[1] Whether Article 369(1) of the Commercial Act, which provides for the principle of one voting right per share, is a mandatory provision (affirmative)

[2] Provisions of the articles of incorporation that restrict voting rights in the appointment and dismissal of auditors on shares held by a stockholder who is not the largest shareholder, his specially related person, etc. in excess of a certain ratio, or the validity of a resolution of a general meeting of shareholders

[1] Article 369(1) of the Commercial Act provides for the principle of one voting right per share that shareholders of a stock company shall have one voting right per share. Since the above provision is a mandatory provision, the above provision is a mandatory provision, and it shall not be effective even if the provisions of the articles of incorporation or the resolution of the general meeting of shareholders restrict voting rights contrary to the above principle, except where the exception to the above

[2] Article 409(2) and (3) of the Commercial Act restricts voting rights in the appointment of an auditor with respect to the shares held by a “shareholders” in excess of a certain ratio. Article 191-11 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635 of Aug. 3, 2007) restricts voting rights in the appointment and dismissal of auditors with respect to the shares held by a stock-listed corporation, the largest shareholder and his specially related persons, etc. of which exceed a certain ratio. Thus, the provisions of the articles of incorporation or the resolution of a general meeting of shareholders, etc. that restrict voting rights in the appointment and dismissal of auditors with respect to the shares held by a “shareholders, etc. who are

[1] Article 369(1) of the Commercial Act / [2] Article 409(2) and (3) of the Commercial Act, Article 191-11(1) of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act (Act No. 8635 of Aug. 3, 2007)

Plaintiff (Law Firm Rate, Attorneys Shin Sung-sung et al., Counsel for the plaintiff-appellant)

Defendant (Attorneys Son Ji-yol et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2008Na97951 decided June 11, 2009

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Article 369(1) of the Commercial Act provides for the principle of one voting right per share that shareholders of a stock company shall have one voting right. Since the above provision is a mandatory provision, it is not effective even if the provisions of the articles of incorporation or the resolution of the general meeting of shareholders restrict voting rights contrary to the above principle, except where the law recognizes the exception to the above principle.

However, Article 409(2) and (3) of the Commercial Act limits voting rights to the shares held by the “shareholders” in excess of a certain ratio, and Article 191-11 of the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635, Aug. 3, 2007; hereinafter the same) limits voting rights to the appointment and dismissal of auditors on the shares held by the “large shareholder and his/her specially related persons, etc.” of the stock-listed corporation’s stocks held in excess of a certain ratio. Thus, the articles of incorporation or the resolution of a general meeting of shareholders, etc., which limits voting rights to the appointment and dismissal of auditors on shares held in excess of a certain ratio, shall be deemed null and void.

According to the facts duly admitted by the court below and the records, ① Article 21(4) of the articles of incorporation of the defendant company (hereinafter “instant articles of incorporation”) provides that “Where the aggregate of voting stocks owned by a shareholder and his specially related persons, etc. who exercise voting rights in relation to the appointment of auditors exceeds 3/100 of the total number of outstanding voting stocks, the shareholder shall not exercise voting rights in relation to the stocks in excess thereof,” thereby containing the same contents as Article 191-11 of the former Securities and Exchange Act (amended by Act No. 5254 of Jan. 13, 1997). ② However, the above provisions of the Securities and Exchange Act (amended by Act No. 6176 of Jan. 21, 200, which were amended by Act No. 6176 of Jan. 21, 200, from “shareholders and their specially related persons, etc.” to “large shareholder and their specially related persons, etc.”

According to the reasoning of the judgment below, in light of the principle of shareholder equality and the purport of the 1 week 1 voting right principle, the reason why the stock company law was a mandatory law, the purport of the restriction on voting rights in our Commercial Act and the former Securities and Exchange Act, etc., the article of this case is deemed to be an invalid provision that violates the mandatory law and unreasonably limits the shareholder's voting rights. The restriction on the voting rights of the plaintiff and his related parties pursuant to the articles of this case was unlawful and thus, the court below accepted the plaintiff's claim seeking the revocation of the resolution of this case by deeming that the restriction on voting rights of the plaintiff and their related parties

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to Article 409 of the Commercial Act and Article 191-11 of the former Securities and Exchange Act as alleged in the grounds of appeal.

2. Regarding ground of appeal No. 2

The court below's interpretation that the articles of incorporation of this case which limits shareholders' voting rights beyond the scope prescribed in the above provisions of the Act by strictly interpreting Article 191-11 (1) of the former Securities and Exchange Act which establishes exceptions to the principle of equality of shareholders, the principle of equality of shareholders, and Article 191-11 (1) of the former Securities and Exchange Act which establishes exceptions to the principle of equality of shareholders, and thus, it is possible to interpret the above provisions of the Act to realize equality between shareholders by reducing exceptions to the principle of equality of shareholders, and it cannot be viewed as an infringement of the principle of equality

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal 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)