Korea General Media Co., Ltd. (Law Firm LLC, Attorneys Gangwon-hee et al., Counsel for the defendant-appellant)

Mayer Newspapers Co., Ltd. (Law Firm two others, Attorneys O Jong-ap et al., Counsel for defendant-appellant)

November 13, 2015

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant shall deliver to the plaintiff the shares listed in the attached list.

1. Basic facts

A. The Plaintiff is a company that aims at publishing and selling books and magazines, and the Defendant is a company that aims at publishing newspapers, etc.

B. From June 2, 2003 to June 2, 2009; from March 30, 2010 to March 31, 2013, the Plaintiff was employed as a director; Nonparty 1 was the representative director of the △△△ Economic Newspapers Co., Ltd. (hereinafter “△△△”) from December 6, 201 to March 28, 201, and was employed as the Defendant’s joint representative director from April 18, 201 to March 31, 2015, respectively.

C. On December 31, 2012, 2012 when the Plaintiff was in office as a director, △△△△○ purchased shares listed in the separate list of shares (hereinafter “instant shares”) from the Plaintiff for KRW 600 million, but the date of payment was January 25, 2013; and the purchaser’s name was determined as Nonparty 1 and entered into a share transfer contract.

D. On January 25, 2013, 201, the date of payment of the above purchase price, △△△△ concluded a stock title trust agreement with Nonparty 1 (hereinafter “instant title trust agreement”) with the following contents, and paid KRW 600 million to Nonparty 1. Nonparty 1 paid the said KRW 600 million to the Plaintiff as the purchase price of the instant shares.

Article 1 (Subject Matter of Trust) of the Table contained in the main text of this Agreement is the subject matter of the instant shares (amount of KRW 600 million) that Nonparty 1 purchases from the Plaintiff. Article 2 (Method of Trust) provides KRW 600 million to Nonparty 1. Article 3 (Management of Trust Property) If Nonparty 1 exercises all rights and obligations as a shareholder, he/she shall comply with the intention of △△△△△, and shall exercise the rights and interests that he/she acquires as a shareholder for the benefit of △△△△△△△△△△△. In addition, the rights and interests he/she acquires as a shareholder shall be reverted to △§§§ 5 (Duties of Nonparty 1). Nonparty 1 shall not dispose of the subject matter of trust or provide

E. On March 5, 2014, the △△ economy opened a general meeting of shareholders and appointed Nonparty 10, who is not Nonparty 1, as a new representative director. At that time, the share certificates issued with respect to the instant shares (hereinafter “instant share certificates”) were kept in the treasury of the △△ Economy, but Nonparty 1 taken the instant share certificates from the company treasury on the date on which the said general meeting of shareholders was held.

F. On April 10, 2014, the Defendant entered into a share purchase agreement with Nonparty 1 to purchase the instant shares of KRW 1,050,000 (hereinafter “instant share purchase agreement”) and on the same day, paid KRW 1,050,000 to Nonparty 1 as well as KRW 1,000,000 from Nonparty 1, and holds the instant share certificate until now.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 3, 4, 9, 11, 18, Eul evidence Nos. 1 through 3, 5, 10 (including each number), the purport of the whole pleadings

2. Summary of the parties' arguments

A. The plaintiff

On December 31, 2012, 2012 when the Plaintiff was employed as a director, △△△△△△ concluded a share acquisition agreement by acquiring the shares of this case from the Plaintiff. The said share acquisition agreement requires a resolution of a general meeting of shareholders pursuant to Articles 383(4) and 398 of the Commercial Act, which is a transaction between a director and a company. The △△△△△△△△△ is invalid because the said share acquisition agreement did not undergo a resolution of the general

Therefore, a legitimate owner of the instant shares is still the Plaintiff. Since the Defendant occupies the instant share certificates upon delivery from Nonparty 1, not the Plaintiff, the Defendant must return the instant share certificates to the Plaintiff.

B. Defendant

1) The Defendant purchased the instant shares from Nonparty 1, the owner of the instant shares, and lawfully succeeded to and acquired them.

2) Even if Nonparty 1 is only the title trustee of the instant shares, the Defendant purchased the instant shares from Nonparty 1 who possessed the instant share certificates and received the instant share certificates. The Defendant did not know that Nonparty 1 was not the owner of the instant shares at the time of concluding the instant share purchase contract, and did not have gross negligence, and thus, acquired the instant shares in good faith.

