[1] The validity of an act of a public-service corporation acquiring property without a resolution of the board of directors (effective)

[2] The method of withdrawal or extension of a general meeting of shareholders notified and publicly announced

[1] Article 7(1)1 of the Act on the Establishment and Operation of Public Interest Corporations requires a resolution of the board of directors as well as the disposal of property, and the “acquisition” thereof. The purport of the Act is to promote the sound development of public-service corporations and to have public-service corporations faithfully perform its original purpose by ensuring the proper management, maintenance, protection, and finance of the property, taking into account the special nature of the public-service corporation. However, in a case where a public-service corporation acquires the property free of charge due to the donation of stocks or other objects, etc., without making a contribution, without making a decision of the board of directors, the public-service corporation itself is required to make a public announcement of the property basis of the public-service corporation, and there is no reason to accomplish the purport of nullifying the acquisition of the property unless the resolution of the board of directors is requested and the resolution is made. Therefore, even if a public-service corporation gratuitously acquired the

[2] In order to withdraw or postpone a convocation after the notice or public notice of the convocation of the general meeting of shareholders was given, the representative director shall be notified and publicly notified in the same manner as that of the convocation through a resolution of the board of directors corresponding to the case of convocation.

[1] Articles 7(1)1 and 11(3) of the Act on the Establishment and Operation of Public Interest Corporations (amended by Act No. 4932 of Jan. 5, 1995); Article 16(1)2 of the Enforcement Decree of the Act on the Establishment and Operation of Public Interest Corporations / [2] Article 363(1) of the Commercial Act

Defendant 1 and two others

Prosecutor

Law Firm Mau, Attorneys Han Dong-han et al.

Seoul High Court Decision 2007No406 decided September 7, 2007

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

We examine the grounds of appeal.

1. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes

A. The summary of the facts charged of the instant case is as follows: (a) the Defendants conspired, and the Nonindicted Incorporated Company and the Deceased, the founder of the Nonindicted Incorporated Foundation, who operated the ○○ consortium, embezzled 36 share certificates representing 3,600 shares of the Nonindicted Incorporated Foundation’s basic property on December 30, 1990 (hereinafter “instant share certificates”) on the part of the Nonindicted Incorporated Foundation after the Deceased’s death, and kept for the Nonindicted Incorporated Foundation, Defendant 2 and 3, on May 26, 2006, demanded the Defendant 1 to transfer and endorsement on the register of shareholders on the register of Nonindicted Incorporated Foundation, and Defendant 1 embezzled the instant share certificates in the name of the Defendant 2 and the letter, with his consent, by transfer and endorsement.

B. As to this, the lower court: (a) provided that the board of directors shall deliberate and decide on the budget, settlement of accounts, loans, and the acquisition, disposal, and management of property of a public-service corporation under Article 7(1)1 of the Act on the Establishment and Operation of Public-Service Corporations (amended by Act No. 4932, Jan. 5, 1995; hereinafter “Public-Service Corporations Act”); (b) on the premise that the act of acquiring property cannot be deemed effective unless a public-service corporation disposes of its property or acquires its property without deliberation and resolution by the board of directors; (c) on the ground that it is reasonable to view that the act of acquiring property cannot be deemed to have been proven to have been proven to have been beyond a reasonable doubt on the ground of its reasoning as to whether the non-indicted foundation, which corresponds to a public-service corporation, actually had a resolution by the board of directors at the time of acquiring the instant share certificates. Accordingly, the instant share certificates cannot be readily concluded to have been reverted to the ownership of the

C. However, we cannot accept the above determination by the court below for the following reasons.

Article 7(1)1 of the Public Interest Corporation Act requires a resolution of the board of directors as well as the disposal of property. The purport of Article 7(1)1 of the Act is to promote the sound development of public-service corporations and to have public-service corporations faithfully perform its original purpose by ensuring the smooth management, maintenance, protection, and finance of the property, taking into account the special characteristics of the public-service corporation (see Supreme Court Decision 2000Da20090, Jun. 28, 2002). However, in cases where a public-service corporation receives stocks or other objects by donation of the property without the contribution of the price, and without the contribution of the price, gratuitously acquires the property, the property foundation of the public-service corporation itself is required to make a public-service corporation more public announcement. Therefore, the purport of invalidating the acquisition of the property is not to be achieved, unless the resolution of the board of directors is requested and the resolution is made. Therefore, it is not invalid unless there is any special reason to the contrary.

Such a interpretation is supported by the distinction between the two by not requiring the permission of the competent authority in the case of “sale, donation, lease, exchange, change of the purpose of use, or offer as security” of the basic property of a public-service corporation (Article 11(3) of the Public-Service Corporation Act) and without compensation, unless “it is difficult to use it as the basic property in light of the purpose of donation” (Article 16(1)2 of the Enforcement Decree of the Public-Service Corporation Act) - separate from the alteration of the articles of incorporation due to the acquisition - it is supported by the distinction between the two by failing to request the competent authority for separate permission for the acquisition itself.

