Responsibilities of expressed representative director in cases where appointed by a resolution of an improper general meeting of shareholders and registered representative director acts on behalf of the company;

The purpose of Article 395 of the Commercial Act stipulating the liability of a company for a representative of expression is that if a third party who is responsible for and believed to be responsible for the company for a representative of expression is bona fide, the company shall be liable for a third party. Therefore, since the representative director or a joint representative director is not a legitimate resolution of the general meeting of shareholders, so if a representative director or a joint representative director is not a legitimate representative director or joint representative director, then his/her appointment becomes null and void, the company may be deemed to have actively or implicitly permitted the use of his/her representative name in order to hold the company liable for an act that he/she represents the company liable under Article 39

Article 395 of the Commercial Act

Plaintiff 1 and three others, Counsel for the defendant-appellant-appellee

Attorney Jeong-hee, Attorney Park Byung-hee, a representative director of cultural family

Attorney Cho Jong-dae et al., Counsel for the intervenor joining the defendant

Seoul High Court Decision 75Na927 delivered on February 17, 1976

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. The judgment of the court below stated in its reasoning that even though the representative who received the lease deposit from the plaintiffs as the plaintiffs' assertion is not the persons appointed by the resolution of a legitimate general meeting of shareholders of the defendant company, all of the persons who received the lease deposit from the plaintiffs are registered as the representative director or joint representative director of the defendant company, and in fact, the defendant company should be held liable to the plaintiffs, a third party acting in good faith, under Article 395 of the Commercial Act.

However, the defendant company, as stated in the judgment of the court below, established 7 shareholders including the non-party et al. as promoters, and improved the name of the company at any time after holding a general meeting of shareholders on Nov. 10, 1963 by the transferee of the shares, and thereafter, changed the name of the company at any time or improved the representative of the company, the plaintiffs now reached the current company. The plaintiffs are entitled to lease from the defendant company to the non-party et al. on Dec. 31, 1966 when the defendant company constructed the market building on Dec. 31, 1966 (hereinafter referred to as the "land"). If the defendant company is to build the market building on Dec. 31, 1966, the part of the building should be first leased from the defendant company to the non-party et al., and the amount according to the average number of the stores' offices to be leased under the name of lease deposit. Since the defendant company was established, the defendant company was not entitled to represent the defendant company as its representative, even if the plaintiffs did not have issued the share.

Therefore, the above decision of the court below is that the representative director or joint representative appointed by the resolution of the general meeting of shareholders held by a person who is not a shareholder is not entitled to represent the defendant company, or even if he is such person, he is registered as the representative director or joint representative director of the defendant company, and in fact he was engaged in a juristic act on behalf of the defendant company, and if the plaintiffs believe it as it is, the defendant company should be held liable pursuant to Article 395 of the Commercial Act.

However, Article 395 of the Commercial Act provides for the liability of a company for a representative speech, the purport of which is that the company shall be liable for a third party in the case of a third party who is responsible for a representative speech and has believed to be responsible for it. Therefore, it is reasonable that the company shall be liable for it only when the company has actively or implicitly permitted a representative speech.

Thus, in this case, the appointment of the representative director or joint representative director is null and void because it is not a legitimate representative director or joint representative director, and if the defendant company is not a legitimate representative director or joint representative director of the defendant company, the defendant company can be deemed to have actively or implicitly permitted the use of the representative director's name in order for the defendant company to be held liable pursuant to Article 395 of the Commercial Act. However, the court below's decision cannot be argued that the defendant company could not be viewed as having allowed the above representative director or joint representative director to use the representative director's name in this case because there is a circumstance that the defendant company can be said to have allowed the above representative director or joint representative director to use the representative's name in this case. Thus, the court below did not err in the misapprehension of legal principles of Article 395 of the Commercial Act and application of Article 395 of the Commercial Act is not possible. In addition, in this case, the decision of the general meeting of shareholders or board of directors where the plaintiffs' non-existence of this case is sought, and it did not clearly state any specific reasons for the defendant's interest.

Therefore, the decision of the court below is reversed and the case is remanded to the Seoul High Court, which is the court below, on the grounds that the appeal pointing this out is justified, and it is so decided as per Disposition by the assent of all participating judges.

Justices Min Jae-chul (Presiding Justice)