[1] Whether it can be presumed that a director approved the resolution of the board of directors in accordance with Article 399(3) of the Commercial Act, in case where a director recorded in the minutes of a meeting of the board of directors that he had the right to attend the

[2] The standard for determining whether the board of directors’ consent to a resolution constitutes an act in breach of the duty of due care as a good manager in a case where a director of a stock company resolves to make a contribution to one of the shareholders of the company

[3] In a case where the board of directors of the corporation A, a casino operator, resolved to make a contribution to the local government Eul, and the corporation Gap sought damages pursuant to Article 399 of the Commercial Act against the director Byung who supported the resolution of the board of directors, the case affirming the judgment below which held that Byung et al's consent to the above resolution constitutes an act contrary to the duty of due care as a director's good manager

[4] In a case where a director is liable for damages to the company by committing acts in violation of Acts and subordinate statutes or the articles of incorporation or neglecting his/her duties, whether the amount of damages can be limited by taking into account all the circumstances such as the circumstances leading up to the violation of duties (affirmative), and whether the determination of the rate of fact-finding or restriction as to the grounds for taking into account the limitation of damages in this

[1] Article 39(1) of the Commercial Act provides, “If a director commits, or neglects to perform, an act in violation of Acts and subordinate statutes or the articles of incorporation, by intention or negligence, the director shall be jointly and severally liable for damages to the company.” Article 399(2) of the Commercial Act provides, “If the act in the preceding paragraph is committed by a resolution of the board of directors, the director who consented to the resolution shall also be liable for damages to the company.” Article 399(3) of the Commercial Act provides, “If the act in the preceding paragraph is committed by a resolution of the board of directors, and the minutes in which the objection was not stated, are presumed to have been approved by the resolution.” As such, Article 399(2) of the Commercial Act provides, “The director shall be presumed to have consented to the resolution.” Article 399(3) of the Commercial Act provides, on the premise that the director is liable for damages against the resolution of the board of directors, on the premise of Article 399(2) of the Commercial Act provides that “Where it is difficult to prove that the minutes are not recorded in the resolution.”

[2] If a director of the board of directors did not fully review the nature of the contribution, the effect of the contribution act on the purpose of the establishment of the company and the public interest, the reasonableness of the amount of the contribution, the relationship between the company and the other party to the contribution in light of the financial status of the company, etc. when a director of the board of directors passed a resolution on the contribution act for one of the shareholders of the company, the act of the director'

[3] In a case where the board of directors of a casino corporation Gap, a casino operator, resolved to make a contribution to the local government Eul, and the company Gap sought damages pursuant to Article 399 of the Commercial Act against the director Byung who consented to the resolution of the board of directors, the case affirming the judgment below that the resolution of the board of directors was made for the purpose of contributing to the balanced regional development through the economic promotion of abandoned mine areas and the public interest such as improving the living conditions of residents, and even if the amount of contribution cannot be deemed excessive in light of the financial status of the company Gap, it is not large to contribute to the promotion of the entire abandoned mine areas, and it is difficult to see that the contribution was made in a way that serves the public interest in light of the object of the contribution and the place of its use, and it is difficult to see that Byung et al. sufficiently reviewed the above points at the time of the resolution of the board of directors.

[4] When a director acts in violation of Acts and subordinate statutes or the articles of incorporation or neglects his duties and thereby is liable for damages to the company, the scope of damages can be limited in light of the ideology of the fair compensation system, taking into account all the circumstances such as the contents and nature of the pertinent business, the background leading up to the pertinent director’s breach of duties and the manner leading up to the pertinent director’s breach of duties, the objective circumstances or degree involved in the occurrence and expansion of damages to the company, the degree of contribution to the ordinary director’s company, the pertinent director’s profit accrued from the pertinent violation, the existence of the pertinent director’s organizational structure, and the existence of risk management system, etc. In such a case, setting the rate of fact-finding or restriction on the grounds for taking into account the damages