On the other hand, the judgment of the court below that the act of acquiring property cannot be recognized unless it goes through the resolution of the board of directors in acquiring property without compensation is erroneous in the misapprehension of legal principles as to the act of acquiring property without compensation by a public-service corporation, which affected the conclusion of the judgment. Thus, the judgment below is hard to dismiss without examining the remaining grounds of appeal. The grounds of appeal by the prosecutor pointing this out are with merit.

2. As to Defendant 1’s obstruction of business

A. The summary of the facts charged of this case is that Defendant 1, who had been scheduled to hold a general meeting of shareholders on May 29, 2006, requested Defendant 2, etc. to deliver a written request for suspension of the general meeting of shareholders on May 26, 2006, and received it. On the same day, Defendant 1 sent a text message to the shareholders of Nonindicted Co., Ltd. on or around 15:24, and announced it in daily newspapers on or around the 27th day of the same month, and the public notice was made in daily newspapers on or around the 29th day of the same month, by preventing shareholders who dissent from the extension of the general meeting of shareholders from entering the general meeting of shareholders by force and obstructing them from holding the general meeting of shareholders by fraudulent means and by force.

B. On the grounds delineated below, the lower court reversed the first instance judgment and acquitted the Defendant on the ground that the facts charged in the instant case constituted a case where there is no proof of criminal facts.

Defendant 1 received a request from Defendant 2 and 3 who became a major shareholder of the non-indicted corporation for the postponement of the general meeting of shareholders, and the resolution to postpone the general meeting of shareholders was adopted after consultation with other directors (non-indicted 2 and 3). Thus, this cannot be deemed an unlawful act that interferes with the business of holding the general meeting of shareholders of the non-indicted corporation. In addition, once the above resolution of the board of directors was made three days prior to the scheduled procedure of notification and public notice, it is difficult to see that the resolution of the board of directors to postpone the scheduled general meeting of shareholders is legitimate, and it is difficult to recognize the existence of the general meeting of shareholders being protected because the resolution of the board of directors to postpone the scheduled general meeting of shareholders was just because the resolution of the board of directors to postpone the scheduled general meeting of shareholders was made by the employees of the service company. Furthermore, it was hard to acknowledge the existence of the general meeting of shareholders, and there was no allegation that other shareholders, including the above non-indicted corporation, including Defendant 1, etc., voluntarily hold the general meeting of shareholders.

C. However, we cannot accept the above determination by the court below for the following reasons.

(1) The lower court acknowledged the following facts. On May 15, 2006, Defendant 1 notified the shareholders of Nonindicted Co., Ltd. of the convocation date of the general meeting of shareholders on May 29, 2006; Defendant 1 posted a notice of convening the general meeting of shareholders on May 29, 2006; Defendant 1 issued a notice of convening the general meeting of shareholders on May 27, 2006; Defendant 2, etc., sent to Defendant 2, etc. the notice of convening the meeting of shareholders on May 27, 2006; Defendant 2, etc., sent the transfer of the instant share certificates to Defendant 2, etc.; and decided to postpone the general meeting of shareholders by holding the board of directors in consultation with other directors. Accordingly, on the same day, Defendant 1 notified the postponement date of the general meeting of shareholders by sending EM (SM) letters to the shareholders of the mobile phone; on May 27, 2006, posted the notice of postponement of the general meeting of shareholders;

(2) However, in order to withdraw or postpone the convocation after the notice and public notice of the convocation of the general meeting of shareholders were given, it is reasonable to view that the representative director must give notice and public notice in the same manner as in the convocation through a resolution of the board of directors in the case of convocation.

However, as seen earlier, since the shares of this case were not subject to the resolution of the board of directors in acquiring the shares of this case by donation, it shall be deemed that the shares of this case were reverted to the non-indicted incorporated foundation, and thus, the request for postponement of the above general meeting of shareholders by Defendant 2, etc. is difficult to be deemed a legitimate shareholder. In addition, even according to the factual relations recognized by the court below, the notice was given to the general meeting of shareholders by means of mail notice in writing, and the notice was given to each shareholder by means of sending a mobile phone text message, not by means of a written notice such as a notice of convocation, but by means of a notice of convocation, but by means of sending a daily newspaper and a mobile phone text message, and the postponement was publicly announced at the place

Therefore, the judgment of the court below on the premise that the general meeting of shareholders of this case was lawfully postponed is erroneous in the misunderstanding of legal principles as to notification of convocation and postponement thereof, which affected the conclusion of the judgment. The prosecutor's ground of appeal pointing this out is with merit.

3. Conclusion

Therefore, 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 Kim Ji-hyung (Presiding Justice)