Whether the “reasons” required to be written in accordance with Article 403(2) of the Commercial Act includes the content of the cause for occurrence of responsibility and the director to be held liable (affirmative); and where the name of the director to be held liable in a written document is not written or the fact of occurrence of liability is somewhat rough, but the company can specify it by integrating the contents written by the company, materials held by the company, etc., whether such written document satisfies the requirements prescribed in Article 403(2) of the Commercial Act (affirmative)

Article 403(1), (2), and (3) of the Commercial Act provide that "any shareholder who holds shares equivalent to 1/100 or more of the total number of issued and outstanding shares may file a lawsuit against the company to enforce directors' liability, and if the company fails to file a lawsuit within 30 days from the date it receives such request, the above shareholder may immediately file a lawsuit for the company for the company." The purport of Article 403(1), (2), and (3) of the Commercial Act is to protect the interests of the company by recognizing a representative lawsuit that can enforce directors' liability by exercising directors' rights for the company, but to prevent the company from filing a lawsuit by preparing the requirements for filing a lawsuit by taking into account that the shareholder's representative lawsuit is based on

Therefore, the “reasons” to be written in accordance with Article 403(2) of the Commercial Act shall include the contents on the director subject to responsibility and the facts on the cause of occurrence of liability so that the company, which is the subject subject of rights, can decide whether to file a lawsuit. However, it cannot be said that a shareholder always has accurate knowledge and appropriate information about the company’s affairs, etc., and thus, even if a shareholder does not always indicate the name of the director subject to liability presumption in the document submitted pursuant to Article 403(2) of the Commercial Act or somewhat outlines the fact that the cause of liability arises, if a company can specify the facts on which liability arises by taking into account the content thereof, the minutes of the board of directors, etc., and the materials held by the company, the document must be deemed to have satisfied the requirements prescribed in Article

Article 403(1), (2), and (3) of the Commercial Act

Supreme Court Decision 2009Da98058 Decided April 15, 2010 (Gong2018Sang, 635) Supreme Court Decision 2017Da270916 Decided February 28, 2018

【Good Corporate Governance Institute】 (Law Firm C&K, Attorneys Kim Jong-soo, Counsel for the defendant-appellant)

Defendant 1 and five others (Bae & Yang LLC, Attorneys Jeong Young-deok et al., Counsel for the defendant-appellant)

Defendant 2 and 8 others (Law Firm Han-ro, Attorneys Oin-hun et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2015Na2056305 decided October 30, 2019

All appeals are dismissed. The costs of appeal by the Plaintiff are assessed against the Plaintiff, and the costs of appeal by Defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15 are assessed against the Defendants.

The grounds of appeal are examined.

1. Plaintiff’s ground of appeal

A. Regarding the acquisition of the instant RG insurance

For the reasons indicated in its reasoning, the lower court determined that it was difficult for Defendant 1, Defendant 5, Defendant 6, Defendant 7, Defendant 8, Defendant 9, and Defendant 10 to intentionally be exempted from monitoring and supervision by using the internal control system of the interesting fire and marine insurance company (hereinafter “interesting fire insurance”).

In light of the relevant legal principles and records, the judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the director's violation of surveillance duty, or by violating the

B. Purchase of membership in the instant golf course

For the reasons indicated in its holding, the lower court determined that the amount equivalent to operating profit from August 18, 2010 to August 17, 2020 is included in the scope of compensation for damages, in calculating the amount of compensation for the interesting fire insurance of Defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15 with respect to the purchase of the instant golf course membership, the difference between the purchase price of the instant golf course membership and the arm’s length price of the instant golf course membership is 4.8 billion won.

