[1] The shareholder's interest in a lawsuit claiming the removal of director

[2] Whether a lawsuit filed against a person who has the rights and obligations of a director after retirement is legitimate even though the term of office as a director of a stock company expired (negative)

[1] The lawsuit claiming the removal of a director by a shareholder under Article 385 (2) of the Commercial Code is unfair that a director still remains in his/her position by rejecting a dismissal at a general meeting of shareholders despite the existence of a fraudulent act in relation to the performance of his/her duties or other grounds stipulated in the above Article 385 (2) of the Commercial Code. Therefore, the purpose of the lawsuit is to deprive a minority shareholder of his/her current status for the remaining term of office, so that the person to be dismissed

[2] A lawsuit claiming dismissal of a director against a person who has the right and duty of a director even after retirement under Article 386 (1) of the Commercial Act is not only based on legal and explicit grounds. In such a case, a minority shareholder may exercise the right to convene a general meeting and seek appointment of a new director. If it is not appropriate for a person who has the right and duty of a director to perform his/her duties because he/she is in an unfaithful private life, such as an unlawful act in connection with his/her duties during his/her term of office, the shareholder may request the court to appoint a person who performs the duties of a director temporarily pursuant to Article 386 (2) of the Commercial Act as an interested party, and there is no practical benefits to separately recognize the request for dismissal. Therefore

[1] Article 385 (2) of the Commercial Act, Article 226 of the Civil Procedure Act, / [2] Articles 385 (2) and 386 of the Commercial Act

Freeboard (Law Firm Sejong, Attorneys Lee Byung-ju et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2006Na11488 decided May 2, 2006

1. All of the plaintiff's lawsuits shall be dismissed.

2. Litigation costs shall be borne by the plaintiff.

The judgment dismissing Defendant Kim Jong-soo and Kim Jong-sung from office as a director of the Defendant Shin Young Construction Co., Ltd.

1. Determination on the legitimacy of a lawsuit

The Plaintiff, as a person holding 10% of the total number of shares issued by the Defendant Company, sought to dismiss the said Defendants from the position of director of the Defendant Company on the grounds that they were in violation of the act of misconduct under Article 385(2) of the Commercial Act, statutes, or the articles of incorporation, and that they were in violation of Article 385(2) of the Commercial Act. We examine ex officio the legality of the instant lawsuit

According to the provisions of Article 385 (2) of the Commercial Act, in a case where a director refuses to dismiss a director at a general meeting of shareholders even though there was an unlawful act in connection with his duties, or a serious violation of the Acts and subordinate statutes or the articles of incorporation, a shareholder who holds no less than 5/100 of the total issued and outstanding shares may file a claim with the court for dismissal of the director within one month from the date of resolution of the general meeting. However, it is improper that a shareholder's lawsuit seeking dismissal is to dismiss a director at a general meeting of shareholders and have the status still remains in his/her position despite the existence of an unlawful act in connection with his/her duties or other causes provided for in the above Acts and subordinate statutes. Therefore, the purpose of the lawsuit is to deprive the shareholder's current status

However, comprehensively taking account of the evidence No. 1 and evidence No. 3, the defendant corporation established for the purpose of housing construction, real estate leasing, sale, sale, etc. (hereinafter referred to as the "defendant corporation") and the whole purport of argument No. 1 and No. 3, the defendant corporation established for the purpose of housing construction, real estate leasing, sale, sale, etc. on Sep. 17, 1993; the non-party 1's most common morals and Kim Jong-young on the corporate register; the non-party 94. Nov. 7, 1994; the defendant Kim Jong-sung was registered as the director of the defendant corporation on July 26, 1994; according to the articles of incorporation of the defendant corporation, the defendant corporation had three or more directors (Article 22); the director's term of office is three years after his appointment; the director's maximum term of office is increased before the closing of the general shareholders' meeting on the closing of the last period for the settlement of accounts during his term of office, and the term of office of the defendant 15.

In the event that the term of office of a director expires, it is clear that the above Defendants do not have the status of a director any longer since the delegation relationship with the Defendant Company terminates.

Meanwhile, Article 386(1) of the Commercial Act provides that, in cases where the head of a director is decided by law or the articles of incorporation, a retired director due to the expiration of his/her term of office or resignation has the rights and duties of the director until his/her newly appointed director is appointed. In the case of the defendant company, it is recognized that all of the directors are subject to the above provisions since his/her term of office expires. However, even if the Defendants have the rights and duties of the director under the above provisions, the above provisions are merely a temporary performance of the duties of the director until the appointment of a new director only in inevitable cases under the law or the articles of incorporation in order to maintain continuity by avoiding the suspension of the duties of the director, and it is not based on delegation relation between the defendant company and the new director, and there is no explicit ground for filing a lawsuit seeking dismissal of the director under Article 385(2) of the

In addition, in such a case, a minority shareholder may exercise the right to call a general meeting and seek to appoint a new director. If a person who performs the right and duty of a director is private in bad faith, such as an unlawful act in connection with his/her duties during his/her term of office, and it is inappropriate to perform such right and duty, the shareholder may demand the court to appoint a person who performs the duty of a director temporarily as an interested party pursuant to Article 386(2) of the Commercial Act, and in such a case, there is no room to separately

Ultimately, the plaintiff's lawsuit of this case is no longer in the position of the above defendants upon the expiration of their respective terms of office, and thus, it is deemed that the above defendants' interest in the lawsuit could no longer be relieved of its illegality.

2. Conclusion

Therefore, the plaintiff's lawsuit of this case, which the above defendants sought dismissal on the premise that they are in the position of director of the defendant company, is unlawful, and it is so decided as per Disposition by the assent of all.

Judges So-young(Presiding Judge)