The Seoul Central District Court on Thursday dismissed an 837 billion won ($632 million) shareholder derivative lawsuit filed by Young Poong and MBK Partners against Korea Zinc Chairman Choi Yun-birm and other directors, handing the company's management a legal victory in their ongoing battle for control.
The Young Poong-MBK alliance filed the suit in November 2024, alleging that Korea Zinc's directors caused substantial losses by buying back shares at 890,000 won apiece through a tender offer, well above what the plaintiffs claimed was their fair value of around 560,000 won.
The alliance also challenged Korea Zinc's subsequent plan to raise 2 trillion won through a new share offering, arguing that it would shift the financial burden of the buyback onto ordinary shareholders.
The court sided with Korea Zinc's management, finding insufficient grounds to hold the directors liable for breach of duty. It cited the decision-making process leading up to the buyback, including consultations with legal advisers, and recognized the directors' discretion in making business judgments.
Under Korea's Commercial Act, shareholders who have held at least 0.01 percent of a listed company's shares for six months can bring a derivative lawsuit against its directors on the company's behalf.
Young Poong and MBK said they would appeal immediately, arguing that the court had interpreted the directors' managerial discretion too broadly.
The alliance vowed to challenge the legality of the tender offer and establish that the directors breached their duty of care, while pursuing measures to restore Korea Zinc's corporate value.
silverstar@heraldcorp.com