[2] In a case where the number of the representative director under the law or the articles of incorporation could not be collected due to the retirement of the representative director, and the retired representative director failed to take the procedure for appointing the former representative director during the period in which he/she has the right and duty as the representative director until he/she takes the office, whether the retired representative director may be punished by a fine for negligence by applying Article 635(1)8 of the Commercial Act

[2] Article 635 (1) 8 of the Commercial Code imposes a fine for negligence on a person who is in a position to take a general meeting convening procedure for the appointment of a director or auditor under the law or the articles of incorporation. However, as the "director" subject to appointment is not included in the "representative director", the "representative director" is not included in the "representative director". Thus, the retired representative director failed to take the number of the representative director under the law or the articles of incorporation until he/she takes the office after his/her resignation, and thus, he/she cannot be punished by a fine for negligence on the ground that he/she neglected the procedure for appointing the remaining representative director during the period of his/her right and duty as the representative director until

Article 635(1) of the Commercial Act provides that “When a director, etc. of a company commits an act that falls under any of the following subparagraphs, he/she shall be punished by a fine for negligence not exceeding five million won” under Article 635(1)1 of the Commercial Act provides that “when he/she neglects the registration prescribed in this Part, he/she shall be punished by a fine for negligence not exceeding five million won.” Article 35(1) of the Articles of incorporation of a company other than the applicant for registration (hereinafter referred to as “non-applicant 1”) provides that “not less than three directors of the company shall be appointed.” Meanwhile, Article 39(1) provides that “one or

However, in cases where a director, including a representative director, retires from office due to the expiration of his/her term of office or resignation, and the result of the retirement of the representative director or the head (minimum number of persons or a specific number) of the director under the law or the articles of incorporation occurs, the retired director has the right and duty as a director until the new appointed director (Article 386(1) and Article 389(3) of the Commercial Act). In such cases, the two or three weeks of the two or three weeks of the retirement registration of the retired director shall be calculated not from the date of his/her retirement, as in general cases, but from the date of his/her retirement. It is reasonable to deem that only the registration of retirement of the retired director cannot be separately applied until the former director takes office (see Supreme Court en banc Order 2004Ma800, Mar. 8, 2005).

In light of the above legal principles, the Re-Appellant, the only representative director of the non-applicant 1 company, retired on March 23, 2005, and the Re-Appellant retired from the position of director. However, since the non-applicant 2, 3 retired on March 26, 2005 after the expiration of the term of office, non-applicant 1 company retired from the position of director, the non-applicant 4, 5, and 6 still fell under the case where the number of the representative director prescribed by the law or the articles of incorporation was decided even if the non-applicant 4, 5, and 6 did not constitute the case where the number of the directors was decided, and the initial date of the registration of retirement of the Re-Appellant, which is the representative director, until the representative director takes office, shall be December 6, 2005. Accordingly, since the Re-Appellant applied for the registration of retirement on December 19, 2005, it cannot be said that Article 635 (1) 1 of the Commercial Act violates the Commercial Act.

Furthermore, Article 635(1)8 of the Commercial Act imposes a fine for negligence on a person who is in a position to take procedures for convening a general meeting to appoint him/her, in cases where he/she substitutes for the head of a director or an auditor as prescribed by the Act or the articles of incorporation. However, since the "director" subject to appointment is not included in the "representative director", it is impossible for the retired representative director to take the number of representative directors as prescribed by the Act or the articles of incorporation due to his/her retirement, and thus, he/she cannot be punished by a fine for negligence on his/her retired representative director on the ground that he/she neglected the procedures for appointing the former representative director during the period in which he/she has the right and duty

Nevertheless, the court below maintained the decision of the court of first instance that held that the re-appellant violated Article 635 (1) 8 of the Commercial Act on the premise that the re-appellant neglected the appointment procedure for the successor representative director. Thus, the court below erred by misapprehending the legal principles on neglecting the appointment procedure under Article 635 (1) 8 of the Commercial Act, which affected the conclusion of the judgment.

However, there is a ground to reverse only part of the act of violation of this case against the re-appellant, but all of the judgment of the court below should be reversed.

Therefore, the order of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Dai-hee (Presiding Justice)