[1] In cases where the articles of incorporation of a corporation provide that a director’s remuneration shall be determined by a resolution of the general meeting of shareholders, whether a director may exercise the right to claim remuneration without a resolution of the general meeting of shareholders (negative)

[2] In a case where the articles of incorporation of Gap corporation stipulate that the remuneration for directors shall be determined by the resolution of the general meeting of shareholders, and where Eul, the representative director of Gap corporation, received the money from Gap corporation as "special bonus" without the resolution of the general meeting of shareholders, the case affirming the judgment below holding that Eul's money received as "special bonus" constitutes unjust enrichment without any legal ground as remuneration paid as compensation for performing

[1] Article 388 of the Commercial Act provides that a director’s remuneration shall be determined by the resolution of the general meeting of shareholders, unless the articles of incorporation stipulate that a director’s remuneration shall be determined by the resolution of the general meeting of shareholders to prevent harm to personal interests in connection with his/her remuneration and protect the interests of the company, shareholders, and creditors. Therefore, where the articles of incorporation provides that the director’s remuneration shall be determined by the resolution of the general meeting of shareholders, a director may not exercise his/her right to claim remuneration, unless there is any evidence to acknowledge that there was a resolution of the general meeting of shareholders on the amount, payment method, payment time, etc.

[2] Where the articles of incorporation of Gap corporation stipulate that the remuneration for directors shall be determined by the resolution of the general meeting of shareholders, and where Eul, the representative director of Eul corporation, received the money from Eul corporation as "special bonus" without the resolution of the general meeting of shareholders, the case affirming the judgment of the court below that Eul constitutes unjust enrichment which was made without any legal ground on the ground that Eul's payment of the money under the name of "special bonus" constitutes compensation for the performance of duties. If Eul was to make a decision without the resolution of the general meeting of shareholders when it was paid special bonus, it cannot be deemed that the resolution was made even if the general meeting of shareholders was held, and since the special bonus part of Eul was within the limit of remuneration for the director determined by the general meeting of shareholders, the special bonus paid to Eul constitutes unjust enrichment.

[1] Article 388 of the Commercial Code / [2] Article 388 of the Commercial Code, Article 741 of the Civil Code

[1] Supreme Court Decision 2012Da98720 Decided May 29, 2014, Supreme Court Decision 2015Da51968 Decided May 30, 2018 (Gong2018Ha, 1164), Supreme Court Decision 2017Da17436 Decided July 4, 2019 (Gong2019Ha, 1517)

EsPS Co., Ltd. (Law Firm P & P & P, Attorneys Kim H & P, et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm Cho & Kim, Attorneys Cho Jae-chul et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2018Na2004916 decided October 17, 2018

All appeals are dismissed. The costs of appeal by the Plaintiff are assessed against the Plaintiff, and the costs of appeal by the Defendant are assessed against the Defendant.

The grounds of appeal are examined.

1. As to the Defendant’s grounds of appeal Nos. 1 through 4

A. Article 388 of the Commercial Act provides that a director’s remuneration shall be determined by a resolution of the general meeting of shareholders, if the relevant amount is not determined by the articles of incorporation. This is a mandatory provision to protect the interests of the company, shareholders, and creditors by preventing any harm inflicted on the director’s personal interest in connection with his/her remuneration. Therefore, where the articles of incorporation provides that a director’s remuneration is determined by a resolution of the general meeting of shareholders, barring any evidence to acknowledge that there was a resolution of the general meeting of shareholders on the amount, payment method, payment period, etc., the director cannot exercise a right to claim remuneration (see, e.g., Supreme Court Decisions 2012Da98720, May 29, 2014; 2017Da17436, Jul. 4, 2019). The same applies to “director’s remuneration” includes both remuneration paid as compensation for the director’s performance, regardless of its name, such as monthly salary and bonus, and remuneration paid by a company for performance or performance (see, etc.).

B. The lower court determined as follows on the grounds stated in its reasoning.

1) The Plaintiff’s articles of incorporation stipulate that the remuneration of directors shall be determined by the resolution of the general meeting of shareholders. The Defendant’s representative director, as the Plaintiff’s representative director, received the money under the name of “special bonus” from 2013 to 2014 (hereinafter “instant special bonus”) also constitutes remuneration paid as compensation for performing duties.

2) If the Defendant’s decision-making was made only by the Nonparty, who is a major shareholder of the company without a resolution of the general meeting of shareholders when receiving the instant special performance rating, the mere fact that even if the general meeting of shareholders was held, it is anticipated that the resolution was made. If the decision-making on the payment of the instant special performance rating becomes null and void without a resolution of the general meeting of shareholders, it cannot be deemed that the payment of the said portion is valid solely on the basis that a part of the instant special performance rating is within

3) Therefore, the instant special performance bonus paid to the Defendant constitutes unjust enrichment made without any legal ground.

C. Examining the above legal principles in light of the above, the lower court did not err in its judgment by misapprehending the legal principles as to the remuneration of directors, resolution by the general meeting of shareholders, limit of remuneration of directors, etc.

2. Defendant’s ground of appeal No. 5 and Plaintiff’s ground of appeal

For the reasons indicated in its holding, the lower court determined that the Defendant was obligated to return the amount actually received, excluding withholding tax, in this case where the Plaintiff deducted withholding tax, such as income tax, and paid the instant special performance rating, as unjust enrichment. Furthermore, the Defendant, as a malicious beneficiary, was liable to return unjust enrichment by attaching legal interest after the date of receiving the instant special performance

In light of the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal principles as to the right to claim the refund of withholding tax amount and the malicious beneficiary as alleged in the grounds of appeal.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal by the Plaintiff are assessed against the Defendant. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jung-hwa (Presiding Justice)