Recommendations from proxy advisory institutions split over a single audit committee seat at Korea Zinc. One institution, the Korea Institute of Corporate Governance and Sustainability (한국ESG기준원), was counted as recommending a vote for candidate Park Yoo-kyung, while eight in all, including four domestic institutions, recommended a vote for a candidate surnamed Baek. The Korea Institute of Corporate Governance and Sustainability gave an opinion in favor of candidate Park and against candidate Baek. The vote takes place at the extraordinary shareholders meeting on September 9.
The content of the recommendations differed from institution to institution, and did not come together into one.
The choices of overseas pension funds leaned toward the agenda items on the MBK side. CalPERS of the United States and Norway's NBIM stood on the side supporting the agenda items put forward by MBK. Through an advance voting disclosure, NBIM set out before the meeting how it would handle the shareholder proposal items of September 9.
The National Pension Service chose neutrality on these agenda items. Candidate Park Yoo-kyung is the figure proposed by the MBK and Young Poong side.
Conclusions diverged among domestic institutions as well. The four domestic institutions that recommended a vote for candidate Baek include the Korea ESG Research Institute (한국ESG연구소) and the Korea ESG Evaluation Institute (한국ESG평가원), and the Korea ESG Evaluation Institute issued a report analyzing the extraordinary meeting's agenda on September 1. Because the denominator changes depending on whether pension funds and institutional investors are included in the count of eight, it is hard to compare one and eight directly.
The issue that decides the size of the vote hangs on the interpretation of the 3% rule under the Commercial Act. MBK and Young Poong are disclosed as joint holders under the Capital Markets Act, but the argument has been raised that they do not fall under specially related persons under the Commercial Act, so the stakes of the two cannot be tied together at 3%. Depending on whether the stakes are added together or counted separately, the scale of votes actually exercised in the appointment of an audit committee member changes.
The large holdings report also came up as an issue. On the grounds that the content written in this report was stated differently just before the shareholders meeting, a legal battle broke out over a request to restrict voting rights. The court reached a conclusion on the relationship between the lender stated in the report and the restriction of voting rights. The item recording where the funds to acquire the held stake were borrowed from ended up touching the scope in which voting rights are recognized.
The competition to buy up stakes has moved into a question of interpreting the rules. The appointment of an audit committee member carries an exception provision lowering a large shareholder's voting rights to 3%, so the side with the higher stake cannot exercise that many votes as they stand. Because joint holder disclosure is covered by the Capital Markets Act and the scope of specially related persons by the Commercial Act, the arithmetic splits into two tracks over the same stake. This difference in interpretation also lies behind the split in the advisory institutions' recommendations.
Where the single audit committee seat goes depends on what percentage of the stakes held by each side is recognized as voting rights. At the September 9 meeting, opening with the recommendations divided in two, the vote totals the chair reads out will differ depending on how the 3% rule was applied.
