[2] Whether the limitation of the period of filing a lawsuit for six months under Article 429 of the Commercial Act shall apply to a lawsuit seeking confirmation of non-existence of the convertible issuance of bonds (negative)

[3] The deadline for exercising the claim to maintain the issuance of the convertible bonds, and whether the lawsuit seeking the prohibition of the conversion of convertible bonds after the claim to convert convertible bonds is legitimate (negative)

[4] Whether a resolution of a general meeting of shareholders is nonexistent in a case where there is a serious defect to the extent that the resolution is not likely to exist, such as a false preparation of the minutes of the general meeting without undergoing the actual convocation procedure and the meeting procedure (affirmative)

[2] Since Article 429 of the Commercial Act applies mutatis mutandis to the issuance of convertible bonds, the limitation of the filing period of six months under Article 429 of the Commercial Act shall apply to a lawsuit seeking confirmation of invalidity of the issuance of convertible bonds. However, in a case where there is any appearance registered as to the issuance of convertible bonds even though there is no substance of the issuance of convertible bonds, the limitation of the filing period of six months under Article 429 of the Commercial Act shall not apply to a lawsuit seeking confirmation of existence of the issuance of convertible bonds to remove such appearance

[3] A claim to maintain the issuance of convertible bonds is to demand the company to maintain the issuance of convertible bonds in cases where a company is likely to suffer disadvantages due to the issuance of convertible bonds in violation of Acts and subordinate statutes or the articles of incorporation or in a remarkably unfair manner (Article 516(1) and Article 424 of the Commercial Act), and the company shall exercise the right to request the issuance of convertible bonds until the due date for the issuance of convertible bonds. Meanwhile, when the convertible bonds holder requests the conversion of convertible bonds, the company shall issue the stocks. Since the convertible bonds are the right to form convertible bonds, as a matter of course, the conversion becomes effective at the time of the request for conversion, and the convertible bonds will become a shareholder at that time and lose their status as a bondholder (Articles 516 and 350 of the Commercial Act)

[4] In a case where there is a serious defect to the extent that the resolution was not likely to exist, such as preparing a false minutes of the general meeting without undergoing the actual convocation procedure and the meeting procedure, the resolution shall be deemed nonexistent.

A. As to the first ground for appeal

Article 516(1) of the Commercial Act provides that Article 424 of the Act and Article 424-2 regarding the liability of a person who has acquired shares at an unfair price shall apply mutatis mutandis to the issuance of convertible bonds. However, Article 429 of the Commercial Act does not provide for the mutatis mutandis application of the lawsuit seeking nullification of the issuance of new shares. However, the convertible bonds are bonds granted with the right to convert into the primary stock by exercising the right to convert into the primary stock. Since such issuance of convertible bonds is similar in fact to the issuance of new stocks in that it affects the physical foundation of a stock company and the interests of the existing shareholders, Article 429 of the Commercial Act regarding the action seeking nullification of the issuance of new stocks may apply mutatis mutandis to the issuance of convertible bonds (Supreme Court Decision 200Da37326 Decided June 25, 2004).

On the other hand, Article 429 of the Commercial Act provides that "the invalidity of issuance of new shares may be asserted only by a lawsuit within six months from the date of issuance of new shares only to shareholders, directors or auditors." Thus, even if the board of directors or the general meeting of shareholders has a defect in revoking or nullifying the resolution for issuance of new shares, a lawsuit may be instituted only by a lawsuit seeking nullification of issuance of new shares after the issuance of new shares becomes effective, unless there are special circumstances, such as where the defect is extremely serious to the extent that the issuance of new shares is nonexistent (see Supreme Court Decision 87Meu2316, Jul. 25, 198)

According to the reasoning of the judgment below, the court below determined that the defendant joining the defendant company's subscription for acceptance of KRW 300 million of the convertible bonds of this case against the defendant company on May 12, 1999, and that the payment between the defendant company and the defendant company was an alternative of KRW 300 million of the loan to the defendant company as of March 1, 1999, and that the defendant company completed registration with respect to the above convertible bonds of May 17, 1999, and that the above issuance of the above convertible bonds was already effective, and therefore, the lawsuit seeking confirmation by the resolution of the board of directors, one of the process of issuance of the above convertible bonds, without a direct action for invalidity of the issuance of the bonds, is unlawful. In light of the above legal principles and the records, the court below's fact finding and determination are justified, and there is no violation of law such as misunderstanding of legal principles or misunderstanding of facts against the rules of evidence as alleged in the grounds for appeal.

