By Kwanwoo Jun
Korea Zinc's shares rose sharply a day after the world's leading zinc smelter decided to adopt new rules that management said would bolster minority shareholders' rights.
The stock climbed 12% on Friday, its steepest one-day gain in nearly two months, outperforming the benchmark Kospi index's 0.85% rise.
Shareholders on Thursday approved Korea Zinc management's new proposals to employ a collective voting system and limit the number of board members to 19.
Both the cap on the board size and the cumulative voting system, which allows each shareholder to exercise voting rights more flexibly and collectively, should better protect minority shareholders, Korea Zinc said in a statement after the meeting. Those measures can also serve as a check against dominant shareholders unilaterally exercising power over the board, it said.
The extraordinary shareholders' meeting had initially been called by private-equity firm MBK Partners and Korea Zinc's major shareholder Young Poong, which have teamed up and increased their combined stake to more than 40% since September for control of the smelter, to reshape its board and management led by Chairman Yun B. Choi.
Thursday's decision, however, effectively frustrated the MBK-Young Poong alliance's latest attempt to add 14 new members of its own to the current 12-member board at the meeting. The alliance said it would seek to nullify the decision, heralding a likely protracted boardroom feud.
Choi, backed by U.S. private-equity firm Bain Capital and other Korea Zinc shareholders, has accused the MBK-Young Poong alliance of launching a hostile takeover campaign.
South Korea's state pension fund, which holds a 4.5% stake in Korea Zinc, has supported the cumulative voting system and the cap on the board size.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
01-24-25 0507ET