The meaning of “transfer of the whole or essential part of the business” under Article 374(1) of the Commercial Act which requires a special resolution of the general meeting of stockholders.

For the purpose of Article 374 subparagraph 1 of the Commercial Act where a special resolution of the general meeting of stockholders requires a special resolution, the term “transfer of the whole or part of the business” means a transfer of the whole or important part of the business which is organized for a specific business purpose and functioned as an organic whole. It is necessary that the transfer of the business property by the transferring company should be accompanied by the succession of the whole or important part of the business activities of the transferring company, so it does not constitute a simple transfer of the business property, but if the disposal of the business property results in the same result as the transfer or closure

Article 374 subparagraph 1 of the Commercial Act

Supreme Court Decision 65Da2140, 2141 Decided Nov. 25, 1969

Dongyang Petroleum Co., Ltd., Counsel for the plaintiff-appellant

Kangwon Petroleum Co., Ltd., Counsel for the defendant-appellant

Seoul High Court Decision 85Na4100 decided September 24, 1986

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The Plaintiff’s attorney’s ground of appeal is examined.

1. For the purpose of Article 374 subparagraph 1 of the Commercial Act where a special resolution of the general meeting of shareholders is required, the term “transfer of the whole or essential part of the business” means a transfer of the whole or essential part of the business which is organized and functioned as an organic whole for a certain business purpose. It is a mere transfer of the business property by the transferring company is subject to the succession of the whole or important part of the business activities of the transferring company. However, in case where the disposal of the business property results in the same result as the transfer or closure of the whole or part of the business of the transferring company due to the disposal of the business property, a special resolution of the general meeting of shareholders is required (see Supreme Court Decision 64Da569 delivered on Nov. 25, 196; 65Da2140, 2141 delivered on Nov. 25, 196).

2. However, according to the reasoning of the judgment below, since the plaintiff company was established with the whole of the above petroleum products' input, sale, storage and transportation service business and its incidental business as its main purpose, the court below determined that the plaintiff company's purchase and sale of petroleum products with the trade name of the land and the building of this case and its adjacent site and building owned by the non-party, and operated the oil retail business with the trade name of the oil station of Yansan-gun, Chungcheongnam-gun, and that it installed a large scale oil reservoir on the ground of its own, and operated the oil wholesale business with six oil tanks in 1983, and it did not constitute an unlawful determination of the court below as to the above disposal of the above petroleum products' property of 197,000,0000,0000,0000,0000 won or less than the maximum amount of the secured debt of the real estate owned by the non-party 1 corporation's company's own as well as the above disposal and sale of the above company's property of 197,07,07,0, if it did not affect the above company's bankruptcy.

3. Therefore, the appeal shall be dismissed, and all costs of appeal shall be assessed against the losing party. It is so decided as per Disposition by the assent of all participating judges.

Justices Park Jong-dong (Presiding Justice)