[1] Article 399 of the Commercial Act / [2] Articles 382(2) and 399 of the Commercial Act, Article 681 of the Civil Act / [3] Articles 382(2) and 399 of the Commercial Act, Article 681 of the Civil Act / [4] Article 399 of the Commercial Act

[4] Supreme Court Decision 2002Da60467, 60474 Decided December 10, 2004 (Gong2005Sang, 87) Supreme Court Decision 2016Da16191 Decided October 25, 2018 (Gong2018Ha, 2219)

Gangwonland Co., Ltd. (Attorneys Park Sung-soo et al., Counsel for the plaintiff-appellant)

Defendant 1 and eight others (Bae, Kim & Lee LLC, Attorneys Go-ro et al., Counsel for the defendant-appellant)

Busan High Court Decision 2001Na11448 decided May 1, 200

Seoul High Court Decision 2015Na2046254 decided September 23, 2016

The part of the lower judgment against Defendants 1 and 2 is reversed, and that part of the case is remanded to the Seoul High Court. The appeals by Defendants 3, 4, 5, 6, 7, 8, and 9 are dismissed, respectively. The costs of appeal between the Plaintiff, Defendants 3, 4, 5, 6, 7, 8, and 9 are assessed against the Intervenor, and the remainder are assessed against the Defendants, respectively.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the grounds of appeal that it is unlawful to presume that Defendant 1 and Defendant 2 were approved by the resolution of the board of directors pursuant to Article 399(3) of the Commercial Act.

A. Based on its reasoning, the lower court determined that the Defendants’ instant resolution to contribute KRW 15 billion to the Intervenor joining the Defendant constitutes a case where the Plaintiff neglected to perform his/her duties, and that Defendant 1 and Defendant 2 were presumed to have agreed to the instant resolution because they did not include any objection in the minutes at the time of the instant resolution as a director, and that they were jointly and severally liable with the remaining Defendants pursuant to Article 399(2) and (3) of the Commercial Act.

B. However, we cannot agree with the determination that Defendant 1 and Defendant 2 were presumed to have agreed to the resolution of this case for the following reasons.

1) Article 399(1) of the Commercial Act provides, “If a director commits, or neglects to perform, an act in violation of the Acts and subordinate statutes or the articles of incorporation by intention or negligence, the director shall be jointly and severally liable for damages to the company.” Article 399(2) of the Commercial Act provides, “If the act referred to in the preceding paragraph is committed by a resolution of the board of directors, the director who has consented to such resolution shall also be liable for damages to the company.” Article 399(3) of the Commercial Act provides, “If the act is committed by a resolution of the board of directors, and the minutes of which objection has been raised are not stated, the person who has participated in the resolution shall be presumed to have consented to such resolution.” As such, Article 399(2) of the Commercial Act provides, “When the duties of the director are committed by the resolution of the board of directors, the director shall be held liable for damages to the director who consented to such resolution.” Article 399(3) of the Commercial Act provides that “Where it is difficult to prove that the director did not have approved the minutes of the resolution of the board.”

2) According to the evidence adopted by the court below, although Defendant 1 and Defendant 2 appeared at the 111th board of directors of the Plaintiff, they were recorded in the minutes as their authority at the time when the resolution of this case was made. In light of the circumstances, Defendant 1 and Defendant 2 cannot be deemed to be “a person who is not in the minutes” under Article 399(3) of the Commercial Act, and thus, it cannot be presumed to have consented to the resolution of the board of directors pursuant to Article 399(3) of the Commercial Act, and therefore, they do not bear the responsibility under Article 399(2) of the Commercial Act.

C. Nevertheless, the court below erred by misapprehending the legal principles as to Article 399(3) of the Commercial Act, thereby adversely affecting the conclusion of the judgment, on the ground that Defendant 1 and Defendant 2 merely stated that they were authorized to make a statement in the minutes, and that they did not have any objection, and thus, deemed that the Defendants were presumed to have consented to the resolution of this case, and thus, the above Defendants are jointly and severally liable for damages to the Plaintiff with other directors.

