[1] Where a registered director files a lawsuit seeking registration of change to the effect that he/she has asserted his/her resignation against the company and resigned from office, the person who represents the company (=representative director)

[2] In a case where the complaint contains a representative’s indication but is erroneous in its indication, whether the presiding judge may dismiss the complaint on the ground that it did not comply with the order of correction (negative)

[1] Article 394(1) of the Commercial Act is not applicable to a lawsuit seeking registration of change to the effect that a person registered as a director of a company had resigned from the company by asserting the resignation against the company. As such, the representative of the company is not an auditor but a representative director. The reason is as follows. The court must determine the representative of the company in accordance with the appearance of the company for the stabilization of litigation relations. However, the reason why the provision of the Commercial Act provides that a director and an auditor represent the company for the sake of the stability of litigation relations is to ensure the fair performance of litigation, and there is no room to apply the above provision of the Commercial Act to a case where a director already has already resigned from the company. Meanwhile, the resignation is a single act by the other party, and its declaration of intention reaches the other party and becomes effective, so even if registration has not been completed upon the resignation of the director, it is sufficient to view the company as a fair representation even if there is no concern that the director has already lost the status of the company.

[2] The presiding judge’s right to examine a complaint under Article 254 of the Civil Procedure Act, where a complaint violates Article 249(1) of the same Act or fails to affix revenue stamps pursuant to the provisions of the law, may order the plaintiff to correct the defect within a reasonable time fixed by the presiding judge. The presiding judge shall dismiss the complaint by issuing an order when the plaintiff does not correct it within the said time period. As long as the complaint bears the indication of a representative, even if the error was found in the indication, it is not allowed to issue an order to correct the defect and dismiss the complaint on the ground of non-compliance. In such a case, only a judgment can be dismissed.

[1] Article 394(1) of the Commercial Act / [2] Article 254 of the Civil Procedure Act

[1] Supreme Court Decision 2000Da9086 delivered on March 15, 2002 (Gong2002Sang, 864)

Re-appellant

Seoul High Court Order 2013Ra460 dated July 5, 2013

The order of the court below is reversed, and the case is remanded to Seoul High Court.

The grounds of reappeal are examined.

1. Article 394(1) of the Commercial Act is not applicable to a lawsuit seeking registration of change to the purport that a person registered as a director of a company has withdrawn from office by asserting that he/she has resigned against the company, and thus, the representative of the company in such lawsuit shall be deemed not to be the auditor, but the representative director.

In this lawsuit, the subject matter of the hearing where the resignation of a director has been duly made, and thus, it cannot be known that it is in the course of the lawsuit. Thus, the court needs to determine the representative of the company in accordance with the appearance of the company for the stabilization of litigation relations. However, the reason why the provisions of the Commercial Act stipulate that the auditor in the lawsuit of a director and a company shall represent the company is to ensure fair performance of litigation, and there is no room to apply the above provisions of the Commercial Act unless there are special circumstances (see Supreme Court Decision 2000Da9086, Mar. 15, 2002, etc.). Meanwhile, the resignation is a sole act with the other party, and its declaration of intention has been effective at the same time when the other party reaches the other party and its registration has not been completed, and thus, it is the principle to lose the status of the director even if the director loses his status by himself while filing a lawsuit against the company, at least if the director claims that he had lost his status as a director by his resignation, it is sufficient to be seen as a director, and there is little to perform a fair performance of litigation.

According to the reasoning of the order of the court below and the records, the lawsuit of this case is filed against the re-appellant, the representative director of the defendant company and in-house director of the defendant company, and the defendant company did not register the change. The re-appellant filed the lawsuit of this case by representing the non-party representative director of the defendant company as the representative of the defendant company. Thus, in accordance with the legal principles as seen earlier, Article 394 (1) of the Commercial Act does not apply to the lawsuit of this case.

Nevertheless, the court below determined that the order of correction by the presiding judge of the court of first instance ordering the representative of the defendant company to correct the representative of the defendant company as an auditor and all of the order of first instance that dismissed the complaint of this case was lawful on the ground that the re-appellant did not comply with the order of correction of the presiding judge of the court of first instance. Such order of the court below is erroneous in the misunderstanding of legal principles as to Article 394(1) of the Commercial Act, which affected the conclusion of the judgment. The ground for

2. Furthermore, the presiding judge’s right to examine a complaint under Article 254 of the Civil Procedure Act may, in cases where a complaint violates Article 249(1) of the same Act or fails to affix revenue stamps pursuant to the provisions of the law, order the plaintiff to correct the defect within a reasonable time fixed by the presiding judge, and the plaintiff’s rejection of the complaint by issuing an order when the plaintiff does not correct it within the said time period. As such, insofar as the complaint bears the indication of the representative of the plaintiff, it is not allowed to order the correction to indicate the correction even if the error was found in the relevant indication, and dismiss the complaint on the ground of non-compliance. In such a case, the order of the court below is only permissible to dismiss the suit by judgment. In this respect, the reversal cannot be exempt.

3. Therefore, the order 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 Lee In-bok (Presiding Justice)