3. Determination

A. The validity of a share acquisition agreement between the Plaintiff and the Plaintiff

A director of a stock company under the Commercial Act shall be three or more directors (the first sentence of Article 383(1)), and a company, the total capital of which is less than one billion won, may be one or two (1) companies (the second sentence of Article 383(1)). In order for a director to engage in a transaction with a company, the board of directors shall, in advance, specify important matters concerning the relevant transaction and obtain approval from the board of directors (Article 398 Subparag. 1 of the Commercial Act). In cases of a company with one or two directors, the total capital of which is less than one billion won, the board of directors shall obtain approval from the general meeting of shareholders instead of the board of directors (Article 3

As to the instant case, comprehensively taking account of the overall purport of the pleadings in the public health room, evidence No. 1-1, evidence No. 1-3, and evidence No. 4, the Plaintiff’s director as of December 31, 2012, as of December 31, 2012, was recognized by the △△△△△, the Plaintiff’s director as of December 31, 2012, and two non-party 2, and the △△△△△ should have passed a prior resolution of the general meeting of shareholders in order to purchase the instant shares from the Plaintiff. However, there is no evidence to acknowledge that the △△△△△△ has passed a resolution of the general meeting of shareholders before purchasing the instant shares from the Plaintiff. Thus, the agreement on acquisition of the instant shares by December 31, 20

Therefore, the △△△△ cannot be deemed as the owner who lawfully acquired the instant shares from the Plaintiff.

B. Whether the defendant acquired the shares of this case

1) Whether the acquisition by succession is recognized

A) Relevant legal principles

In accepting shares issued under the name of a third party and paid the price for acquiring shares by investing the shares in the name of the third party with the consent of the third party, the third party becomes a shareholder regardless of whether only the third party has actually followed the procedure such as transfer of a name as a de facto subscriber, and this legal principle applies to cases where a title holder merely entrusts another person with the name on the register of shareholders in connection with the acquisition of shares, etc., and such legal principle applies likewise to cases where a title holder is entrusted with the title on the register of shareholders. Since a mere title holder cannot be deemed as a shareholder of the shares held in the title trust, the title holder cannot be deemed as a non-entitled person, and even if he was a transferee of the shares from the non-entitled person, such shares cannot be lawfully acquired unless there are special circumstances such as bona fide acquisition (see

B) Determination

(1) In light of the aforementioned legal principles, the health room, △△△△, in the instant case, concluded a title trust agreement with Nonparty 1 on January 25, 2013, and concluded the instant title trust agreement with Nonparty 1, and concluded that the instant shares cannot be deemed a legitimate owner of the instant shares. Therefore, Nonparty 1 is merely a person who was entrusted with the name of a shareholder on the register of shareholders with respect to the instant shares from △△△△, who is not the owner of the instant shares, and it cannot be deemed a legitimate owner of the instant shares, and thus, constitutes an unentitled person as a legitimate owner of the instant shares, and thus, the Defendant’s assertion on this part based on the premise that Nonparty 1

B. Meanwhile, the Defendant asserted that Nonparty 1 agreed to acquire the ownership of the instant shares between △△△ and Nonparty 1 on August 5, 2013. However, as seen earlier, Nonparty 1 cannot be deemed a legitimate owner of the instant shares, and Nonparty 1 cannot acquire the instant shares in accordance with an agreement with △△△△△△.

In addition, comprehensively taking account of the overall purport of the arguments in Gap evidence Nos. 18, Eul evidence Nos. 5, 6, and 10, the non-party 1 deposited KRW 600 million in the bank account designated by △△△△△ in order to resolve his criminal cases from the △△△△△ on August 5, 2013. At the time, non-party 1 said that the non-party 1 would own the shares of this case to return KRW 600 million to the △△△△△△△, but the non-party 1 did not respond to it. The non-party 1 did not accept the plaintiff's claim that the non-party 1 paid the plaintiff's share of this case to the National Tax Service on Sep. 23, 2013 in order to release the seizure of the shares of this case as of September 24, 2013, the non-party 1 paid the plaintiff's share of this case to the non-party 150 million won.

2) Whether to recognize bona fide acquisition

A) Relevant legal principles

Article 359 of the Commercial Code provides, “The provisions of Article 21 of the Check Act shall apply mutatis mutandis to the bona fide acquisition of share certificates.” Article 21 of the Check Act provides, “In case where there is a person who has lost his possession of a check for any reason, the holder of the check shall not be bound to return the check if he proves his right to the check in accordance with Article 19. However, the same shall not apply in case where the holder acquires the check in bad faith or by gross negligence.” As a requirement for bona fide acquisition of the check, it is deemed that the bona fide acquisition is not recognized if the acquisition of share certificates was caused by bad faith or gross negligence, and the gross negligence here means that it considerably lacks the duty of care required in transactions at the time of acquisition of share certificates (see Supreme Court Decision 9Da58471 delivered on September 8, 200).

Meanwhile, in order for a company to claim that a third party becomes null and void because it failed to obtain approval of the board of directors or a general meeting of shareholders (hereinafter “board of directors, etc.”) under Articles 398 and 383(4) of the Commercial Act, the company shall prove that the third party was aware of or was grossly negligent in not knowing the failure to obtain approval of the board of directors, etc. In this context, the gross negligence refers to a situation in which it is deemed reasonable to view that the third party was not in need of protecting the third party from the perspective of fairness, as it considerably violates the duty of care required under the general principles of transaction, such as believing that the transaction between the director and the company was necessary for approval of the board of directors, etc. if the third party had paid due attention to the fact that the third party was aware of the failure to obtain approval of the board of directors, etc. (see Supreme Court Decision 2012Da73530, Jun. 26, 2014).

