[2] The person who bears the burden of proving the existence of “justifiable cause” under Article 385(1) of the Commercial Act concerning the removal of a director before the expiration of the term of office

[2] Where the term of office of a director of a stock company was set and a director is dismissed before the expiration of the term without justifiable grounds, the director may claim damages from the company (the latter part of Article 385(1) of the Commercial Act). In such a case, the burden of proving the existence of “justifiable cause” is borne by the director who claims damages.

If a director is dismissed from office against his/her will as well as an agreement on remuneration for an employment contract entered into between a stock company and a director, and the director agrees to pay a certain amount of compensation for retirement benefits separately from his/her intention, such compensation for dismissal is paid only when the director is dismissed against his/her will, so it cannot be viewed as a kind of remuneration paid in return for the performance of his/her duties, such as retirement compensation.

However, unless otherwise stipulated in the articles of incorporation, remuneration stipulated in an employment contract between a director and a company may be claimed against the company only by a resolution of the general meeting of shareholders, unless otherwise stipulated in Article 388 of the Commercial Act, and even if such compensation does not fall under the form of remuneration, it shall not be included in the same employment contract as remuneration and shall be paid in relation to such employment contract. In addition, even if a director is dismissed during his term of office, the company shall be liable for damages only when he is dismissed without justifiable reasons (Article 385(1) of the Commercial Act). If the above compensation is deemed to be paid to the dismissed director against his will, regardless of whether there is a justifiable reason, so it does not constitute a separate resolution of the general meeting of shareholders on the ground that it does not constitute a favorable payment to the director, it cannot prevent the directors from entering into an employment contract, and thus, the above compensation cannot be concluded to prevent any harm to the company's interests in relation to the employment contract and to protect the interests of the shareholders, which would result in the exercise of the rights of the general meeting of shareholders.

Therefore, Article 388 of the Commercial Act on the remuneration of directors shall be applied mutatis mutandis or applied mutatis mutandis to the above compensation for dismissal, and it shall be interpreted that the company may claim it only when the resolution of the general meeting of shareholders is required unless the amount is stipulated in the articles of incorporation.

Examining the reasoning of the lower judgment in light of the records, the lower court’s determination that the Defendant did not have an obligation to pay the instant compensation, etc. to the Plaintiffs is justifiable in accordance with the aforementioned legal doctrine, since the instant compensation, etc. was not paid but did not require a resolution of the general meeting of shareholders in order to claim it against the company. Furthermore, it is reasonable to deny the Plaintiffs’ assertion that the Defendant ratified the agreement to pay the instant compensation, etc. on the grounds stated in its reasoning. In so doing, the lower court did not err by misapprehending the legal doctrine on the legal nature of the instant compensation and the resolution

2. Regarding ground of appeal No. 1

The plaintiffs' assertion in the grounds of appeal on this point is that the board of directors' resolution on each of the employment contracts of this case between the plaintiffs and the defendant is lawful and valid, but as seen above, the court below rejected the plaintiffs' primary claims on the ground that there was no resolution of the general meeting of shareholders on the compensation for dismissal, etc. of this case, and as long as such determination is justified, it cannot affect the conclusion of the judgment as to whether there was legitimate approval of the board of directors on the employment contract

3. Regarding ground of appeal No. 3

In a case where the term of office of a director of a stock company has been fixed and he is dismissed before the expiration of the term without any justifiable reason, that director may claim damages from the company (the latter part of Article 385(1) of the Commercial Act). In such a case, the burden of proving “justifiable cause” is borne by the director who claims damages (see Supreme Court Decision 2004Da47529 delivered on January 14, 2005).

In light of the above legal principles and the records, the court below is just and acceptable to determine that the plaintiffs did not have any justifiable reason for the dismissal of directors in light of the following facts: the plaintiffs and the shareholders and holding companies of the defendant company; the relation between the shareholders and holding companies of the defendant company; the plaintiffs distorted the intentions of the Rite Group, which are holding companies in relation to their delisting; and the plaintiffs entered into each employment contract of this case including large amount of compensation for his interests only after being aware that they will be dismissed from office as the defendant's director; and there is no error in the misapprehension of legal principles as to the existence of justifiable reasons for the dismissal of directors, violation of the rules of evidence, and incomplete hearing, as alleged in the grounds for appeal.

4. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jeon Soo-ahn (Presiding Justice)