In a case where Company A: (a) convened a temporary general meeting of shareholders by sending a notice of convening a meeting without specifying the contents and exercise method of the appraisal right of the opposing shareholders against the merger; (b) Company B passed the agenda approved for the merger with Company B; and (c) Company C, who did not give written notice of opposing the merger before the general meeting, did not exercise the right to object to the above agenda; and (d) purchased shares by sending a certificate of contents within 20 days from the date of resolution

In a case where: (a) Company A issued a written notice of convening a general meeting of shareholders that does not state the contents and method of exercising the appraisal right of shareholders; and (b) Company B passed the agenda for approving the merger with Company B; (c) Company B, who did not give written notice of dissent from the merger before the general meeting, issued a written notice of convening a general meeting of shareholders; and (d) Company B did not exercise the appraisal right of shareholders within 20 days from the date of resolution of the general meeting; and (c) Company B did not exercise the appraisal right of shareholders without giving written notice of dissent from the merger, the case holding that: (a) Company B did not exercise the appraisal right of shareholders under Article 374(2) of the Commercial Act, which applies mutatis mutandis under Article 530(2) of the Commercial Act, to protect the minority shareholders who oppose the merger; and (b) Company B did not exercise the appraisal right of shareholders before the general meeting of shareholders; and (b) Company B did not exercise the appraisal right of shareholders; and (c) did not exercise the appraisal right of shareholders before the merger.

Articles 374(2), 374-2, 522(1), 552-3(1), and 530(2) of the Commercial Act

Applicant (Attorney Lee Byung-ju, Counsel for defendant-appellant)

Gyeonggi Tourism Development Corporation

Suwon District Court Order 2010Mo59 dated August 23, 2011

1. Revocation of a decision of the first instance;

2. The purchase price of 31 share (1,000,000 per share) issued by the Oran Tourism Development Corporation, merged on September 25, 2008, shall be 7,439,949 per share of the case principal, for which the applicant has requested the purchase.

3. The total expenses shall be borne by the principal of the case.

The same shall apply to the order.

1. Basic facts

According to the records, the following facts are proved:

A. The applicant is a shareholder who holds 31 shares (the face value of which is KRW 1,00,000 per share) of Ora Tourism Development Co., Ltd. (hereinafter “Oar Tourism”) that had operated a golf course (blud-based) in the area of 8,876 square meters in the 156-1 sports site in Gwangju-si, Mai-si and its neighboring land.

B. The principal of this case, from July 2006, acquired shares of some shareholders of the Oral Tourism from around July 2006 to become the largest shareholder of Oral Tourism (which shall hold 14,823 shares out of total issued 17,430 shares). On the other hand, the principal of this case had merged with Oral Tourism.

C. On July 25, 2008, Lao Tourism approved the above merger by the resolution of the board of directors, and on August 8, 2008, sent a notice of convening a temporary general meeting of shareholders to the applicant as follows. At the same time, Lao Tourism did not give notice of the contents of appraisal rights and the method of exercising appraisal rights under Article 374(2) of the Commercial Act applied mutatis mutandis under Article 530(2) of the Commercial Act.

1. Date: August 22, 2008 (gold) 09:30

2. Places: Blubert consortiums, employees' restaurants;

3. Objectives;

(a) Bills referred to in subparagraph 1: The cases of approving mergers between us and the development of Gyeonggi Tourism;

(1) Merger ratio: 23 weeks for the development of the game tourism per share of our shares;

(2) Scheduled date of merger: September 22, 2008

(c) A surviving corporation: Development of Gyeonggi Tourism (State);

(b) Bills referred to in subparagraph 2: Modification of articles of incorporation;

D. On Aug. 22, 2008, Orar Tourism held a temporary general meeting (hereinafter “instant general meeting”). At the place of the general meeting, documents explaining the background and schedule of the merger, the grounds for the calculation of the merger ratio, etc. (No. 2-1, 2-2) were distributed to the applicant. The period for exercising appraisal rights to the documents was from Aug. 22, 2008 to September 10, 2008, the appraisal value per share of Orar Tourism was stated as KRW 7,439,949, respectively. The instant general meeting was 14,885 shares (85.39%) among the total number of shares issued by the said company. The applicant passed the instant general meeting to the approval agenda for the merger with the instant principal at the 17,430 shares (85.39%). After that, the applicant had the right to time for the said agenda. The registration of the merger was completed on September 25, 2008.

E. Meanwhile, on September 1, 2008, the applicant sent a certificate of content to the effect that he/she would make a claim for purchase of shares (total share 31 shares) held by the applicant to the Oral Tourism, and Oral Tourism did not give any special reply to the claim even if he/she received the claim around that time.

F. The provisions of the Commercial Act relating to the instant case are as follows.

Article 522 (Written Agreement of Merger and Resolution of Approval)

(1) The merger of a company shall prepare a merger contract and obtain approval from a general meeting of shareholders.

