2. B

Service place of the plaintiffs ○

[Judgment of the court below]

2. On June 13, 2019, the Defendant’s temporary general meeting of shareholders held on June 13, 2019, removed the Plaintiff B from office directors and the representative director, and confirmed that there was no resolution that appointed D as an inside director.

2. All costs of the lawsuit shall be borne by the defendant.

A. The Defendant, a company established on August 16, 2016 for the purpose of real estate development business, etc., is an ordinary share of 100 shares and the total amount of capital is KRW 10 million.

B. On December 13, 2018, the Defendant made an agreement with the Plaintiff Company A (hereinafter referred to as the “Plaintiff Company”) regarding the following (a) with respect to the business site of the Plaintiff Company A* Dong*******-*, number 11,458.38 (hereinafter referred to as the “business site of the Plaintiff Company”).

1. By February 28, 2019, the Defendant concluded at least 95% a sales contract for the land of the Plaintiff Company’s business site and transferred it to the Plaintiff Company by February 28, 2019.

2. In return, the Plaintiff Company pays to the Defendant an unsold office or commercial building, among the main complex development projects to be developed in the business site of the Plaintiff Company, the acquisition cost of the business right of KRW 3 billion, KRW 7 billion, and KRW 5 billion among the main complex development projects to be developed in the business site of the Plaintiff Company.

3. The time of payment under the foregoing paragraph 2 above shall be the agreed amount to be separately determined by the Plaintiff Company and the Defendant, and shall be the payment of KRW 100 million as of December 31, 2018.

4. If the Defendant breached this agreement, 10 times the agreed amount shall be immediately compensated by the Defendant. On December 26, 2018, E, D, F, and the Defendant’s audit G, which were the Defendant’s shareholders, entered into a contract with the Plaintiff Company to transfer 100 shares of common shares issued by the Plaintiff Company (a par value of KRW 10,000 per share) and the Defendant’s entire management rights at KRW 15 billion (i.e., KRW 5 shares issued by the Plaintiff Company).

D. On January 10, 2019, E and F entered into a contract with the Plaintiff Company: (a) on the part of 300 shares of the Defendant Company, E transferred 230 shares out of 300 shares of the Defendant Company, to the Plaintiff Company; and (b) on the part of 450 shares of the Defendant Company, F entered into a contract to transfer 270 shares out of 450 shares of the Defendant Company’s outstanding shares to the Plaintiff Company at KRW 270 million (Evidence A; hereinafter “EF-Plaintiff Stock Transfer Agreement”).

At the time of the transfer of shares by EF-Plaintiff, the shareholder registry of the defendant was written by E (300 shares), D (250 shares) and F (450 shares) as shareholders holding 1,00 shares issued by the defendant.

E. On January 17, 2019, Plaintiff B was appointed as the Defendant’s internal director and representative director.

F. E, D, and F prepared a written resolution of a special meeting of shareholders on June 13, 2019, and the content of the written resolution is that “Plaintiff B is dismissed from the Defendant’s inside director and representative director, and D is appointed as the Defendant’s inside director (No. 15 evidence; hereinafter “instant resolution”).

[Ground of recognition] Facts without dispute, Gap's 2 through 9, each entry of Gap's 15, the purport of the whole pleadings

2. The Defendant’s assertion on the part of the defense prior to the merits is that the Plaintiffs are not shareholders listed in the current register of shareholders, and there is no legal interest in seeking confirmation of absence of the instant resolution.

A shareholder may file a lawsuit against a company for confirmation of the absence of a resolution of the general meeting of shareholders (see, e.g., Supreme Court Decision 2015Da248342, Mar. 23, 2017). A lawsuit for confirmation of the absence of a resolution of the general meeting of shareholders is not limited by the person entitled to institute a lawsuit, and any person who has a legitimate interest in confirmation of the absence of a resolution may file a lawsuit for confirmation (see, e.g., Supreme Court Decisions 6397, Jul. 22, 2016; 79Da2267, Oct. 27, 1980).

As seen earlier, it is reasonable to view that Plaintiff B was dismissed from office of the Defendant’s representative director by the instant resolution, and that the Plaintiff Company was the Defendant’s shareholder at the time of the instant resolution, and that the Defendant’s ground for losing the Plaintiff Company’s shareholder qualification is not recognized as follows. Therefore, it is reasonable to deem that the Plaintiff Company is the Defendant’

On the other hand, in the case where the resolution of this case exists, the plaintiff company maintains the validity of the resolution of this case without exercising its shareholder's right, and thus the infringement of shareholder's rights continues, and the plaintiff B is unable to recover the qualification of the defendant representative director and directors. This is an existing unstable and dangerous, and the most effective and appropriate means to remove the plaintiffs are subject to the confirmation of non-existence of the resolution of this case. Thus, the plaintiffs are legally interested in seeking confirmation of non-existence of the resolution of this case. Thus, the defendant's assertion is without merit.