B) the facts of recognition

(1) The number of shares issued in the △△ economy is 325,000 shares. From December 31, 2012 to December 31, 2012, the register of shareholders of the △△△△ economy is 120,00 shares issued in the △△△ economy (the number of shares acquired on October 1, 200), Nonparty 3, who is a shapes of the △△△△△△△△, owns 90,00 shares of the same (the total number of shares acquired on October 1, 200), Nonparty 4, and Nonparty 5, each of 15,00 shares (the number of shares acquired on October 62, 200, the number of shares acquired on October 1, 200), Nonparty 1 owns 60,00 shares (the number of shares acquired on October 46, 200, the number of shares acquired on October 1, 201 (the number of cement shares acquired on December 1, 2008).

B. On August 28, 2013, the Defendant entered into M&A negotiation with Nonparty 6, Nonparty 3, who is the birth of △△△△△, to acquire the management right of △△ economy (hereinafter “instant acquisition negotiation”), along with 295,00 shares, other than the shares owned by Nonparty 4 and Nonparty 5, out of the total shares issued by △△△ economy, and the main contents of the draft stock acquisition agreement prepared in the process are as follows.

The share acquisition agreement contained in the main text of this Agreement is entered into between the seller and the defendant (hereinafter “Buyer”) on August 28, 2013. The following words and expressions have the meanings as follows. The subject company refers to the △△△ Economy. The subject company means the seller’s 175,000 common shares of 10,000 won per share issued by the company owned by △△△△△△, the seller’s 10,000 common shares (53.9% of the total number of issued shares) and the seller’s 175,000 common shares of 20,000 common shares issued by the company owned by △△△△△△△, the seller’s 120,000 common shares (hereinafter “the subject shares”) and the Defendant (hereinafter “Buyer”). The subject shares of this Agreement are the seller’s 10,000 shares and the seller’s 2nd 3rd 2nd 3rd 2nd 3rd 2nd 2nd 3rd 3rd 36.

Article 12(1) of the former Stock Exchange Act provides that “The Plaintiff shall purchase the shares at KRW 5 billion if the provisional attachment of the shares was cancelled,” and Article 12(1) of the former Stock Exchange Act provides that “The Defendant shall purchase the shares at KRW 175,00,000,000,000,000,000,000,000,000,000,000,000,000,00,000,000,000,00

x. At the time of the acquisition negotiation of the instant case, Nonparty 1, the nominal owner of the instant shares, did not participate or present his opinion in the process of consultation between the Defendant, Nonparty 6, and Nonparty 3 on the purchase price.

(v) Meanwhile, at the time of the instant share purchase agreement, Nonparty 1 shown the instant title trust agreement to Nonparty 7, Nonparty 8’s representative director, and Nonparty 9’s former director.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 16, 18, 19, Eul evidence Nos. 8 and 9, the purport of the whole pleadings

C) Determination

In light of the following circumstances revealed by the above facts, i.e., the Defendant agreed to purchase the primary shares including the instant shares on August 28, 2013, and agreed to purchase the instant shares first, 34.3% (i.e., 60,000/175,00 shares) of the instant shares, which are the nominal owner of the instant shares, and there was no consultation on the purchase price with Nonparty 1, the title holder of the instant shares, and rather, the Defendant negotiated the purchase price with Nonparty 6 and Nonparty 3 en bloc with respect to all the instant primary shares including the instant shares, and the Defendant was 25,000 shares, which were part of the primary shares in the process of the instant acquisition negotiation, were in the name of △△△△, which would prevent the Defendant from acquiring a majority of issued shares in the economy if it fails to secure the said shares, and the remaining shares were 00% of the date of the instant purchase and sale contract with Nonparty 1, 200 shares to be issued by 50% of the instant shares.

However, in light of the above facts and facts as seen earlier, the Defendant: (a) was unable to enter into the instant sales contract with Nonparty 1 on the 00 billion won of the shares; (b) it was difficult for the Defendant to enter into the instant sales contract with Nonparty 1 on August 28, 2013 as the 00 million won of the shares; and (c) it was difficult for the Defendant to enter the instant sales contract with Nonparty 1 on the 00 billion won of the shares; and (d) it was difficult for the Defendant to enter the instant sales contract with the 00 billion won of the shares to enter into the instant sales contract with the 00 billion won of the shares; and (e) it was also difficult for the 200 billion won of the instant shares to enter into the instant sales contract with Nonparty 1 on April 10, 2014 into the instant sales contract with the 00 billion won of the shares; and (e) the Defendant’s 100 million won of the instant shares into the instant sales contract with the 10000 billion won of the instant shares.

Therefore, solely based on the circumstances acknowledged earlier, the Defendant acquired the instant shares at the time of acquiring the instant shares without going through the Plaintiff’s general meeting of shareholders, and was aware that Nonparty 1, who again acquired the instant shares, was not a lawful owner of the instant shares, or it is difficult to recognize that Nonparty 1 was grossly negligent in believing that Nonparty 1 lawfully acquired the instant shares and subsequently acquired the instant shares, and there is no other evidence to acknowledge otherwise, and thus, the Defendant bona fide acquired the instant shares.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment]

Judges O Young-han (Presiding Judge)