Whether the so-called nominal director or auditor has a right to claim remuneration determined by the articles of incorporation or a resolution of the general meeting of shareholders against the company (affirmative in principle)

Under the law, the so-called nominal directors and auditors who have the status of directors and auditors, but do not perform substantial duties as directors and auditors pursuant to the explicit or implied agreement with the company, are also corporate entities, which provide the foundation necessary for the establishment and activities of the company as social entities, and bear the responsibility for breach of obligations with the authority and obligations prescribed by the Commercial Act, is different from the general directors and auditors. Thus, apart from the issue of judicial control over excessive remuneration, barring special circumstances such as the appointment of the company as directors and auditors as a means of paying the company's funds to individuals in the form of payment of remuneration, the company has the right to claim remuneration determined by a resolution of the articles of incorporation or the general meeting of shareholders pursuant to Articles 388 and 415 of the Commercial Act.

Articles 388 and 415 of the Commercial Act

Bankrupt Bank of Busan Savings Bank (Law Firm Jeongjin, Attorneys Kim Tae-young et al., Counsel for the plaintiff-appellant)

Defendant 1 and four others (Dongba General Law Firm, Attorney Ansan-do, Counsel for the defendant-appellant)

Seoul High Court Decision 2014Na2024073 decided November 24, 2014

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

The grounds of appeal are examined.

1. Under the law, the so-called nominal directors and auditors who have the status of directors and auditors, but do not perform substantial duties as directors and auditors pursuant to the explicit or implied agreement with the company, as corporate corporate bodies, provide the foundation necessary for the company to establish and act as a social entity, and bear the responsibility for violation of the obligations under the Commercial Act does not differ from the general directors and auditors. Thus, apart from the judicial control over excessive remuneration, the company has a right to claim remuneration determined by the articles of incorporation or the resolution of the general meeting of shareholders pursuant to Article 388 and Article 415 of the Commercial Act against the company, unless there are special circumstances, such as that the company is appointed as directors and auditors as a means to pay the company funds to individuals in the form of payment of remuneration, regardless of the issue of judicial control over excessive remuneration.

2. The court below determined as follows: (a) The Busan Savings Bank, Inc., established or acquired a special purpose corporation by means of lending another person's name and recording it as a shareholder or an officer in order to avoid the limitation of the Mutual Savings Bank; (b) it directly conducted real estate development projects with large loans to the special purpose corporation; and (c) it is one of the special purpose corporations established or acquired for this purpose; and (b) the Defendants were appointed as a large director and auditor and completed the registration and paid a large amount of 1 million to the large amount of 1 million to 3 million won per month; and (d) the mandatory's right to claim remuneration was incurred by delegated affairs, and the Defendants did not have the right to claim compensation for the large amount of money, and thus, the Defendants received remuneration from the large amount of money from the large amount of funds and must be returned to the large amount of funds without legal grounds.

However, in light of the aforementioned legal principles, if the so-called nominal directors and auditors, such as the Defendants, meet the requirements of Articles 388 and 415 of the Commercial Act, they shall have the right to claim remuneration against the company, barring any special circumstances. However, the lower court denied the Defendants’ right to claim remuneration against the light. In so doing, the lower court erred by misapprehending the legal doctrine on the right to claim remuneration from nominal directors and auditors, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)