3. Determination of the defendant's shareholder at the time of the resolution of this case

A. The parties' assertion

1) The plaintiffs' assertion

The Plaintiff Company entered into a share transfer agreement with EF-Plaintiff Company on January 10, 2019 and paid all the share transfer price on the date of the contract. As such, the Defendant was the Defendant’s shareholder at the time of the instant resolution on June 13, 2019. (2) Defendant’s assertion

On December 13, 2018, the plaintiff company and the defendant side concluded the business agreement of the defendant company, 4 persons E, etc. of December 26, 2018, and the management right transfer agreement of the plaintiff company, and the EF-Plaintiff stock transfer agreement of January 10, 2019.

According to the business agreement of the Defendant-Plaintiff Company on December 13, 2018, the Defendant concluded at least 95% a land sales contract that sets the Plaintiff’s business site at least KRW 175 billion by February 28, 2019 and transfers it to the Plaintiff Company, instead of paying the purchase price for the land.

After the business agreement of the Plaintiff Company, the Defendant concluded a purchase contract for the land of the Plaintiff Company, and requested the Plaintiff Company to pay the down payment equivalent to the down payment out of the purchase price for the land, but the Plaintiff Company failed to comply therewith. Accordingly, the Defendant terminated the management right transfer contract for the Plaintiff Company on April 12, 2019 on December 26, 2018 and the eF-Plaintiff Company Stock Transfer contract on January 10, 2019 on January 10, 2019. The Defendant’s shareholder status that the Plaintiff Company acquired upon termination of the eF-Plaintiff Stock Transfer contract on January 10, 2019 was returned to E and F. The Defendant’s shareholder status that the Plaintiff Company acquired was not stated as the Defendant’s shareholder on June 13, 2019, because the Plaintiff Company was not stated as the Defendant’s shareholder at the time of the instant resolution by the Defendant on June 13, 2019.

B. Legal principles

A person registered as a shareholder in the register of shareholders is presumed to be a shareholder of the company and has the burden of proving the denial of shareholder's rights (see, e.g., Supreme Court Decision 2010Da91916, Mar. 24, 2011).

The Commercial Act recognizes the special effect of the latter as to the relationship of rights between the parties other than the company with respect to ownership of shares and the exercise of shareholder's rights against the company by dividing the latter into the list of shareholders and the list of shareholders in the name of the latter. Since the entry in the register of shareholders is merely a requisite to oppose the company, the entry in the register of shareholders is not stipulated as a requirement for effective transfer of shares, and thus the entry in the register of shareholders is not a shareholder of the unentitled person, and the entry in the register of shareholders is not a shareholder but a shareholder does not lose his/her rights (see, e.g., Supreme Court Decision 2017Da278385, Jun. 11, 2020).

The transfer of shares before the issuance of share certificates under Article 335(3) of the Commercial Act is effective against the company at the expiration of six months after its incorporation. In this case, the transfer of shares takes effect only by the declaration of intention of the parties in accordance with the general principle as to the transfer of nominative claim. The transfer of shares in the register of shareholders under Article 337(1) of the Commercial Act is merely a requisite to set up against the transferee of shares to exercise shareholder's rights in relation to the company (see, e.g., Supreme Court Decision 2003Da29661, Oct. 24,

If a share transfer contract is legally rescinded, the former transferee loses his/her status as a shareholder of a stock company (see, e.g., Supreme Court Decision 93Da44906, Jun. 28, 1994).

A continuous contract is based on the trust relationship between the parties. When the trust relationship, which forms the basis of the contract, is destroyed during the existence of the contract due to unfair acts, etc. by either of the parties to the contract, and the existence of the contract is not expected due to serious grounds, the other party may terminate its effect by undermining the contract (see, e.g., Supreme Court Decision 2011Da59629, Apr. 11, 2013).

If one of the parties has terminated a contract, the contract shall lose its effect for the future (Article 550 of the Civil Act). The termination of the contract is distinguished from the rescission of the contract in that the contract shall lose its effect for the future, and it shall be recognized that the contract is effective until it is terminated and the already performed part shall not be subject to restitution.

