Plaintiff (Attorney Dong-sung et al., Counsel for plaintiff-appellant)

CSK Co., Ltd. and one other (Attorney Yoon-young et al., Counsel for the plaintiff-appellant)

June 11, 2009

1. The plaintiff's claims against the defendants are all dismissed.

2. The costs of lawsuit are assessed against the Defendants.

Defendant 2 shall be dismissed from office as a director of the CSK company.

1. Basic facts

A. The Plaintiff is a shareholder of the Defendant Company, which owns 3,200 shares of 50,100 shares (the total number of shares issued by the Defendant Company was 32,00 shares, which became 50,100 shares by issuing new shares of 18,100 shares on November 1, 2004) issued by Defendant CSK Co. (hereinafter “Defendant Company”). Defendant 2 is a shareholder of the Defendant Company, who owns 3,200 shares of 12,250 shares of the Defendant Company as the representative director of the Defendant Company.

B. On November 1, 2004, the Defendant Company issued new shares through the resolution of the board of directors, and, in principle, allocated shares in proportion to the number of shares held by each shareholder at the time of the above resolution. However, the old shareholder’s refusal of preemptive rights was decided to allow the general public or other shareholders to accept the new shares. Accordingly, the Defendant Company issued new shares of 18,100 common shares (hereinafter “instant new shares”) on the same day, and Defendant 2, who was the existing shareholder, was 5,850 shares among them, and Nonparty 3 did not allocate new shares, but the Plaintiff’s share ratio with respect to the Defendant Company was reduced from 10% to 6.39% because the Plaintiff did not allocate new shares.

D. On August 5, 2008, when the Plaintiff became aware of the above facts, and demanded the Defendant Company to convene a temporary general meeting of shareholders in order to dismiss Defendant 2 from office as a director, the Defendant Company did not convene a temporary general meeting of shareholders, but the Plaintiff did not submit an application for permission to convene a general meeting of shareholders in Incheon District Court No. 2008Bhap33, Sept. 2008, the board of directors of the Defendant Company, which held a temporary general meeting of shareholders on Oct. 30, 2008, which was proposed by the Plaintiff, was rejected, but did not put Defendant 2 to vote on the dismissal of the director.

[Reasons for Recognition] Facts without dispute, Gap's evidence 1 to 5, Gap's evidence 1 to 5, Gap's evidence 1, 2, 4, 5, 6, 7, 8, 9, Eul's evidence 1, 4, 5, 6, 7, and 10, non-party 1 and 4's testimony and the purport of whole pleadings

2. The assertion;

The Plaintiff asserts that when the Defendant Company issued the new shares of this case, it did not give public notice and notification under Articles 418 and 419 of the Commercial Act to the Plaintiff, Nonparty 1, and Nonparty 2 (hereinafter “Plaintiff, etc.”) who are the existing shareholders, and that the Plaintiff, etc. did not give up new shares, the Plaintiff, etc. did not forge a written waiver of the subscription of new shares under the name of the Plaintiff, etc., thereby excluding the Plaintiff, etc., and allocated new shares only to Defendant 2 and Nonparty 3,

In this regard, the defendant argues that even if the plaintiff et al. was well aware of the issuance of the new shares of this case and the defendant company did not notify the plaintiff et al. in the process, it does not constitute a reason for removal of directors merely because it was minor procedural defect.

3. Determination

A. Whether there was a defect in the process of issuing the new stocks of this case

1) According to Articles 418 and 419 of the Commercial Act, when issuing new shares, the company must set a certain date and publicly notify the purport that the shareholders listed on the register of shareholders have preemptive rights at the time of issuing new shares, two weeks prior to the said date. The company must notify the class and number of shares with such preemptive rights and that the rights shall be forfeited if the shareholders do not subscribe for the subscription to shares on or before the said date.