In light of the relevant legal principles and records, such determination by the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles as to the calculation of damages, or by violating the

2. As to the grounds of appeal by Defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15

A. Whether the shareholder representative lawsuit satisfies the requirements (defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15)

1) Article 403(1), (2), and (3) of the Commercial Act provide that “A shareholder who holds no less than 1/100 of the total number of issued and outstanding shares may file a lawsuit against the company to enforce directors’ liability in a document stating the reasons therefor, and if the company does not file a lawsuit within 30 days from the date on which the request was received, the above shareholder may immediately file a lawsuit for the company for the benefit of the company.” The purport of the above provision is to protect the interests of the company by recognizing a representative lawsuit for which shareholders can enforce directors’ liability by exercising their rights on behalf of the company, but to prevent the company from filing a lawsuit by preparing the requirements for filing a lawsuit (see Supreme Court Decisions 2009Da98058, Apr. 15, 2010; 2017Da270916, Feb. 28, 2018, etc.).

Therefore, the “reasons” to be written in accordance with Article 403(2) of the Commercial Act shall include the contents on the director subject to responsibility and the facts on the cause of occurrence of liability so that the company, which is the subject subject of rights, can decide whether to file a lawsuit. However, it cannot be said that a shareholder always has accurate knowledge and appropriate information about the company’s affairs, etc., and thus, even if a shareholder does not always indicate the name of the director subject to liability presumption in the document submitted pursuant to Article 403(2) of the Commercial Act or somewhat outlines the fact that the cause of liability arises, if a company can specify the facts on which liability arises by taking into account the content thereof, the minutes of the board of directors, etc., and the materials held by the company, the document must be deemed to have satisfied the requirements under Article 403(

2) The court below rejected the Plaintiff’s derivative suit based on the Plaintiff’s written claim as follows: (a) on the premise that, even if the name of the director subject to the prosecution for liability is not indicated in the document under Article 403(2) of the Commercial Act; (b) if the company can specify the director subject to the prosecution for liability by taking into account the contents written in question, the minutes of the board of directors’ meetings, etc., and if it is possible to specify the director subject to the prosecution for liability, the document must be deemed to have satisfied the requirements prescribed in Article 403(2) of the Commercial Act; and (c) on the ground that the Plaintiff’s written claim for the prosecution for interesting fire insurance did not contain the name of the director subject to the prosecution for liability and did not meet the requirements prescribed in Article 403(2) of the Commercial Act, and thus, the Plaintiff’s derivative suit based on the written claim as to the lawsuit does

3) Examining the aforementioned legal principles and records, the lower court’s determination is justifiable. In so determining, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the requirements for filing a suit

B. Whether the amendment to the claim is legitimate (defendants 2, 3, 4, and 5)

For the reasons indicated in its holding, the lower court determined that the Plaintiff’s existing claim against Defendant 2, Defendant 3, and Defendant 4 was unlawful to change the claim for damages related to the purchase of the instant golf club membership and to add the claim for damages related to the purchase of the instant golf club membership to the existing claim against Defendant 5.

In light of the relevant legal principles and records, such determination by the lower court is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on changes in claims

C. Whether there was negligence in purchasing membership rights of the instant golf course (Defendant 2, Defendant 3, Defendant 4, Defendant 11, Defendant 12, Defendant 13, and Defendant 14)

For the reasons indicated in its reasoning, the lower court determined that Defendant 2, Defendant 3, Defendant 4, Defendant 11, Defendant 12, Defendant 13, and Defendant 14 committed an act in violation of the relevant statute by negligence in connection with the purchase of membership of the instant golf course.

In light of the relevant legal principles and the records, the judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the director's liability for the company under Article 399 of the Commercial Act, or by failing to exhaust

D. Whether the instant golf course membership agreement exists (Defendant 5, Defendant 15)

For the reasons indicated in its holding, the lower court determined that Defendant 5 and Defendant 15 instructed Defendant 2, Defendant 3, Defendant 4, Defendant 11, Defendant 12, Defendant 13, and Defendant 14, who is a director of the interesting country fire insurance in connection with the purchase of membership of the instant golf course.

In light of the relevant legal principles and records, the judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the responsibility of the manager of work instruction under Article 401-2 (1) 1 of the Commercial Act, or in the incomplete hearing

3. 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 Park Jung-hwa (Presiding Justice)