(c) Fact of recognition;

The following facts are recognized in full view of the above facts of recognition, Gap evidence 3, 5, 9, 12, 21 through 24-5, and the purport of the whole arguments.

① The matters agreed upon by the Plaintiff Company and the Defendant pursuant to the business agreement of the Plaintiff Company on December 13, 2018 are as follows: ① the Defendant entered into a sales contract for the land of the Plaintiff Company up to 175 billion won by February 28, 2019, and transferred to the Plaintiff Company at least 95%, and the Plaintiff Company entered into a sales contract for the land of the Plaintiff Company’s business site, and transferred it to the Plaintiff Company. The Plaintiff Company pays to the Defendant an unsold officetel or commercial building among the main complex development projects to be developed on the Plaintiff Company’s business site, the amount of KRW 3 billion for acquisition of business rights, KRW 7 billion for land services, and KRW 5 billion for the Plaintiff Company’s business site; and the timing of payment under the above provision of the provision of the provision of the B

② At the time of January 10, 2019, 1,00 shares issued by Defendant was owned by E (300 shares), D (250 shares) and F (450 shares).

E and F entered into a stock transfer agreement between the Plaintiff Company and the Plaintiff Company on January 10, 2019, (1) E transfers 230 million won out of 300 shares of the Defendant’s outstanding shares to the Plaintiff Company, and (4) F enters into a stock transfer agreement between E and E-F-won companies that transfer 270 billion won out of 450 shares of the Defendant’s outstanding shares to the Plaintiff Company. On January 10, 2019, the Plaintiff Company paid the above price of KRW 230 million to E, and KRW 270 million to F (Receipt No. 9). On January 17, 2019, the Defendant’s list of shareholders (Evidence No. 21), indicated Defendant 100, E-D (F) and Jeju (F) as the Plaintiff Company’s holding of the above price of KRW 100,000,000 and KRW 270,000.

③ On April 12, 2019, the Defendant notified the Plaintiff Company of the termination of the purchase contract on the Plaintiff Company’s business site after the Plaintiff Company’s business agreement and the Defendant urged the Plaintiff Company to pay the down payment equivalent to the down payment out of the purchase price of the land. On December 26, 2018, 4 - including E, etc. of December 26, 2018, and EF-Plaintiff Company’s share transfer contract on January 10, 2019, and the notice of termination of the transfer and takeover of management rights agreement (i.e., (ii) the Plaintiff Company’s cancellation on April 12, 2019.

④ The instant resolution (Evidence No. 15) is accompanied by the Defendant’s list of shareholders as of June 13, 2019. The said list of shareholders is indicated as holding E (200 shares), D (400 shares), and F (400 shares).

D. Determination

In full view of the above facts, the above quoted evidence, and the whole purport of oral arguments, the defendant's 1,00 shares issued at the time of the resolution of this case were held by E (70 shares), D (250 shares), F (180 shares), and the plaintiff company (50 shares). Thus, the plaintiffs' assertion is with merit.

① At the time of January 10, 2019, 1,00 shares issued by Defendant was owned by E (300 shares), D (250 shares) and F (450 shares).

E and F entered into a stock transfer agreement between the Plaintiff Company and the Plaintiff Company on January 10, 2019, and ① E transferred 230 million won out of 300 shares issued by the Defendant to the Plaintiff Company and KRW 230 million out of 300 shares issued by the Defendant, and LF entered into a 270 shares out of 450 shares issued by the Defendant to the Plaintiff Company with KRW 270 million out of 450 shares, and the Plaintiff Company paid the total amount of KRW 50 million to E and F on the same day.

The defendant's list of shareholders (Evidence A No. 21) dated 17, 2019 includes that 1,000 shares issued by the defendant are owned by E (70 shares), D (250 shares), F (180 shares), and the plaintiff company (50 shares).

② The Defendant’s shareholder registry as of June 13, 2019, on the premise that the Plaintiff Company lost its shareholder status by termination of April 12, 2019, entered the Defendant’s shareholder registry as E (200), D (400), F (400). However, as seen below, as of April 12, 2019, the termination of the Defendant’s shareholder registry as of April 12, 2019 is illegal and invalid, and thus, the Defendant’s shareholder registry as of June 13, 2019 was invalidated. Accordingly, the Defendant’s shares issued by 1,00, E (70), D (250), F (180 shares), and Plaintiff Company (50 shares) are presumed to be held.

③ Comprehensively taking account of the following facts, the termination of April 12, 2019 by the Defendant is not recognized as the delay of the payment of the Plaintiff Company’s financial obligation, which is the grounds for termination, and thus, is invalid.

