[1] The validity of an agreement among shareholders to partially restrict the transfer of shares (=in principle, validity)

[2] The validity of a contract of transfer between shareholders where shares subject to restriction on transfer are transferred without the approval of the board of directors (effective)

[1] Article 335 (1) of the Commercial Act / [2] Article 335 (1) and (2) of the Commercial Act

[1] Supreme Court Decision 99Da48429 delivered on September 26, 200 (Gong2000Ha, 2183)

Plaintiff 1 and six others (Attorney Kang Chang-chul, Counsel for the plaintiff-appellant)

Defendant 1 and one other (Attorney Kim Gyeong-l et al., Counsel for the defendant-appellant)

Busan High Court Decision 2005Na13783 Decided January 11, 2007

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

1. As to Defendant 1’s ground of appeal

A. As to the first ground for appeal

In light of the purport of the proviso of Article 335(1) of the Commercial Act, that the articles of incorporation may be stipulated for the approval of the board of directors by means of restricting the transfer of shares, in cases where shareholders agree to restrict part of the transfer of shares, such agreement does not entirely deny the possibility of shareholders’ recovery of invested capital, and is, in principle, valid between the parties unless it is contrary to public order and good morals (see Supreme Court Decision 99Da48429, Sept. 26, 200).

The court below determined that the contents of the agreement in this case cannot be deemed to violate the mandatory law or to be contrary to the public order and good morals by completely denying the possibility of withdrawing the invested capital of the agreed shareholders, after compiling the evidence as a whole in accordance with the legal principles of the same purport. The court below's fact-finding and decision are justified, and there is no error in the misapprehension of legal principles as to the restriction of stock transfer as otherwise alleged in the ground of appeal.

B. Regarding ground of appeal No. 2

In light of the records, the court below's rejection of the above defendant's assertion that the agreement of this case was replaced by the agreement of August 20, 2002 and reversed, is just, and there is no error of law such as incomplete trial, omission of judgment, violation of the rules of evidence, etc.

C. Regarding ground of appeal No. 3

Notwithstanding the articles of incorporation of the company that provides for the approval of the board of directors, where shares are transferred without the approval of the board of directors, the transfer of shares shall be effective against the company, and the transfer of shares between shareholders shall not be null and void.

In the same purport, the court below is just in rejecting the defendant's assertion that the transfer of shares by the defendants to the same purport is null and void since the Korea Cable Telecommunication Co., Ltd. did not obtain approval from the board of directors of the South Busan Broadcasting Co.

D. Regarding ground of appeal No. 4

In light of the records, the court below's rejection of the above defendant's assertion on the violation of the good faith principle is just and there is no error of law as otherwise alleged in the ground of appeal.

2. As to the ground of appeal by Defendant Jeong Jin-jin

According to Article 398(2) of the Civil Act, where the estimated amount of damages is unreasonably excessive, the court may reduce the estimated amount of damages to a reasonable extent. Here, "unfairly excessive case" means cases where it is acknowledged that the payment of the estimated amount of damages would result in the loss of fairness by imposing unfair pressure on the debtor in the position of the economically weak in light of the general social concept, taking into account all the circumstances such as the status of the creditor and the debtor, the purpose and content of the contract, the motive scheduled for the amount of damages, the estimated ratio of the estimated amount of damages to the amount of debts, the estimated amount of damages, the estimated amount of damages, and the transaction practices at the time, etc. In addition, in determining whether the estimated amount of damages is unreasonably excessive or not under the above provision, the court shall comprehensively consider all the above circumstances that occurred between them as at the time of the closing of arguments in the fact-finding court (see, e.g., Supreme Court Decisions 9Da4546, Apr. 23, 199; 29Da29857, Dec. 29, 20009

According to the reasoning of the judgment below, the court below reduced the amount equivalent to 10% of the estimated amount of damages of this case by taking account of the difference in the sales price per stock of the Defendants, the deceased Nonparty, and Plaintiff 1’s shares, the motive and background of the agreement of this case, and other various circumstances shown in the argument of this case. In light of the records, the above measures of the court below are justified and there are no errors in the misapprehension of the grounds for reduction as pointed out in the grounds for appeal.

3. Conclusion

Therefore, all appeals are 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.

Justices Yang Sung-tae (Presiding Justice)