[1] The case where "justifiable reasons" under Article 385 (1) of the Commercial Code concerning the removal of a director before the expiration of his term of office is recognized

[2] The case denying a claim for damages against the company by the representative director dismissed prior to the expiration of his/her term of office on the ground that "justifiable grounds" under Article 385 (1) of the Commercial Act exists

[1] "Justifiable reason" as stipulated in Article 385 (1) of the Commercial Code means that there is insufficient reason to dismiss a director before his/her term of office only when there occurs an objective situation that would hinder the director in performing his/her duties as a manager, such as where he/she was unable to perform his/her duties due to failure to establish or implement an important business plan, and where he/she was unable to perform his/her duties as a manager, such as in cases where he/she was unable to perform his/her duties as a manager, and where he/she was unable to perform his/her duties as a manager.

[2] The case denying the claim for damages against the company by the representative director dismissed prior to the expiration of his/her term of office on the ground that "justifiable grounds" under Article 385 (1) of the Commercial Code exists

[1] Article 385 (1) of the Commercial Act / [2] Article 385 (1) of the Commercial Act

Plaintiff (Law Firm Gyeong & Yang, Attorneys Yang Jong-soo et al., Counsel for the plaintiff-appellant)

Defendant Co., Ltd. (Law Firm Shin & Yang, Attorneys White-hwan et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2003Na46644 Delivered on April 30, 2004

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

Article 385(1) of the Commercial Act provides that a director may be dismissed at any time by a special resolution of the general meeting of shareholders, and where a director whose term of office has been fixed is removed without any justifiable reason before his/her term of office, he/she may claim damages against the company so as to harmonize the interests of the shareholders and directors, such as securing the management right of the company and stabilizing the status of management. In light of the purport of the provision of this Act, the "justifiable cause" in this context is insufficient to be simply loss of subjective trust relationship between the shareholders and the directors, such as incombustibility, etc., and where a director is considerably difficult to perform his/her duties due to an act in violation of the statutes or the articles of incorporation or a failure to establish or implement an important business plan, thereby resulting in the loss of fundamental trust relationship with the management ability.

The court below, after compiling the adopted evidence, found the facts as stated in its decision. The plaintiff was found to lack investment attraction capability, management ability, and qualities to the extent that it was not properly implemented one year among the management plans of the defendant company. Accordingly, it is reasonable to deem that the plaintiff, the representative director of the defendant company, was unable to perform his duties delegated for the defendant company, and that there was a circumstance that the representative director and the defendant company cannot be entrusted with the management of the defendant company because there was no personal trust between the representative director and the defendant company, and that there was a reason that the defendant company believed the plaintiff who is the representative director and could not be entrusted with the management of the defendant company. In light of the above legal principles, the court below's dismissal of the plaintiff is just, and the judgment of the court below and the justifiable reasons stipulated in Article 385 (1) of the Commercial Act is not erroneous, and there is no error of law

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 on the bench.

Justices Lee Han-gu (Presiding Justice)