In the articles of incorporation of a corporation, the board of directors or vice-president, who has exclusive power of representation among the directors, shall be elected at a general meeting consisting of the members or representatives of a corporation. In the absence of such chief director or vice-chief director or there is no vacancy, and where damage is likely to occur to a corporation or a third party, whether the court may appoint a temporary chief director exclusive of the power of representation or a temporary chief director acting for such chief director pursuant to Article 63 of the Civil Act (affirmative) and the standard for determining

The articles of incorporation of a juristic person stipulate that a chief director or a vice chief director, who has exclusive power of representation, among the directors of a juristic person, shall be elected at a general meeting composed of members or representatives of a juristic person. There is no or a vacancy in the office of the chief director exclusively assigned with such power of representation, and where damage is likely to occur therefrom, the court may, upon the application of an interested party or a prosecutor, appoint an interim chief director or a temporary vice chief director, the exclusive power of representation of the juristic person pursuant to Article 63 of the Civil Act. In such cases, the court shall determine the requirements for appointment of a temporary chief director and a temporary chief director, who is the exclusive authority of representation or acting director, and shall comprehensively consider the circumstances such as the situation where the absence or absence of the chief director or acting director, the contents of the articles of incorporation concerning the exercise of power of representation, the existence of a legitimate representative prescribed by the articles of incorporation, the existence of the former representative or acting director, and whether the former representative or acting director is deemed inappropriate to continue performing his/her duties after the expiration of his/her term of office.

Articles 59(1) and 63 of the Civil Act

Applicant (Law Firm LLC, Attorneys Yu-chul et al., Counsel for defendant-appellant)

Wereci Central Parental Association, an incorporated association

Appellant 1 and 3 others (Law Firm LLC et al., Counsel for the plaintiff-appellant)

Seoul High Court Order 2018Ra2000 dated April 20, 2018

All reappeals are dismissed.

The grounds of reappeal are examined.

1. As to the grounds for reappeal as to the requirements for appointment under Article 63 of the Civil Act

A. Article 63 of the Civil Act provides, “When there is no director or there is a vacancy, and such vacancy is likely to cause damage, the court shall appoint an ad hoc director upon the application of an interested party or a prosecutor.” The court shall appoint an ad hoc director and have him/her manage the affairs of a director temporarily, inasmuch as there is a concern that the absence of a director is likely to cause damage to a corporation or a third party, unless he/she fails to handle urgent affairs or fails to receive an expression of intent.” Here, the term “where there is no director or a vacancy,” means a case where there is no director or the number of persons prescribed by the articles of incorporation, and the term “where there is a vacancy” means that the cause of damage is likely to occur to a corporation or a third party when a director is appointed in accordance with the ordinary procedure for appointing a director (see Supreme Court en banc Order 2008Ma699, Nov. 19, 2009, etc.).

Meanwhile, a director is in principle representing each of the corporate affairs, but may otherwise be determined by the articles of incorporation, etc. (see the main text and proviso of Article 59(1) of the Civil Act). In addition, in cases where, pursuant to the proviso of Article 59(1) of the Civil Act, the articles of incorporation clearly separates the chief director who represents a corporation and the general director who has no representative authority, so that the representative authority of the corporation shall be exclusively assigned to the chief director, and that the chief director shall be directly elected by vote at a general meeting of shareholders comprised of members of the corporation, the general director shall not be deemed to have the authority to represent the corporation even in cases where the chief director is vacant, since he/she does not have at all the representative authority of the corporation from the beginning (see Supreme Court Decision 2001Da7599, Mar.

As can be seen, the articles of incorporation provides that the president or vice-president, who has exclusive power of representation among the directors, shall be elected at a general meeting composed of juristic persons’ members or representatives. There are no vacancies between the president having exclusive power of representation or vice-president designated by such representative, and when damage is likely to occur therefrom, the court may, upon the application of an interested party or prosecutor, appoint a temporary president or temporary vice-president, the exclusive power of representation of the juristic person pursuant to Article 63 of the Civil Act. In this case, the court shall determine the requirements for appointment of a temporary president and a temporary vice-president, who has exclusive power of representation or acting director, in light of the circumstances such as the absence of the president or acting director or acting director, the contents of the articles of incorporation regarding the exercise of power of representation, the existence of a legitimate acting director prescribed by the articles of incorporation, the existence of a former representative or acting director, and whether the former representative or acting director is deemed inappropriate to continue performing his duties after the expiration of his term of office, and shall comprehensively consider the above requirements and the need for appointment.

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

(1) The principal of the case is a juristic person organized by the Si Cho Jong-su and the members of the clan who were descendants after the king in the country of the village.

