Young 풍 Loses 1st Trial in KRW 800 Billion Shareholder Derivative Lawsuit Against Korea Zinc

Young Poong has lost the lawsuit it filed against directors of Korea Zinc who approved the company's tender offer for treasury shares and its general public offering of paid-in capital.

The 30th Civil Division of the Seoul Central District Court (Presiding Judge Kim Seok-beom) ruled against the plaintiff today (October 22) in a shareholder derivative lawsuit filed by Young Poong, which sought approximately KRW 837 billion in damages against Korea Zinc directors, including Chairman Choi Yun-beom.

Regarding Korea Zinc's tender offer for treasury shares, the court explained, "If they reviewed legal advice and injunction applications and made decisions based on a capital-raising plan through a certain percentage premium, such judgment cannot be evaluated as a breach of the duty of due care as a good manager or the duty of loyalty, provided that the judgment was not manifestly unreasonable."

The court also judged that it did not constitute a violation of Commercial Act provisions or the articles of incorporation.

A shareholder derivative lawsuit is a legal action brought by a shareholder on behalf of the company to hold directors accountable and recover damages when the company neglects to pursue responsibility against its directors.

In November 2024, Young Poong filed a shareholder derivative lawsuit, claiming that Korea Zinc directors failed to fulfill their duty of due care as good manager and inflicted approximately KRW 837 billion in damages on the company.

The argument was that because the Korea Zinc board of directors proceeded with a tender offer to purchase Korea Zinc shares—which were priced at around KRW 560,000 per share—at KRW 890,000, acquiring a total of 2,040,030 treasury shares, the company suffered damages equivalent to the price difference multiplied by the number of shares.

Korea Zinc, a core affiliate of the Young Poong Group, was jointly founded by the late founders Chang Byung-hee and Choi Kee-ho.

Currently, the Choi family manages Korea Zinc, while the Chang family manages the Young Poong Group and its electronic affiliates.

Since Chairman Choi Yun-beom took office in 2022, a competition to acquire Korea Zinc shares has unfolded between the Choi family and the Young Poong Group's Chang family, leading to a management control conflict between the two companies.
(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.