Court rules in favor of Sorin shareholder meeting amid management feud

(From left) Korea Zinc Chairman Choi Yoon-beom and Young Poong Chairman Chang Hyung-jin. [Photo by each company]

In a significant development in the corporate tussle over Sorin Corp., a Seoul district court has ruled that a shareholders’ meeting must be held, despite opposition from Youngpoong Group.

The Seoul Central District Court on Monday granted Korea Zinc’s request to convene a shareholders’ meeting. This request was initially submitted on March 22, following a failed attempt to hold an emergency board meeting due to the absence of Youngpoong representatives.

Korea Zinc controls a 66.7 percent stake in Sorin, while Youngpoong holds 33.3 percent, though management has traditionally been under Youngpoong’s control.

Sorin plays a crucial role in distributing products manufactured by Korea Zinc and Youngpoong, making it a highly valuable asset.

The court’s decision marks a turning point, allowing Korea Zinc to proceed with an extraordinary shareholders’ meeting next month to propose a new board of directors.

“We plan to hold an extraordinary shareholders’ meeting in late June to vote on the replacement of the current board,” said a spokesperson for Korea Zinc. The proposed changes include appointing four new internal directors, such as Choi Min-seok, president of Steel Cycle and cousin of Korea Zinc Chairman Choi Yoon-beom, and reappointing Honorary Chairman Choi Chang-geun.

With Korea Zinc holding a majority of shares, the proposed changes are expected to pass without significant opposition, effectively allowing Korea Zinc to gain control over Sorin’s management.

The court’s ruling comes amid a heated dispute between the Choi and Chang families over the control of Sorin.

Korea Zinc, co-founded by Choi Ki-ho and Chang Byung-hee in 1974, has been jointly managed by the Choi and Chang families.

However, recent conflicts have surfaced regarding the management of Sorin, with Korea Zinc pushing for a change in the board of directors.

The ongoing conflict has strained the partnership between the Choi and Chang families, potentially bringing their long-standing collaboration to an end.

The rift was further exacerbated by a lawsuit filed by Youngpoong against Korea Zinc over a recent capital increase involving HMG Global, an overseas subsidiary of Hyundai Motor Co.

The fallout from the deteriorating relationship with Korea Zinc has also impacted Youngpoong’s operational efficiency.

Youngpoong’s Seokpo Refinery reported an average operational rate of 64.7 percent in its latest quarterly report—the lowest in a decade, down from the usual 75-90 percent.

This decline contributed to an operating loss of 43.2 billion won ($31.7 million) in the first quarter of this year.

Seokpo Refinery’s reduced output was partly due to a temporary halt in operations following a fatal accident in December involving a subcontractor employee, leading to an investigation under the Severe Accident Punishment Act.