This picture shows Korea Zinc's headquarters in Jongno District, Seoul, Oct. 7, 2024. Yonhap

Proxy adviser Institutional Shareholder Services (ISS) on Friday expressed support for four nominees for board members of Korea Zinc recommended by its biggest shareholder, Young Poong, amid a battle for control over the zinc smelter between company chairman and an alliance led by Young Poong.

The ISS recommendation comes about two weeks before the world's biggest zinc refiner will hold a shareholders' meeting on Jan. 23 to vote on the appointment of two groups of new board members proposed by the two sides. The Young Poong alliance includes private equity firm MBK Partners.

The board is currently composed of 12 directors. Korea Zinc and the Young Poong camp proposed seven and 14 additional members, respectively, to gain a bigger say in management decisions. The appointment is up for a vote by shareholders.

The ISS said the board size needs be limited to 16, smaller than the 19 suggested by Korea Zinc, saying a 16-member board will "ensure the addition of fresh perspectives and robust discussions, while also introducing sufficient dissident representation to counterbalance the strong dominance of the current management."

As for its support for the four candidates, the ISS said "these nominees appear to possess the relevant skills and experience necessary to enhance the functions of the board and meaningfully contribute to its discussions, while also strengthening its independence and oversight over management at this critical juncture."

Also up for a vote is the Korea Zinc-proposed cumulative voting system, which the Young Poong side sees is part of the smelter's efforts to garner more support from shareholders in favor of the current management led by Chairman Choi Yun-beom.

"While a cumulative voting system is generally considered to be beneficial for minority shareholders, in this case, it may lead to unintended consequences that dilute the impact of the changes sought by the dissident (Young Poong side)," the ISS said.

Korea Zinc has been caught in a monthslong battle to defend a takeover bid by the MBK-Young Poong alliance, which initiated the management tussle on Sept. 13 by launching a tender offer for an additional stake in the smelter.

In response, Korea Zinc, with the support of U.S.-based Bain Capital, conducted a massive stock buyback.

The Young Poong camp now controls 40.97 percent of Korea Zinc, while Korea Zinc Chairman Choi and related parties own about 34 percent of the company.

The planned "majority" vote on the appointment is regarded as an up-or-down vote on the takeover, with the 4.51 percent stake controlled by the National Pension Service seen as a critically important voting bloc. (Yonhap)