Court Overturns Korea Zinc Meeting Resolutions Over Voting Curbs on Young Poong

November ruling puts board decisions under pressure

The Seoul Central District Court on November 12, 2026, ordered the cancellation of resolutions adopted at Korea Zinc's March 2025 annual shareholder meeting, ruling against a voting restriction used during the battle for control of the world's largest refined zinc smelter.

The court's 29th Civil Division, presided over by Judge Go Seung-il, sided with Young Poong and private equity firm MBK Partners. Their alliance challenged decisions taken after Korea Zinc used a shareholding arrangement involving Australian subsidiaries to prevent Young Poong from exercising its voting rights.

The decisions affected include a limit on the number of directors and appointments to the board and audit committee. Those positions matter because directors oversee management, while the audit committee scrutinizes financial reporting and company oversight.

Korea Zinc said it would appeal immediately. The company argues that the judgment conflicts with Supreme Court precedent and an April 2, 2026, decision rejecting the alliance's request for temporary relief over voting rights at the same annual meeting.

The dispute centers on a striking gap between share ownership and board control. Young Poong and MBK together form Korea Zinc's largest shareholder bloc, but Chairman Choi Yun-beom's side, despite holding a smaller stake, has retained the upper hand on the board.

The November judgment challenges the legal basis for decisions that helped sustain that position. The next stage is an appeal over how South Korea's rules on companies holding shares in one another should apply when management uses those arrangements during a takeover fight. No appeal hearing date or timetable for changing the board was given.

How the fight for control developed

Young Poong and MBK signed an agreement in September 2024 to pursue management control of Korea Zinc. They subsequently exercised their voting rights together, while Choi's camp worked to retain control of the company.

Share ownership gives investors votes on matters such as choosing directors. A board then oversees the company's direction and management. Blocking a large shareholder from voting can therefore change which candidates win, even without changing how many shares each side owns.

The central events unfolded over more than two years:

• September 2024: Young Poong and MBK agreed to work together to secure control of Korea Zinc.
• Before the January 2025 extraordinary meeting: Sun Metals Corporation acquired about 10.3 percent of Young Poong, creating a circular shareholding arrangement.
• March 2025: A court partially granted relief against the earlier voting restriction. Korea Zinc also held its annual meeting using a revised shareholding arrangement to restrict Young Poong's votes.
• May 2025: Young Poong and MBK filed the main lawsuit seeking cancellation of the annual meeting resolutions.
• April 2, 2026: The Supreme Court's First Division dismissed the alliance's final challenge in the injunction proceedings concerning voting at the annual meeting.
• November 12, 2026: The Seoul Central District Court ruled for the alliance in the main lawsuit, prompting Korea Zinc to announce an immediate appeal.

Why a 10.3 percent stake mattered

Korea Zinc's defense relied on Article 369(3) of South Korea's Commercial Act, which restricts voting rights in certain cross-shareholding relationships. In a simple example, when Company A holds more than 10 percent of Company B, the provision restricts Company B's voting rights in Company A. The dispute concerns how that rule applies through subsidiaries.

The rule is intended to prevent circular ownership from giving a controlling shareholder excessive influence with a relatively small investment. A circle arises when ownership runs through several companies and eventually returns to the starting company.

Before the January 2025 extraordinary shareholder meeting, Sun Metals Corporation, known as SMC, acquired about 10.3 percent of Young Poong. SMC sits beneath Sun Metals Holdings, or SMH, in Korea Zinc's Australian corporate structure.

The ownership chain ran from Korea Zinc to SMH, then SMC, then Young Poong, and back to Korea Zinc through Young Poong's stake. Korea Zinc invoked the law to block voting rights attached to Young Poong's 25.4 percent stake in Korea Zinc at that meeting.

The two percentages describe different holdings. SMC's roughly 10.3 percent investment in Young Poong exceeded the law's 10 percent threshold by about 0.3 percentage points. The resulting restriction affected Young Poong's much larger 25.4 percent holding in Korea Zinc, showing why the transaction carried substantial voting consequences.

A share transfer created a new arrangement

Young Poong and MBK challenged the restriction connected to the January extraordinary meeting, and a court partially granted their injunction request in March 2025. The January restriction was also subsequently found unlawful by the Supreme Court.

Choi's side then changed the ownership structure. SMC transferred its Young Poong shares to its parent, SMH, through an in-kind dividend. That means the subsidiary distributed shares to its parent rather than paying the dividend in cash.

The revised ownership chain was shorter: Korea Zinc held SMH, SMH held more than 10 percent of Young Poong, and Young Poong held shares in Korea Zinc. The distinction between SMC's original acquisition and SMH's later holding is central to understanding the separate court challenges.

