[1] The scope of application of the duty to notify the acquisition of shares under Article 342-3 of the Commercial Code

[2] Whether it is unlimited to recognize the purchaser of shares who did not enter the register of shareholders as a shareholder on the company’s side (affirmative)

[3] Whether a resolution of the general meeting of shareholders, which shareholders elected the Speaker pro tempore, is legitimate after the Speaker voluntarily leaves the National Assembly without completing the examination of the bill (affirmative)

[1] Article 342-3 of the Commercial Code provides that "if a company acquires more than 1/10 of the total number of issued and outstanding shares of another company, it shall be notified without delay to such another company." This is to ensure that the stability of management rights is prevented by acquiring more than 1/10 of the total number of issued and outstanding shares of the other company if the company acquires more than 1/10 of the total number of issued and outstanding shares of the other company and exercises voting rights, the other company, which is threatened with the stability of management rights, by acquiring more than 1/10 of the total number of issued and outstanding shares of the other company, thereby under the so-called Regulation on the Restriction of Voting Rights of the other company (Article 369(3) of the Commercial Code), it shall be aimed at preventing control of the other company and promoting stability of management rights by taking defensive measures so that it can not exercise voting rights against the other company. Therefore, the above provision shall not apply only to a specific general meeting of shareholders where the company acquires voting

[2] The provision of Article 337 (1) of the Commercial Act means that a person who acquired a registered share cannot assert a shareholder's right against the company if the person who acquired the registered shares fails to open the name of the shareholder on the register of shareholders, and it is unnecessary to recognize a real shareholder who did not transfer a name as a shareholder from the company to the company.

[3] In a case where the chairperson voluntarily leaves the meeting place against the shareholders' will without completing the examination of the bill at the general meeting of shareholders, it cannot be deemed that the general meeting of shareholders was closed or terminated. In this case, the chairperson renounced his/her position, such as the termination of the whole agenda, and did not exercise his/her authority and exercise his/her rights. Thus, the resolution of the general meeting of shareholders, which the shareholders remaining in the meeting place at the time of retirement, by election of the Speaker pro tempore, is lawful.

[1] Articles 342-3 and 369(3) of the Commercial Act / [2] Article 337(1) of the Commercial Act / [3] Articles 368 and 380 of the Commercial Act

[2] Supreme Court Decision 89Meu14714 decided Oct. 24, 1989 (Gong1989, 1769) / [3] Supreme Court Decision 83Do748 decided Aug. 23, 1983 (No 31-4, 82)

Plaintiff

Military Branch Industry Ltd.

Seoul High Court Decision 2000Na34718 delivered on January 18, 200

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

1. The facts established by the court below are as follows.

On March 27, 1999, the Defendant Company held the 39th regular shareholders’ meeting (hereinafter “the instant general shareholders’ meeting”). The Plaintiff was the representative director and the shareholders of the Defendant Company at the time of the instant general shareholders’ meeting. At the time of the instant general shareholders’ meeting, the Defendant Company issued 13,40,00 ordinary shares with a face value of KRW 5,00,00,000, with a face value of KRW 5,000,000, and the Plaintiff held 563,313 shares [= 513,424 shares (31%) + 49,889 shares with no change of holders + 54,215 shares (4.05%) in total, including Nonparty 1, the Plaintiff’s mother, etc.; and the Plaintiff was recommended to exercise voting rights by proxy at the time of the instant general shareholders’ meeting; and the Plaintiff held 111 shareholders, who were the shareholders of the Defendant Company, holding 402,484,05 shares (304.4).

On February 12, 199, Nonparty 2, etc., the shareholder of the Defendant Company, made a proposal on the agenda to be dealt with at the general meeting of shareholders of the instant case through a shareholder proposal, and agreed to jointly exercise the voting rights at the general meeting of shareholders of Korea Investment Association No. 1, the shareholder of the Defendant Company, and the above general meeting of shareholders of the instant case, and delegated the Sigma Investment to the general meeting of shareholders. As a proxy, Nonparty 2, etc., upon soliciting the general shareholders to exercise the voting rights by proxy by proxy, recommended the shareholders to express their opinions on the individual agenda of the general meeting of shareholders of this case.