(2) The contents of the principal’s articles of incorporation are as follows. This corporation shall be composed of the following. This corporation shall have the right to vote of executives and voting rights at the meeting of the deceased country (Article 7). Members shall comply with the articles of incorporation, regulations and matters to be resolved at the general meeting (Article 8). Not more than 20 directors, not more than 5-150 directors, and not more than 2 auditors shall be appointed as officers of a corporation (Article 11). Officers shall be elected at the general meeting and shall be reported to the Administrator of the Cultural Heritage Administration without delay (Article 12). The term of office of officers shall be three years, and they shall be reappointed (Article 16). The chief director shall represent a corporation and administer the affairs of the corporation; the chief vice president, standing vice president (standing vice president), and vice-president shall act for the chief executive officer (Article 17) in order of the affairs of the corporation; the president shall be organized by a resolution of the general meeting (Article 20-21).

(3) At the special meeting of November 20, 2013, the instant principal resolved to amend the articles of incorporation and to select the re-appellant 1 as the president of the instant principal. On April 30, 2014, the instant principal resolved to amend the articles of incorporation at the special meeting of April 30, 2014. From September 30, 2014 to the special meeting of November 20, 2013, the resolution of ratification was passed to elect 1 of the re-appellant as the president, among the special meetings of November 20, 2013. At the general meeting of January 7, 2015, the re-appellant sent 1 of the re-appellant as the president. However, in the instant case, on the grounds that both the resolution of the general meeting of the instant principal was invalid, the Seoul High Court confirmed that the resolution of amendment of the articles of incorporation at the special meeting of November 20, 2013 and the resolution of the instant principal of this case was declared to be null and void by the Seoul District Court 2014.

(4) At the special meeting of October 20, 2015, the principal of the case: (a) appointed the re-appellant 1 as the president of the case principal; and (b) decided to delegate the appointment of executive officers, including the vice president, to the re-appellant 1; (c) accordingly, the re-Appellant 1 appointed the re-Appellant 2 as the vice president; and (d) the re-Appellant 3 as the chief director and the chief of the accounting division. However, in the case of invalidity confirmation of the resolution of the general meeting, which was brought by the representative of the principal of the case, the judgment was rendered to confirm that the said resolution of the special meeting was null and void (Seoul Central District Court Decisions 2015Gahap5751, Dec. 1, 2016; 2016Na2087368, Jul. 7, 2017; 2017Da257500, Dec. 13, 2017).

(5) As the decision becomes final and conclusive that the resolution of the general meeting that elected the re-appellant 1 as the president of the principal of the case becomes null and void, the authority of the non-applicant 2, who was appointed as the representative of the president of the principal of the case until the judgment on the merits became final and conclusive, was all extinguished.

C. The first instance court determined that, in order to avoid damages that may arise to the principal of the case, the second instance court's appointment of temporary chief director, pursuant to Article 63 of the Civil Code, the second instance court held that the second instance court's appointment of temporary chief director, the representative of the principal of the case, should be acknowledged in accordance with Article 63 of the Civil Code, since the second instance judgment on the merits that the resolution of the general meeting of the person concerned who was elected as the president of the principal of the case becomes final and conclusive, and the first instance attorney, the acting president of the court, is no longer able

In addition, the court below determined that the first instance court's decision to appoint non-party 1 as the temporary president of the principal of the case, although there is room to see that the re-appellant 4 had the right to manage emergency affairs as the chief director (sub-chief director) whose term of office expires, considering the overall situation of the principal of the case, it is difficult to view that the first instance court erred

D. We examine the judgment of the court below in light of the aforementioned legal principles and records.

First of all, in the articles of incorporation of the principal of this case, the general director shall not be deemed to have the authority to represent the principal of this case in the event of a vacancy in the chief director. In addition, the judgment of the court below to the effect that it is not appropriate for the re-appellant 4 whose term of office as the chief director has already expired to serve as the chief director and to perform the duties of the principal of this case is inappropriate, in view of the circumstances leading up to the vacancy of the chief director of the principal of this case and the dispute progress and status among the principal members of this case.

Therefore, the lower court did not err by misapprehending the legal doctrine as to the requirements for appointment of temporary directors under Article 63 of the Civil Act, as otherwise alleged in the grounds of reappeal in this part.

2. As to the grounds for reappeal concerning qualifications, scope of duties or authority of temporary directors

The court below affirmed the decision of the court of first instance that appointed a non-party 1 as a temporary chief director without limitation on the scope of his duties or authority, inasmuch as the non-party 1 did not become a member of the principal of the case, and the status of the principal of the case is well known as the chief director appointed by the court, and the powers between the principal of the case have been divided over whether the non-party 1 was recognized as chief director and the financial management of the principal of the case and the conflict has been deepened.

Examining the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal principles on qualifications for temporary directors, scope of duties or authority.

3. As to the ground for reappeal as to the legitimacy of the appeal

The court below determined that the appeal by the above-appellant was unlawful on the ground that the rights of the Re-Appellant 1, Re-Appellant 2, and Re-Appellant 3 cannot be deemed to have been infringed due to the first instance court's decision, and there is no other evidence to prove

In light of the relevant legal principles and records, although there are some inappropriate parts in the lower court’s reasoning, the lower court’s conclusion that the appeal by the re-appellant is unlawful is acceptable is acceptable. In so doing, it did not err by misapprehending the legal principles, etc. that affected the conclusion of the judgment.

4. Conclusion

Therefore, all reappeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)