According to the defendants' assertion, the plaintiff operates another cleaning company on the same building and the same floor as the defendant company, and the non-party 2 and the non-party 1 were the employees of the defendant company at the time of the issuance of the new shares of this case, and thus the plaintiff et al. asserted that they were well aware of the issuance of the new shares of this case, and did not follow the procedure of public announcement, notification, etc. under the Commercial Act. In light of the overall purport of this, it seems that the defendant company did not follow the procedure of public announcement, notification,

2) In addition, if evidence Nos. 7-2 (Minutes of the board of directors), 4 (PP), 7 (PP), and 10 (PPP) are added to the entire purport of the pleadings, each statement of evidence No. 7-2 (PPP), the seal of the Plaintiff et al. is affixed to the waiver of new shares, but the seal of the Plaintiff et al. is affixed to the waiver of new shares. However, the seal of Defendant 2 is affixed to the waiver of new shares, and the seal of Nonparty 1 kept in the Defendant Company. The board of directors of the Defendant Company may recognize that the date of payment of new shares payment was set the same day as the resolution of November 1, 204 on the issuance of new shares.

3) According to the factual relationship as above, the Defendants did not follow the procedure of public announcement, notification, etc. under the Commercial Act to the Plaintiff, etc. who is a shareholder when issuing the instant new shares. Even if the Plaintiff, etc. knew of the fact of issuing the instant new shares as alleged by the Defendant, it does not exempt the Defendants from the Defendants’ public announcement and duty of notification, and it is reasonable to deem that the Defendants intentionally failed to assign new shares by forging the waiver of the new shares, and setting the date of payment of new shares on the same day as the board of directors’ resolution, etc., and intentionally deprived the Plaintiff, etc. of the opportunity to receive the instant new shares.

B. Whether the above defects constitute grounds for removal of directors

1) Article 385(2) of the Commercial Act provides that, if a director refuses to dismiss him/her at a general meeting of shareholders due to an unlawful act in connection with his/her duties, or a serious violation of the statutes or the articles of incorporation, shareholders holding no less than 3/100 of the total issued and outstanding shares may request the court to dismiss the director from office. Here, the term “material facts violating the statutes or the articles of incorporation” refers to cases where a director intentionally violates the statutes or the articles of incorporation and intended to inflict damage on the company by failing to perform his/her duty of loyalty to the company, so that he/she would have intentionally failed to perform

2) As seen earlier in the process of the issuance of new shares in this case, the Plaintiff et al. was excluded from the process of the issuance of the new shares in this case, thereby reducing the Plaintiff’s share ratio from 10% to 6.39%, while Defendant 2-a, from among the 18,100 new shares in this case, Defendant 2-a, 850 shares, and Nonparty 3 received allocation of 12,250 shares from among the 18,100 shares of this case, and Defendant 2-a, who was favorable to Defendant 2 and Nonparty 3, issued the new shares in this case in an unfair manner in violation of the Commercial Act, thereby causing disadvantages, such as being unable to have an opportunity to exercise the right to new

① However, the grounds for the Defendants’ issuance of new shares appears to have been aimed at enhancing the competitiveness of the Defendant Company, whose capital size is less than that of other competitors while engaging in multi-family housing management business as its main business. ② According to the statement of evidence No. 9 (value-added Tax Base Certification), the tax base of February 2004 was zero, but it appears that there was an increase in sales by 22,779,952 won as of the end of 2005, 236,938,605 won as of the end of 2006, and 449,238,138 won as of the end of 207, and that there was an increase in sales by 10 years from the date of issuance of new shares to the date of issuance of new shares. The reason for the Defendants’ issuance of new shares is that it was difficult to readily view that the Plaintiff was in violation of the duty of loyalty to the Defendant Company for the issuance of new shares as of November 1, 2004.

In light of such circumstances, although Defendant 2’s series of actions in relation to the issuance of new shares in this case constitute an act that violates the provisions of the Commercial Act stipulating the procedures, etc. for the issuance of new shares, it cannot be viewed as an unlawful act that causes damage to the company, statutes, and serious facts that violated the articles of incorporation, and thus, it is difficult to view it as a reason for the dismissal of directors. In addition, it cannot be deemed that Defendant 2 violated the duty of loyalty to the Defendant company

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

Judges Choi Jin-ho (Presiding Judge)