[1] Whether an application for provisional disposition may be filed against a retired director who performs the rights and duties of a director pursuant to Article 386(1) of the Commercial Act to suspend the performance of his/her duties (negative)

[2] In a case where a retired director still exercises his/her rights and duties as a director even though the number of the members of a director under the law or the articles of incorporation was met at the time of his/her retirement, whether a provisional disposition seeking suspension of the performance of duties can be filed (affirmative

[1] Article 386(1) of the Commercial Act provides that, in a case where the number of members of a director is decided by law or the articles of incorporation, a retired director upon expiration of his/her term of office shall perform the rights and duties of the director until the newly appointed director is appointed. If necessary, such as where it is impossible or inappropriate to allow the retired director who is exercising the rights and duties of the director to perform his/her duties as a director under the above provision, he/she may request the court to appoint a person who performs temporary director's duties under Article 386(2) of the Commercial Act. Thus, an application for provisional disposition is not allowed separately against the retired director who performs the rights and duties of the director due to the existence of grounds for dismissal, expiration of his/her term of office, expiration of his/her term of office, etc.

[2] Article 386(1) of the Commercial Act provides that a retired director may carry out the rights and duties of a director shall be limited to cases where the number of members of a director as stipulated in the law or the articles of incorporation is determined. Thus, in cases where the number of members of a director as stipulated in the law or the articles of incorporation at the time of the retirement is met, the retired director shall lose his rights and duties as a director as a matter of course at the same time as the expiration or resignation of his term of office. Nevertheless, in cases where the director still exercises the rights and duties as a director, a provisional disposition application to suspend the performance

[1] Article 386 (1) and (2) of the Commercial Act, Article 300 of the Civil Execution Act / [2] Article 386 (1) of the Commercial Act, Article 300 of the Civil Execution Act

[1] Supreme Court Order 2000Ma5632 dated November 17, 200 (Gong2001Sang, 111)

The deceased non-party 1’s lawsuit taking over the lawsuit, and two others

[Defendant-Appellant] Plaintiff 1 and one other (Law Firm Roon, Attorneys Seo Nam-nam et al., Counsel for defendant-appellant)

Busan High Court Order 2008Kahap56 dated July 24, 2009

The part of the order of the court below ordering the debtor 1 to suspend the performance of duties and the appointment of acting person for the debtor 1 is reversed, and that part of the case is remanded to Busan High Court. The re-appeal by the debtor 2 is dismissed. The costs of re-appeal by the debtor 2 are

The grounds of reappeal are examined.

1. As to the grounds for reappeal by the debtor 1

Article 386(1) of the Commercial Act provides that, in cases where the number of members of a director is decided by law or the articles of incorporation, the rights and duties of the director shall be borne by the retired director until his/her newly appointed director is appointed due to the expiration of his/her term of office or resignation. If it is impossible or inappropriate to require the retired director who is exercising the rights and duties of the director to hold the rights and duties of the director as a director under the above provision, etc., if necessary, he/she may request the court to appoint a person to perform the duties of the temporary director under Article 386(2) of the Commercial Act (see Supreme Court Order 200Ma5632, Nov. 17, 200). Accordingly, in addition, an application for provisional disposition seeking the suspension of his/her duties against the retired director who is performing the rights and duties of the director is not allowed under Article 386(1) of the Commercial Act.

According to the records, the company in this case may have one or two directors with total amount of less than KRW 500 million (proviso of Article 383(1) of the Commercial Act). As the articles of incorporation stipulate the joint representative director system, the minimum number of directors necessary for the company in this case is two. The joint representative director and the joint representative director and the debtor 1, a director of the company in this case, on July 31, 2007, when the term of office of the company in this case expired, but the remaining directors cannot keep the minimum number of directors as stipulated in the articles of incorporation due to the expiration of all of their terms of office. Thus, the company in this case continues to exercise their rights and duties as joint representative director and directors.

The court below issued a provisional disposition ordering the suspension of performance of duties as a representative director and a director for the debtor 1 whose term of office has already expired, on the grounds that the provisional disposition ordering the suspension of performance of duties as a representative director and a director for the debtor 1 to whom the right to demand dismissal under Article 385(2) of the Commercial Act has already expired is not permissible, but the provisional disposition ordering the suspension of performance of duties as a representative director and a director for the debtor 1 to whom the right to demand confirmation of the absence of a director's position or authority is allowed.

However, in light of the above legal principles, the debtor 1 is a retired director who is exercising the rights and duties as a joint representative director and a director after the expiration of his/her term of office as provided by Article 386 (1) of the Commercial Act in cases where he/she determines the number of the members of the necessary directors at the expiration of his/her term of office, and where it is necessary to exclude such retired director from his/her duties, he/she may request the court to appoint a person who performs temporary duties as provided by Article 386 (2) of the Commercial Act, apart from that he/she may request the court

Nevertheless, the decision of the court below, which is subject to a provisional disposition of suspension of execution of duties and appointment of acting representative for debtor 1, is erroneous in the misapprehension of legal principles as to provisional directors' appointment procedures or provisional disposition of suspension of execution of duties, etc.

2. As to the grounds for reappeal by the debtor 2

Article 386(1) of the Commercial Act provides that a retired director may carry out the rights and duties of a director shall be limited to a case where the number of members of a director stipulated in the law or the articles of incorporation is determined. Thus, in case where the number of members of a director as stipulated in the law or the articles of incorporation is satisfied at the time of the retirement, the retired director shall lose his rights and duties as a director as a matter of course at the same time as the expiration or resignation of his term of office. Nevertheless, if the director still exercises his rights and duties as a director, it shall be deemed that an application for provisional disposition seeking a suspension

According to the reasoning of the order of the court below, the court below acknowledged that the minimum number of directors necessary for the company of this case is two, and at the time when the debtor 2 was appointed as a director on July 18, 2005, four directors such as creditor 2, non-party 2, debtor 1, and non-party 3, etc. were in office, and therefore the debtor 2 continued to participate in the operation and execution of the board of directors of this case even though there is no need to perform duties as retired director, the court below accepted the provisional disposition of this case against the above debtor on the ground that the right to claim confirmation of non-existence of such status or authority is proved as preserved right to preserve the debtor's right to seek the suspension of execution of duties

In light of the above legal principles and records, the above measures of the court below are just, and there is no violation of the Constitution, law, order or rule that affected the trial.

3. Conclusion

Therefore, the part of the order of the court below ordering the debtor 1 to suspend the performance of duties and the appointment of an acting person is reversed, and that part of the case is remanded to the court below for a new trial and determination. The re-appeal by the debtor 2 is dismissed, and the costs of the lawsuit are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices

Justices Min Il-young (Presiding Justice)