Article 522-3 (Appraisal Rights of Shareholders Dissenting Merger)

(1) If, in case where the board of directors has made a resolution on the matters set forth in Article 522 (1), a shareholder dissenting from such resolution has notified in writing the company of his intention of dissenting prior to the general meeting of shareholders, he may demand in writing that the company purchase his shares, with the class and number of such shares specified, within twenty days after the general meeting makes the resolution.

Article 530 (Provisions Applying Mutatis Mutandis)

(2) Articles 374 (2) and 374-2 (2) through (5). The provisions of this Article shall apply mutatis mutandis to the merger of stock companies;

Article 374 (Transfer, Takeover or Lease of Business)

(2) Where a notice or public notice of convening a general meeting of shareholders is given for an act referred to in paragraph (1), the details and exercising method of the appraisal right referred to in Article 374-2 (1) and (2) shall be clearly stated.

Article 374-2 (Appraisal Rights of Dissenting Shareholders)

(1) If a shareholder who objects to the resolution under the provisions of Article 374 has notified in writing the company of his/her intention of dissenting prior to the general meeting of shareholders, he/she may demand in writing that the company purchase his/her shares, indicating the kind and number of such shares, within twenty days after the general meeting makes the resolution.

(2) A company shall purchase the shares within two months after receiving a request under paragraph (1).

(3) Purchase price of stocks referred to in paragraph (2) shall be determined by an agreement between the stockholders and the company.

(4) Where the negotiation under paragraph (3) has not been attained within 30 days from the date of receiving a request under paragraph (1), the company or the shareholder requesting the purchase of shares may request the court to determine the purchase price.

(5) Where the court determines a purchase price of shares pursuant to the provisions of paragraph (4), it shall calculate it at a fair price in consideration of the company's financial status and other circumstances.

2. The parties' assertion

A. The applicant filed a claim for purchase of the shares with the Lao Tourism on September 1, 2008 (from August 22, 2008 to September 10, 2008) within the period for claiming purchase of shares against the above merger, but argued that the principal company of the case, which continues to exist after the Ora Tourism or the merger, did not comply with the consultation on the value of the share purchase, etc., and sought a determination of the purchase price of the shares upon the application of this case.

B. As to this, the principal of the case asserts that the applicant cannot exercise his appraisal right under Article 522-3(1) of the Commercial Act since he did not have given written notice to the applicant to oppose the merger resolution prior to the general meeting of this case.

3. Determination

(a) Possibility to exercise appraisal rights;

As seen earlier, Article 522-3 of the Commercial Act provides that ① Any shareholder who dissents from the matters set forth in Article 522(1) of the Commercial Act gives written notice to the company prior to the general meeting of shareholders as to the appraisal right of the opposing shareholder shall be required to make a written claim for the purchase of shares owned by him/her against the company within 20 days from the date of resolution at the general meeting.

However, Article 374(2) of the Commercial Act provides that the company shall explicitly state the contents of and methods for exercising the appraisal right under Article 374-2(1) and (2) when it gives notice of convening the general meeting of shareholders. ① The above provision is a provision to protect minority shareholders who oppose merger, etc. and from the standpoint of the applicant and the general shareholder such as the applicant, if the company does not give prior notice of the method for exercising the appraisal right (the notice of dissenting opinion is given before the general meeting of shareholders and the claim for purchase of shares shall be made in writing within 20 days from the date of resolution) when it gives notice of convening the general meeting of shareholders, it seems highly likely to prevent the company from exercising the appraisal right ( even if the company fails to comply with the above provision, if the opposing opinion can exercise the appraisal right only before the general meeting of shareholders without complying with it, it may result in de facto punishing the minority shareholder’s appraisal right before the general meeting of shareholders). ② The purport of the above provision is that the applicant shall give prior notice of dissenting opinion to the company prior to the general meeting of shareholders 140.

On the other hand, the principal of the case asserts that the applicant cannot exercise his appraisal right since he clearly expressed his objection to the above merger without clearly expressing his objection to the above merger at the general meeting of this case. However, as seen earlier, it is difficult to view that the applicant is unable to exercise his appraisal right solely on the ground that the applicant had a right to file a claim under the circumstances where he did not receive a notice of the appraisal right from the lux

(b) Determination of purchase price of stocks;

As seen earlier, it is reasonable to view that the acquisition price per share of the stocks as KRW 7,439,949 is the value per share of the stocks at the time of the above merger, in full view of the following facts: (a) the assessed value per share at the time of the above merger was calculated as KRW 7,439,949; and (b) the assessed value per share at the time of the first merger by the Korea-U.S. Accounting Corporation at the time of the merger

4. Conclusion

Thus, the decision of the first instance court is unfair in conclusion and thus it is revoked (this case is a non-contentious case and the fact that the court of the first instance disclosed the examination in accordance with Article 13 of the Non-Contentious Case Litigation Procedure Act is apparent in the record, so the decision of the first instance court cannot be maintained against the procedure). The purchase price of the shares for which the applicant requested purchase shall be determined at KRW 7,439,949 per share, and it is so decided as per Disposition.

Judges Lee Jong-ok (Presiding Judge)'s tenure of office