[Alpha Biz= Kim Jisun] Korea’s Fair Trade Commission (FTC) has launched an on-site investigation into Young Poong Corp. and its affiliate YPC over alleged violations of the ban on circular shareholding arrangements, according to industry sources on Monday.

The FTC reportedly dispatched investigators to Young Poong’s headquarters from Dec. 17 to 19 to examine whether the company created a new prohibited circular ownership structure in breach of the Monopoly Regulation and Fair Trade Act.

The probe follows a complaint filed in October by Korea Zinc, which is currently embroiled in a management control dispute with its largest shareholder, Young Poong. Korea Zinc alleged that Young Poong established YPC as a wholly owned subsidiary to form a new circular shareholding chain aimed at neutralizing Korea Zinc’s efforts to restrict Young Poong’s voting rights.

In January, ahead of an extraordinary shareholders’ meeting, Korea Zinc acquired a 10.33% stake in Young Poong from the family of Chairman Choi through its Australian affiliate SMC. This transaction resulted in a circular ownership structure linking Korea Zinc, SMC, Young Poong, and back to Korea Zinc, effectively limiting Young Poong’s voting rights at the meeting.

In response, Young Poong established YPC in March and transferred its entire 25.42% stake in Korea Zinc—equivalent to 5.26 million shares—to the new entity via an in-kind contribution. This move formed a circular ownership chain involving Young Poong, YPC, Korea Zinc, Korea Zinc’s overseas subsidiary SMH, and back to Young Poong, enabling indirect ownership of Korea Zinc.

Korea Zinc subsequently reported the arrangement to the FTC, arguing that Young Poong, as part of a large business group subject to cross-shareholding restrictions, illegally created a new circular shareholding structure—an act prohibited under Korean competition law.

Young Poong has denied the allegations, stating that the asset transfer was a defensive measure taken in response to restrictions on its shareholder rights. The company also argued that a circular structure involving overseas affiliates already existed and that no new circular shareholding was created.

The FTC is reportedly examining whether Young Poong and YPC violated provisions related to monopoly regulation, cross-shareholding restrictions, and the prohibition of circular shareholding. The outcome of the investigation could have significant implications for the ongoing control dispute between Young Poong and Korea Zinc.

 

 

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