2. As to the ground of appeal on the purport that the remaining Defendants except Defendant 1 and Defendant 2 (hereinafter “Defendant 3”) did not violate the duty of care as a good manager.

A. If a director of a stock company did not undergo a sufficient review on the nature of the contribution, the effect of the contribution act on the establishment purpose and public interest of the company, the reasonableness of the amount of the contribution in light of the financial status of the company, the relationship between the donor and the company, etc. by the board of directors of the board of directors, with the resolution on the contribution act for one of the shareholders of the company, constitutes an act that violates the duty of due care as a good manager of the director

B. The lower court determined as follows by comprehensively taking account of the circumstances stated in its reasoning.

1) The instant resolution was adopted for the purpose of contributing to the public interest, such as balanced development between regions through the economic promotion of abandoned mine areas and improvement of residents’ living conditions through the economic promotion of abandoned mine areas, and it is difficult to view the amount of the donation as excessive in light of

2) However, it is difficult to deem that the contribution act pursuant to the instant resolution is not so large that it contributes to the promotion of the public interest of the entire abandoned mine area, and that it was carried out in a considerable way to achieve the public interest in light of the subject matter of the contribution and the source of its use, and it is difficult to view that Defendant 3, etc. were sufficiently examined the above points at the time of the resolution

3) Therefore, the consent of Defendant 3, etc. to the resolution of this case constitutes an act that violates the duty of care as a good manager of directors.

C. In light of the aforementioned legal principles and records, the lower court did not err in its judgment by misapprehending the legal principles as to the duty of care as a good manager, the business judgment rule, and violating the rules of evidence.

3. As to the grounds of appeal that the defendant 3 et al. recognized excessive liabilities

A. In a case where a director acts in violation of Acts and subordinate statutes or the articles of incorporation or neglects his duties and thereby is liable to compensate the company for damages, the scope of the damages can be limited in light of the ideology of the fair compensation system, such as the content and nature of the pertinent business, the background leading up to the pertinent director’s breach of duties and the mode of violation of duties, the objective circumstance or degree involved in the occurrence and expansion of company damages, the degree of contribution to the ordinary director’s company, the pertinent director’s benefits arising from the pertinent breach of duties, the existence of the pertinent director’s benefits arising from the pertinent breach of duties, the existence of the company’s organization failure, and the establishment of the risk management system, etc. In such a case, determination of the rate of the damages by fact-finding or its limitation on the grounds for taking into account the damages amount is not remarkably unreasonable in light of the principle of equity (see, e.g., Supreme Court Decision 2002Da60467, Dec. 10

B. The lower court limited the liability for damages of Defendant 9 to 20% of the amount of damages, taking into account the developments leading to the instant resolution by Defendant 3, etc., and limited the liability for damages of Defendant 3, Defendant 4, Defendant 5, Defendant 6, Defendant 7, and Defendant 8 to 10% of the amount of damages.

C. Examining the aforementioned legal principles and records, the lower court’s finding of facts or determination of its ratio on the grounds for limitation of liability cannot be deemed significantly unreasonable in light of the principle of equity. Therefore, the lower court did not err in its judgment by misapprehending the legal doctrine on limitation of liability and by inconsistent reasoning, as otherwise alleged in

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal by Defendants 1 and 2, the part of the judgment of the court below against Defendants 1 and 2 is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion, and the appeal by Defendants 3, etc. is dismissed, respectively. The costs of appeal by Defendants 3, etc. among the costs of appeal between the Plaintiff and Defendant 3, etc. are borne by the Intervenor joining the Defendant, and the remainder are borne by Defendant 3, etc., who is the losing party

Justices Kwon Soon-il (Presiding Justice)