이 사건 주주총회 당일 10:00경 주주총회가 개최되었는데, 피고 회사의 직원들과 시그마창투측 사이에 원고의 위 명의개서되지 아니한 주식 49,889주와 주주총회 참석장을 소지하지 아니한 주주 소외 3의 주식 3만 주에 대한 주주총회 참석자격을 인정할 것인지에 관하여 언쟁이 있었으나 위 49,889주에 대하여는 의결권을 인정하지 않기로 결론을 내렸으며, 사회를 보던 피고 회사 총무과장인 소외 4가 10:12경 1,056,317주의 주주가 참석하여 성원이 되었다고 보고하자, 일부 주주들이 아직 등록을 하지 아니하였다며 등록을 마친 후 개회를 하자고 요구하여 개회가 지연되다가, 주주총회의 의장인 원고가 10:55경 1,177,207주의 주주(의결권 대리행사를 위임한 주주를 포함하여 145명)가 참석하여 87.85%로 성원이 되었으므로 주주총회를 개회한다고 선언한 후, 원고의 의사진행에 따라 제1호 안건(대차대조표 및 손익계산서 승인의 건)과 제2호 안건(결손금처리계산서안 승인 및 회사 회생의 건)이 각 상정되자, 일부 주주들이 원고에게 회사 부실경영과 불분명한 지출에 대한 해명을 요구하는 등 주주들과 원고 사이에 언쟁이 벌어지면서 의사진행이 지연되기 시작하였으며, 원고는 제3호 안건(이사 및 감사 선임의 건)에 대하여 안건 철회를 요구하였으나 일부 참석자들의 반대로 안건 철회가 여의치 않게 되자, 해외출장에서 돌아와 피곤하다며 주주총회 연기를 선언하고 총회장을 떠나려 하였지만 일부 참석자들이 제지하는 바람에 총회장을 떠나지 못하였으며, 다시 다음 주주총회에서 이사와 감사를 선임하자고 주장하였으나 일부 참석자들의 반대로 결국 원고의 제3호 안건 철회안을 놓고 표결을 하게 되었는데, 1,161,465주의 주주들이 표결에 참여한 결과 찬성하는 주주는 567,450주(48.8%), 반대하는 주주는 594,015주(51.2%)로 원고의 철회안은 부결되었고, 이에 일부 주주들이 이사 5명과 감사 1명의 선임을 요구하자 원고는 '그것은 적대적 앰앤에이(M&A;)에 해당한다'는 등의 주장을 내세우며 의안처리를 계속 미루다가 '적대적 M&A; 문제가 해결될 때까지 회의를 연기하겠다'고 일방적으로 선언하고 퇴장하였으나, 594,015주의 주주가 속회를 결의하여 임시의장으로 시그마창투의 대표이사인 소외 5(현재 피고 회사의 대표이사)를 선출하고 회의를 진행하여 참석한 549,015주(발행주식 총수의 40.9%)의 주주 전원의 동의로 위 소외 5 및 소외 6, 소외 7, 소외 8, 소외 9를 이사로, 소외 10을 감사로 각 선임한 후 제5, 6호 의안을 처리 또는 폐기하고 폐회하였다.

2. Regarding ground of appeal No. 1

Article 342-3 of the Commercial Act provides that "if a company acquires more than 1/10 of the total number of issued and outstanding shares of another company, it shall be notified to that other company without delay." Thus, if a company acquires more than 1/10 of the total number of issued and outstanding shares of another company and exercises voting rights, it shall be threatened with the stability of the management rights by acquiring more than 1/10 of the total number of issued and outstanding shares of the other company, the other company which is under threat of the stability of the management rights, thereby acquiring more than 1/10 of the total number of issued and outstanding shares of the other company, thereby preventing the exercise of voting rights of the other company against the other company, and ensuring the stability of the management rights by taking defensive measures against the other company pursuant to Article 369 (3) of the Regulations on the Restriction of Voting Rights of the other company (Article 369 (3) of the Commercial Act). Therefore, the above provision shall not apply to a specific general meeting of shareholders only to exercise voting rights

According to the reasoning of the judgment of the court below and the judgment of the court of first instance cited in part, the court below stated that the proxy used for soliciting the exercise of voting rights by proxy of the plaintiff's general meeting of shareholders in this case stated that the proxy shall exercise voting rights by proxy pursuant to the terms and conditions indicated in delegation. If the proxy's proxy is returned without express approval or disapproval on all or part of the proxy proposal, the proxy shall exercise voting rights by proxy as to the proxy's proposal, and if the proxy's proxy is not so recommended, the proxy shall exercise voting rights as reasonably to the maximum extent possible if it is not so recommended. Further, the above proxy's presentation of dissenting opinion on the part of the company's general meeting of shareholders, "by proxy" and "by proxy of the company's representative's opinion on the delegation of voting rights by proxy of the company's general meeting of shareholders" and "by proxy of the company's representative's opinion on the delegation of voting rights by proxy of the company's general meeting of shareholders," and the above proxy's opinion on the delegation of voting rights by proxy of the company's general meeting of 14.

