Yeongpung loses first-instance suit over Korea Zinc's 2024 share tender offer

The Seoul Central District Court ruled on 22 October against Yeongpung (영풍) in its shareholder derivative suit against Korea Zinc (고려아연) chairman Choi Yun-beom (최윤범) and other directors. Civil Division 30, with presiding judge Kim Seok-beom (김석범), handled the case. Chosun Ilbo reported that the court dismissed all of the plaintiff's claims and ordered Yeongpung to bear the legal costs. Chosun Ilbo and Dong-A Ilbo said the defendants were ten directors. [ 2 , 3 , 6 , 8 ]

The suit concerned Korea Zinc's tender offer for its own shares. According to Chosun Ilbo, Korea Economic Daily, Dong-A Ilbo and Maeil Business, the board offered 890,000 won a share when the stock traded at around 560,000 won, and acquired 2,040,030 shares. Yeongpung argued that paying more than the market price harmed the company. It sought about 836.9 billion won (8369억 won). Chosun Ilbo and Dong-A Ilbo said the claim began at 673.2 billion won. Chosun Ilbo said interest and financing costs were later added, while Dong-A Ilbo said Korea Zinc disclosed in April that the claim had been changed to about 836.9 billion won. [ 2 , 3 , 6 , 8 ]

The court said the directors regarded Yeongpung's tender offer as a threat to the company. It said they reviewed legal advice and the court's injunction decision before setting the terms and the funding plan. Chosun Ilbo quoted the court as saying the judgment did not appear clearly unreasonable, so it could not be assessed as a breach of the duty of care or loyalty. Korea Economic Daily reported that the court also found no violation of the Commercial Act or the company's articles. Dong-A Ilbo said the court could not conclude that the acquisition process broke any law. [ 2 , 3 , 6 ]

Chosun Ilbo reported that Yeongpung had also argued that using a discretionary reserve to buy the shares breached the Commercial Act's limit on share acquisitions. The court answered that the limit caps the total amount that may be bought, so legality cannot be judged only from which funding source was used. Korea Zinc had argued that the decision was not clearly unreasonable and that the directors' judgment should be respected. [ 2 ]

Chosun Ilbo said the dispute began in September 2024, when Yeongpung joined MBK Partners in a tender offer for Korea Zinc shares and the Korea Zinc board answered with its own tender offer. The same panel rejected Yeongpung's request for an injunction against the tender offer in October 2024, saying full evidence-gathering was needed in the main case. Chosun Ilbo called the new ruling the first merits judgment on whether that buyback was lawful. Korea Economic Daily said the suit was filed in November 2024 and also covered the board's resolution on a public rights offering. It described a contest between the Choi family, which runs Korea Zinc, and the Jang family, which runs the Yeongpung group, that has run since 2022. [ 2 , 3 ]

Yeongpung and MBK Partners issued a statement saying the ruling relied on the directors' broad discretion and on formal procedure, and overlooked the harm to the company's finances and shareholder value. They said they would appeal immediately, and that burdening the company with more than 1.6 trillion won in borrowing to defend personal control could not be a legitimate business judgment. [ 2 ]