[1] Whether consent of all partners is necessary to change the liability of members of a limited partnership company (affirmative in principle)

[2] The validity of transfer of shares by a limited partner who fails to meet the requirements stipulated in the articles of incorporation of a limited partnership company (negative)

[1] Article 270 of the Commercial Code provides that the articles of incorporation of a limited partnership company shall state whether each partner is a general partner or a limited partner. Thus, any change in the liability of a limited partnership company member stated in the articles of incorporation shall be made through the procedures for amendment of the articles of incorporation, and for this purpose, the articles of incorporation shall separately provide for the quorum or the quorum for consent, etc., unless there are special circumstances such as Article 204 of the Commercial Code applied mutatis mutandis under Article 269

[2] If a limited partner of a limited partnership fails to meet the requirements stipulated in the articles of incorporation of the limited partnership company, the transfer of equity is null and void.

[1] Articles 204, 269, and 270 of the Commercial Act / [2] Articles 179, 270, and 276 of the Commercial Act

Plaintiff

Defendant Limited Partnership Company

Intervenor joining the Intervenor

Gwangju High Court Decision 2009Na3677 decided January 27, 2010

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

1. As to the misapprehension of legal principles as to the quorum required for the election of general partners

Article 270 of the Commercial Act provides that the articles of incorporation of a limited partnership company shall state whether each partner is a general partner or a limited partner. Thus, any change in the liability of a limited partnership company member stated in the articles of incorporation shall be made through the procedures for amending the articles of incorporation, and for this purpose, unless there are special circumstances such as that the articles of incorporation separately prescribes the quorum or the quorum for consent, the consent of all members shall be required pursuant to Article 204 of the Commercial Act applied mutatis mutandis under

According to the reasoning of the lower judgment and the record, the articles of incorporation of the Defendant Company, a limited partnership company, provides that “a resolution of the general meeting of shareholders shall be passed with the consent of a majority of the present members or more, except as otherwise provided in Acts and subordinate statutes, and when the numbers of votes of approval and disapproval are the same, it shall be determined by the Speaker.” On the other hand

Therefore, Article 14 of the Articles of incorporation of the defendant company should be interpreted as a provision prepared to the effect that Article 14 of the Commercial Act provides for the decision-making of matters that have significant influence on the existence and termination of a limited partnership company as well as on the rights and obligations of its members, and that matters that are not provided for in the Commercial Act, etc. shall follow the quorum provided for in the above Articles of incorporation. Thus, in order to change the plaintiff who is a partner with limited liability of the defendant company to a general partner, the consent of all members of the defendant company should be required

The judgment of the court below to the same purport is justifiable.

The court below did not err in the misapprehension of legal principles as to the quorum necessary for the interpretation of the articles of incorporation or the change of partner's liability.

The ground of appeal on this part is without merit.

2. As to the misapprehension of legal principles as to the requirements, etc. for transferring the shares of limited partners

If any transfer of shares by a limited partner of a limited partnership company fails to meet the requirements prescribed in the articles of incorporation of the limited partnership company, such transfer of shares shall be null and void.

In light of the above legal principles and the records, the act of Nonparty 1, 2, and 3 (hereinafter “third party including Nonparty 1, etc.”) who was a partner with limited liability of the defendant company transferred equity shares to the plaintiff on January 1, 2003, respectively (hereinafter “transfer of equity shares”) is null and void since it did not obtain a resolution of the general partner meeting or the consent of the representative as stipulated in Article 8 of the Articles of incorporation of the defendant company.

Thus, at the time of the general meeting of partners on December 29, 2006, 3 non-party 1 and other parties are still in the position of limited partners. Thus, in order for the resolution to change the plaintiff from the limited partner to the general partner, the consent of the non-party 1 and other parties must be obtained.

The judgment of the court below to the same purport is justifiable.

The court below acknowledged that the non-party 4, 5, 6, 7, 8 et al. immediately retired without examining whether they meet the requirements set forth in Article 8 of the articles of incorporation of the defendant company in the process of transferring the entire equity on or before August 21, 2003. However, such circumstance alone does not err in the misapprehension of the legal principles as to the requirements for the transfer of equity of a limited partner or in the misapprehension of the legal principles as to the grounds for reversal in the judgment below.

This part of the grounds of appeal is without merit.

3. As to the misapprehension of legal principles as to implied and comprehensive delegation of voting rights

In light of the fact that collective legal relations need to be interpreted with an emphasis on clarity and stability, etc., it cannot be readily concluded that the act of transferring shares of this case null and void has been converted into an implied and comprehensive delegation contract with the plaintiff merely because the third party, such as Nonparty 1, etc., who is the transferor of shares to the plaintiff, did not continue to attend the resolution at the general meeting of members of the defendant company after the transfer of shares of this case.

In addition, Article 13 of the Articles of incorporation of the defendant company provides that "When a member intends to delegate his/her proxy and exercise his/her voting right, he/she shall submit a letter of proxy, and his/her proxy shall be limited to the members of the defendant company." However, there is no evidence to find that the plaintiff, at the general meeting of members of the defendant company on December 29, 2006, prepared a written proxy letter from three persons, such as Nonparty 1, etc., and submitted it to the defendant company. Thus, it cannot be said that the plaintiff had exercised his/her voting right by legitimate and effective exercise at the general meeting of members.

The court below did not err in the misapprehension of legal principles as to implied or comprehensive delegation of voting rights, as otherwise alleged in the ground of appeal.

This part of the grounds of appeal is without merit.

4. As to the misapprehension of legal principle as to the requirement for modification of articles of incorporation

According to the reasoning of the judgment below, it is clear that the court below held that the plaintiff was not in the position of general partner on the ground that the plaintiff did not meet the requirements for consent of the general partner for changing the plaintiff, who was a limited partner, to the general partner, and that the plaintiff cannot be deemed as a general partner on the ground that it did not meet the requirements for consent

The court below did not err in the misapprehension of legal principles as to the requirements for modification of the articles of incorporation.

This part of the grounds of appeal is without merit.

5. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)