① The Defendant’s ground for termination as of April 12, 2019 is that the Plaintiff Company failed to pay the down payment out of the purchase price of the land to the Plaintiff Company, even though the Defendant concluded a purchase contract on the Plaintiff Company’s business site after the business agreement of the Plaintiff Company, and urged the Plaintiff Company to pay the down payment.

① According to the business agreement of the Plaintiff Company, the Plaintiff Company is obligated to pay to the Defendant an unsold officetel or commercial building of KRW 3 billion in business acquisition cost, KRW 7 billion in land services cost, and KRW 5 billion in the business site of the Plaintiff Company, among the main complex development projects to be developed in the business site of the Plaintiff Company, on the other hand, the time of payment of the said fund was set separately by the Plaintiff Company and the Defendant.

However, there was no evidence suggesting that the Plaintiff company would pay the Defendant the funds necessary for the Plaintiff company to purchase the Plaintiff company’s business site at any time, namely, whether the Plaintiff company would pay the Defendant the funds necessary for the purchase of the Plaintiff company’s business site. Therefore, it cannot be deemed that the Plaintiff company delayed the payment of the funds at the time of termination of April 12, 2019 by the Defendant.

④ Even if it is assumed that the Plaintiff Company delayed the performance of the obligation to pay funds, that is, the grounds for termination on April 12, 2019 of the Defendant, the Plaintiff Company does not lose its shareholder status in full view of the following facts.

The defendant is only a party to the business agreement of the defendant company, but is not a party to the management right transfer contract of the plaintiff company and the eF-Plaintiff company's share transfer contract, and the defendant cannot terminate the management right transfer contract of the 4-Plaintiff company and the eF-Plaintiff company's share transfer contract.

4 persons, including South Korea, 4 persons, E, etc. - The management transfer contract and the eF-Plaintiff Company’s share transfer contract, have no content that the contract may be terminated when the Plaintiff Company violated the Defendant Company’s business agreement. Thus, even if the Plaintiff Company violated the Defendant Company’s business agreement, 4 persons, such as E, etc. - the management transfer contract and the eF-Plaintiff Company’s share transfer contract cannot

Even when assumed that the termination of the management right transfer contract and EF-Plaintiff Company’s share transfer contract is lawful, the above contract only remains effective for the future after the termination. Since the Plaintiff Company had already acquired the Defendant’s shares before the termination of April 12, 2019, the Plaintiff Company cannot lose its shareholder status.

4. A request for confirmation of existence of a resolution may be made on the ground that there is a serious defect to the extent that the resolution of a general meeting cannot be deemed to exist (Article 380 of the Commercial Act). A company with total capital being less than one billion won may send written notice to each shareholder or give notice in electronic form with the consent of each shareholder 10 days prior to the date of the general meeting of shareholders (Article 363(3) of the Commercial Act). If all shareholders consent, a general meeting of shareholders may be held without the convocation procedure, and a written resolution may substitute for a resolution of the general meeting of shareholders (Article 363(4) of the Commercial Act). A general meeting of shareholders held without the convocation notice to all or most shareholders (Article 363(4) of the Commercial Act). Barring any special circumstance, such defect in the process of its establishment is too excessive and thus it is difficult to recognize the establishment of a general meeting itself under the social norms (see, e.g., Supreme Court Decision 78Da12696, Nov. 14, 1978).

The Defendant’s total amount of capital is 10 million won. On June 13, 2019, the Plaintiff Company made the instant resolution by means of preparing a written resolution without giving a notice for convening a temporary general meeting of shareholders on the premise that the Plaintiff Company is not a shareholder, and there is no dispute between the parties. At the time of the instant resolution, 100 shares issued by the Defendant were owned by E (70), D (250 shares), F (180 shares), and Plaintiff Company (50 shares).

On the other hand, the defendant can hold a general meeting of shareholders without taking a convocation procedure only when a company with less than one billion won in capital and with the consent of all shareholders. The defendant convened a temporary general meeting of shareholders without obtaining the consent of the plaintiff company holding 50% of the shares issued by the defendant and without holding a convocation notice to the plaintiff company. Thus, the defect in the convocation procedure of the resolution of this case is too serious.

5. Conclusion

The plaintiffs' claims are justified, and the judgment of the court of first instance is unfair with different conclusions, so it is revoked by accepting the plaintiffs' appeal and it is so decided as per Disposition with the confirmation of the absence of the resolution of this case.

Judges Hong Sung-sung

Judge Goh Sung