B. Regarding ground of appeal No. 2

In the case of issuance of convertible bonds, Article 429 of the Commercial Act is applied mutatis mutandis to the lawsuit for nullification of issuance of new shares. Thus, even in the lawsuit for confirmation of invalidity of issuance of convertible bonds, the limitation of the period of filing a lawsuit under Article 429 of the Commercial Act shall be applied. However, in the case of a lawsuit for confirmation of invalidity of issuance of convertible bonds, where there is any appearance in which the issuance of convertible bonds is registered without any substance of issuance of convertible bonds, the limitation of the period of filing a lawsuit for confirmation of existence of issuance of convertible bonds for six months under Article 429 of the Commercial Act is not applied (see Supreme Court Decision 87Meu2

According to the reasoning of the judgment below, the court below dismissed the lawsuit seeking confirmation of the invalidity of the issuance of convertible bonds among the preliminary claims in this case on the ground that the lawsuit was filed after six months have elapsed from the date of issuance of convertible bonds. The judgment of the court below is just in accordance with the above legal principles, and there is no error of law such as misunderstanding

However, the court below rejected the lawsuit for confirmation of non-existence of the convertible bonds in this case on the same ground. This part of the judgment of the court below is erroneous since the lawsuit for confirmation of non-existence of the convertible bonds in this case does not apply to the restriction of the filing period of June as stipulated in Article 429 of the Commercial Act. However, since the defendant's intervenor accepted the convertible bonds in this case and completed the payment procedure and the registration of the subscription price, it shall be deemed that there exists the substance of issuing the convertible bonds in this case as seen earlier, and therefore, since there is no resolution of the general meeting of shareholders of the defendant company in this case against the defendant company in this case, the above claim for confirmation of non-existence of the convertible bonds in this case against the defendant company in this part of this case shall not be dismissed for the reason that there is no non-existence of the issuance of the convertible bonds in this case as a matter of course, and therefore the above claim for confirmation of non-existence of the convertible bonds in this part shall not be dismissed

C. Regarding ground of appeal No. 3

According to the reasoning of the judgment below, the court below found that the defendant company was certified as to the minutes of the board of directors on May 12, 1999 without holding the board of directors at a specific place on May 20, 199, and the certificate was held on May 12, 199 when the defendant company held two directors, including the representative director, and one auditor among three directors including the representative director, in order to raise operating funds of the company on May 12, 1999. The attending directors stated that the board of directors passed a resolution to issue the convertible bonds of this case. However, the minutes of the board of directors are prepared by employees of the defendant company in accordance with the direction of the representative director of the defendant company, and the remaining minutes of the board of directors are affixed with seals on their own. The court below held that even if the directors and auditors attended the above minutes without holding the board of directors at a specific place without holding the board of directors, it cannot be viewed that there is no special reason for the plaintiff to assert that there is a large number of resolution to convene the board of directors without the convocation procedure.

In light of the relevant legal principles and records, the above fact-finding and judgment of the court below are just, and there is no error of law such as misconception of facts against the rules of evidence and misapprehension of legal principles as to defects caused by the resolution of board of directors.