Korea Zinc again restricted Young Poong's voting rights at the March 2025 annual meeting, this time relying on the revised structure. Young Poong and MBK sought an injunction allowing voting rights to be exercised and, in May, filed the main lawsuit seeking to cancel the meeting resolutions.

What the district court decided

The November judgment addressed whether Korea Zinc could use the cross-shareholding provisions to restrict an existing shareholder's votes for the purpose of defending management control.

The Seoul Central District Court's 29th Civil Division explained its central finding in these terms:

voting rights of existing shareholders cannot be restricted by applying cross-shareholding provisions for the purpose of defending management control

The court ordered the cancellation of annual meeting resolutions adopted while Young Poong's votes were restricted. The affected measures included a cap on director numbers and the appointment of directors and audit committee members, decisions that helped shape the company's governance.

A limit on board size determines how many seats shareholders can fill. Director appointments determine who occupies those seats. Together, those decisions can influence whether a shareholder bloc can translate its investment into representation on the board.

Young Poong and MBK therefore view the ruling as a challenge to the foundations of the current board structure, rather than simply a correction to voting procedures at a past meeting.

Why Korea Zinc says the law was applied wrongly

Korea Zinc argues that the statutory requirements and the actual ownership structure should determine whether voting restrictions apply. In its view, the answer should stay the same regardless of why the shareholding arrangement was created.

The company set out that argument in its response to the judgment:

Whether the cross-shareholding provisions apply is a matter that must be determined objectively and uniformly, taking into account the relevant laws, existing Supreme Court precedent and the specific facts of the case — it is not something to be decided by weighing subjective intent,

The disagreement is therefore about the legal importance of purpose. The district court's finding focuses on restricting existing shareholders to defend management control. Korea Zinc's position is that courts should apply the ownership rules using objective conditions, including the relevant shareholdings.

Korea Zinc said the arrangements were intended to protect management stability, corporate value and the interests of all shareholders. It maintained that the annual meeting complied with the relevant laws and procedures and said it would challenge the district court's legal reasoning on appeal.

Why the April Supreme Court decision matters

Korea Zinc's appeal argument draws heavily on the Supreme Court's April 2 decision concerning the March annual meeting. The Supreme Court's First Division dismissed the alliance's final challenge after lower courts had rejected its application for an injunction.

An injunction is a request for temporary court protection while a wider dispute is being resolved. The main lawsuit asks the court to decide the underlying claim, in this case whether the meeting resolutions should be canceled. Those proceedings followed different tracks and produced outcomes that the parties now interpret differently.

In the annual meeting injunction case, the Supreme Court upheld the position that cross-shareholding restrictions should be applied objectively and uniformly, rather than differently according to the intention behind creating the relationship. It also upheld the rejection of arguments that the restriction constituted an abuse of rights or a breach of good faith.

Korea Zinc says that reasoning requires the November judgment to be reconsidered by a higher court. Young Poong and MBK, meanwhile, point to their victories over the January meeting restriction and the November cancellation of annual meeting resolutions as support for their challenge to Choi's defense of control.

The January extraordinary meeting involved SMC's holding of Young Poong shares. The March annual meeting involved SMH's holding after the transfer. Keeping those arrangements and their court proceedings separate explains why the dispute includes both successful challenges to voting restrictions and an unsuccessful request for temporary relief.

What changes for shareholders and the board

Young Poong and MBK said the November ruling puts the legitimacy of Korea Zinc's current governance structure in doubt. Their argument is that important board decisions were made while the largest shareholder was prevented from voting.

The alliance described its position in a statement following the ruling:

shows that there is a fundamental problem with the legitimacy of the current governance structure, which was built on an unlawful deprivation of voting rights,

The alliance also said it would continue seeking a transparent and accountable governance structure serving the company and all shareholders, rather than the control of a particular individual.

For investors, the practical issue is who gets to vote on directors and which meeting decisions survive further court review. Canceling resolutions governing board size and appointments puts pressure on the structure through which Choi's side has retained influence.

Korea Zinc's announced appeal now brings the statutory threshold, the subsidiary ownership chain and the purpose of the transactions back into focus. The dispute has moved from whether temporary voting protection should be granted to whether the annual meeting decisions themselves can stand.

Key Points

• The Seoul Central District Court ruled on November 12, 2026, that Korea Zinc must cancel resolutions from its March 2025 annual meeting.
• The ruling concerns voting restrictions imposed on Young Poong through an ownership arrangement involving Australian subsidiaries.
• SMC initially acquired about 10.3 percent of Young Poong; the shares later moved to its parent, SMH.
• The affected annual meeting decisions include a director cap and appointments to the board and audit committee.
• Korea Zinc announced an immediate appeal, citing Supreme Court precedent and the April 2 rejection of the alliance's injunction challenge concerning the annual meeting.
• Young Poong and MBK say the judgment challenges the legitimacy of the current governance structure.