3. On the second ground for appeal

According to the reasoning of the first instance judgment cited by the court below, the court below held that the shareholder can exercise his voting right on behalf of the shareholder unless the shareholder expresses his intention to exercise his voting right directly or not with the Korea Securities Depository 5 days prior to the shareholders' general meeting. However, if the shareholder directly exercises voting right at the shareholders' general meeting, Article 174-6 (5) and proviso 4 of the former Securities and Exchange Act (amended by Act No. 5736 of Feb. 1, 1999), which provides that the same shall not apply to the case where the shareholder directly exercises voting right at the shareholders' general meeting, the shareholders shall not exercise voting right. In order to prevent the shareholders from exercising voting right due to the lack of the quorum due to the division of shares and the mass production of the shareholders, the Korea Securities Depository may exercise voting right on behalf of the shareholders. In order to prevent the shareholders from exercising voting right without the Korea Securities Depository from exercising voting right, the court below's determination that there is no error in the misapprehension of legal principles as to the plaintiff's exercise of voting right.

4. On the third ground for appeal

Article 337(1) of the Commercial Act means that a person who acquired registered shares is unable to assert shareholders' rights against the company unless the person who acquired the registered shares expresses his/her name on the register of shareholders, and it is unnecessary to recognize the real shareholder who did not transfer his/her name as a shareholder from the company’s side (see Supreme Court Decision 89Meu14714, Oct. 24, 1989).

However, according to the reasoning of the first instance judgment as cited by the court below, the court below acknowledged that the defendant company's general director, who had held the society of the general shareholders' meeting of this case, should recognize 49,889 shares of the non-party 3 who did not hold the meeting of the general shareholders' meeting of this case as being the same as the plaintiff's 49,889 shares. However, in light of the records, the court below's above fact-finding is just, and in light of the above legal principles, it is not sufficient to deem that the defendant company recognized the plaintiff as the shareholder, and rejected the plaintiff's assertion on the premise that the plaintiff had voting rights as to 49,89 shares of the non-party 3 who did not hold the meeting of the general shareholders' meeting of this case, and there is no error in the misapprehension of the plaintiff's assertion in the grounds of appeal.

5. On the fourth ground for appeal

A. A. The general meeting of shareholders declared opening cannot be deemed closed or terminated in a case where the chairperson voluntarily leaves the meeting against the shareholders' will while the general meeting of shareholders is able to proceed with the examination of the bill legally or factually without completing the examination of the bill at the general meeting of shareholders. In this case, the chairperson renounced his/her position to terminate the agenda in whole by operating the proper meeting and did not exercise his/her authority and rights. Thus, the resolution of the special general meeting of shareholders held by the shareholders remaining in the meeting of shareholders who elected the Speaker at the time of leaving the meeting is lawful (see Supreme Court Decision 83Do748, Aug. 23, 1983).

According to the reasoning of the judgment of the court of first instance cited by the plaintiff, the court below unilaterally decided that the non-party 1's act of delaying the shareholders' general meeting was legitimate by using violence or monitoring the plaintiff's side, or 30,00 won per share, and that the non-party 12's act of rejecting the plaintiff's resolution was not against the plaintiff's order to leave the general meeting of shareholders because the non-party 4's act of rejecting the plaintiff's voting was against the rules of evidence, and thus, the plaintiff's act of rejecting the plaintiff's resolution was not against the non-party 1's order to leave the general meeting of shareholders because the non-party 5's act of rejecting the plaintiff's voting and the non-party 1's act was not against the rules of evidence, but against the non-party 5's order to leave the general meeting of shareholders, the plaintiff's act of rejecting the resolution was not against the plaintiff's order of withdrawal and the non-party 3's dissenting opinion.

B. According to the reasoning of the judgment of the court of first instance cited by the court below, the court below rejected the plaintiff's assertion that since the employees of the defendant company did not confirm the power of attorney of 111 shareholders who delegated voting rights to the defendant company to the defendant company's employees to exercise voting rights by proxy, or it is not sufficient to recognize that the defendant company exercised voting rights by proxy despite some shareholders' failure to obtain delegation of voting rights by proxy from some shareholders or defect in delegation. Rather, the court below rejected the plaintiff's assertion that the non-party 16 and the non-party 13 were not entitled to exercise voting rights by proxy under the overall control of the non-party 15 who is employees of the defendant company on the day of the general meeting of shareholders of this case, and confirmed the original proxy of the shareholders who delegated voting rights by proxy before the general meeting of shareholders was held, as long as it was confirmed that the employees of the defendant company had already been authorized to exercise voting rights by proxy before the general meeting of shareholders, the non-party 17 and the non-party 18 were not entitled to exercise voting rights by proxy 17.

6. Therefore, the appeal is dismissed, and all 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 Son Ji-yol (Presiding Justice)