Korea Zinc chairman's cumulative voting proposal stirs controversy

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The logo of Korea Zinc is pictured during a press conference in Seoul, Oct. 22, 2024.  Reuters-Yonhap

The logo of Korea Zinc is pictured during a press conference in Seoul, Oct. 22, 2024. Reuters-Yonhap

By Yoon Ja-young

Global proxy advisory firm Institutional Shareholder Services (ISS) has recommended opposing the adoption of a cumulative voting system at Korea Zinc’s upcoming extraordinary general shareholders' meeting on Jan. 23.

The proposed measure, backed by Korea Zinc Chairman Choi Yoon-beom, is drawing controversy after it was revealed that he excluded cumulative voting at Sorin Corp.’s extraordinary general meeting in August 2024 to secure control over the company’s board.

According to industry sources, a resolution to amend the articles of incorporation was passed at the general meeting of Sorin Corp., convened by the Korea Zinc CFO in August.

The resolution, which aims at excluding cumulative voting, was approved by the Choi family and Korea Zinc, who collectively hold a 66.67 percent stake in Sorin Corp., despite opposition from Young Poong Corp.

“This was an abuse of power by Choi to prevent Young Poong, a minority shareholder, from gaining any board representation. ISS has recognized Choi’s hypocritical actions and ulterior motives, which led them to recommend opposing the cumulative voting proposal at Korea Zinc’s extraordinary general meeting,” Korea Zinc’s largest shareholders, MBK Partners and Young Poong, noted in an announcement.

ISS issued recommendations on Thursday supporting the need for reforms within Korea Zinc’s board and opposing the introduction of a cumulative voting system aimed at securing Choi’s control.

ISS stated, “While (the) cumulative voting system is generally considered to be beneficial for minority shareholders, in this case, they may lead to unintended consequences that dilute the impact of the changes sought by the dissident (MBK Partners and Young Poong).”

ISS also recommended rejecting all seven outside director nominees proposed by Korea Zinc’s board and advocated for the election of directors nominated by MBK Partners and Young Poong to enhance board independence and strengthen management oversight.

Source: koreatimes.co.kr
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