsuit on the grounds that Park had infringed Youngpoong's shareholder rights.
The court first found that Youngpoong's voting rights could not be restricted on the basis of SMC's stake in Korea Zinc. The cross-shareholding restriction under the Commercial Act applies only to joint-stock companies, and the court determined that SMC more closely resembles a limited liability company under Australian law. The court ruled that Park's "act of restricting voting rights on the premise that SMC qualifies as a subsidiary under Article 369, Paragraph 3 of the Commercial Act was unlawful."
The court further found that Park, in his roles as EGM chair and as a director of both SMH and SMC, could have recognized the unlawfulness of the restriction but nonetheless proceeded to limit Youngpoong's shareholder rights. Park had served as a director of both SMC and SMH from July 2022 through the time of the EGM.
The court said Park bore a duty of care as EGM chair. It said "a shareholder's voting right is a fundamental right, and it cannot be stripped or restricted by the articles of incorporation or a general meeting resolution except where a separate provision of law applies," adding that Park was "obligated to carefully examine the grounds for restricting voting rights, give Youngpoong an opportunity to conduct its own legal review, and conduct the proceedings in a manner that would not result in an unlawful restriction of voting rights."
The court found, however, that Park had abandoned those obligations and conducted the meeting in a manner prejudicial to Youngpoong. It said Park "followed only the opinion of Korea Zinc's legal counsel and proceeded with the EGM. Rather than fulfilling his duty to protect shareholder rights and ensure a fair process, he restricted the voting rights of plaintiff Youngpoong — the largest shareholder with the ability to influence the vote — and proceeded with the EGM as intended from before the meeting, in order to defend the management rights of the incumbent executives."
Youngpoong and MBK Partners said the ruling "clearly confirms that artificially restricting the voting rights of the largest shareholder in the name of defending management control is impermissible, and that executives who lead such actions bear legal responsibility."
They added that the ruling "reaffirms that the principle of shareholder equality and the right to vote are the most fundamental rights under corporate law," and said it "sets an important standard that infringing on the voting rights of the largest shareholder under the pretext of defending management control cannot be justified — a ruling that carries significant implications for corporate governance and shareholder rights protection going forward."
Korea Zinc: ruling has no bearing on current governance
Korea Zinc said the ruling would have no impact on the company. After the January 2025 EGM, SMC transferred its Youngpoong stake to SMH. At the regular general meeting held in March of that year, the cross-shareholding voting restriction was applied again. The Youngpoong-MBK side challenged the move with an injunction, but the court ruled that the March 2025 regular general meeting had been conducted lawfully — a decision the Supreme Court upheld in April.
Korea Zinc said the ruling "does not negate the legitimacy of the purpose behind Korea Zinc's defense of its management rights" and that "the matter is confined to the January 2025 extraordinary general meeting." It added that "the injunction challenging the validity of the January 2025 EGM — which is related to this ruling — remains under deliberation at the Supreme Court. Korea Zinc has presented its case that SMC qualifies as a company of the same type as a joint-stock company under the Commercial Act and is working to have its lawfulness recognized."
Korea Zinc maintained that SMC does qualify as a joint-stock company and that Park's restriction of Youngpoong's voting rights at the January 2025 EGM on that basis was justified. "CEO Park applied the Commercial Act provisions after careful review of the grounds for treating SMC as a joint-stock company, and fully discharged his duties as chair of the general meeting," the company said. "Park intends to actively seek legal vindication by appealing the consolation damages ruling."
Korea Zinc said its "current management structure was established pursuant to the resolution of the regular general meeting in March last year," and that "disputes related to the January last year extraordinary general meeting, including this ruling, have no bearing on Korea Zinc's governance structure or management control."
park.jiyeong@heraldcorp.com