D. Regarding ground of appeal No. 4

A claim for the maintenance of the issuance of convertible bonds is a claim against the company to maintain the issuance of convertible bonds in a case where the company is likely to suffer disadvantages due to the issuance of convertible bonds in violation of Acts and subordinate statutes or the articles of incorporation or in an remarkably unfair manner (Article 516(1) and Article 424 of the Commercial Act), and a claim shall be made before the issuance of convertible bonds becomes effective, namely, before the due date of payment of convertible bonds. On the other hand, when the convertible bonds holder requests the conversion of convertible bonds, the company shall issue stocks. Since the convertible bonds are the right of conversion, as a matter of course, at the time of the request for conversion, they naturally become a shareholder and lose the status as a bondholder (Articles 516 and 350 of the Commercial Act). Accordingly, there

According to the reasoning of the judgment below, the court below dismissed the defendant's primary claim of this case that had already been filed with the company prior to the filing of the lawsuit of this case on the ground that the defendant accepted the convertible bonds of this case, paid the price, completed the registration, and further the conversion had already occurred by claiming the conversion of the convertible bonds based on the above convertible bonds. In light of the above legal principles and records, the claim against the conversion of convertible bonds, among the main claim of this case, is the time of each claim, and there is no interest in the protection of rights. In light of the above legal principles and records, the above measures of the court below are just, and there is no error of law by misunderstanding legal principles

E. Ground of appeal No. 5

According to the reasoning of the judgment below, the court below, based on its adopted evidence, found that around February 199, the Gyeonggi Chemical Industry Co., Ltd. (hereinafter referred to as the "Game Chemical") was faced with the financial crisis due to aggravation of its management. Nonparty 2, the husband of the defendant joining the defendant, first of all, sold the athletic chemical shares possessed by himself and his wife, etc. in order to avoid the bankruptcy of the athletic chemical, and contributed 3.3 billion won out of the proceeds of the sale to the athletic chemical. The first of all, the company, one of the subsidiaries of the athletic chemical (hereinafter referred to as the "Game Engineering") took the form of lending the athletic engineering to the athletic chemical, through the Gyeonggi Engineering Co., Ltd., Ltd. (hereinafter referred to as the "Game Engineering"), and later, the defendant et al. did not receive 3.3 billion won funds from the above subsidiaries such as the defendant Co., Ltd., and the defendant Co., Ltd. did not receive 9.3 billion won funds from the defendant Co., Ltd. to the above company and the defendant Co.

In light of the records, the above fact-finding and judgment of the court below are justified, and there is no error of law such as misconception of facts as alleged in the grounds of appeal.

2. Judgment on the grounds of appeal by the Intervenor joining the Defendant

In a case where there is a serious defect that could not be seen as having existed such a resolution, such as preparing a false minutes of the general meeting without undergoing the actual convocation procedure and the meeting procedure, a resolution of the general meeting of shareholders shall be deemed non-existent (Supreme Court Decision 91Da5365 delivered on September 22, 192).

According to the reasoning of the judgment below, the court below determined that the plaintiff's claim for confirmation of existence of the amendment of the articles of incorporation of this case was an interest in its confirmation, inasmuch as the defendant company, without any written notice or convocation notice to each shareholder for convening the general meeting, or without any actual resolution, attended by all shareholders on March 30, 199 and made a false resolution of the general meeting of shareholders as stated in the attached list No. 1 of the judgment below. If the above circumstances are the same, the above resolution for amendment of the articles of incorporation as stated in the attached list No. 1 of the judgment below that the procedural defect was too serious. Further, even if the defendant company's resolution for amendment of the articles of incorporation of this case or the issuance of convertible bonds can not be denied, the above appearance of the resolution for amendment of the articles of incorporation of this case was actually made, and there is no risk of issuing convertible bonds to those other than the shareholder pursuant to the non-existent resolution for amendment of the articles of incorporation.

In light of the above legal principles and records, the above fact-finding and decision of the court below are just, and there are no errors in violation of the rules of evidence or misapprehension of legal principles as alleged in the grounds of appeal, and the defendant's intervenor's intervenor's decision on October 12, 1993 is not a proper precedent as it differs from this case.

3. Conclusion

Therefore, all appeals by the Plaintiff and the Intervenor joining the Defendant are dismissed as it is without merit, and the costs of appeal are assessed against each party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jae- Jae (Presiding Justice)