[1] Whether a crime of granting pecuniary benefits to a shareholder under the Commercial Act is established when there is no criminal intent to commit a crime of giving pecuniary benefits without regard to the exercise of shareholder's rights (negative)

[2] In a case where the defendant, the representative director Gap corporation, was prosecuted for violating the Commercial Act by attending the shareholders' general meeting of the Gap company's company's company's shareholders in a way to encourage the shareholders' general meeting of shareholders to exercise specific voting rights in advance voting or direct voting, the case affirming the judgment of the court below that the defendant's act constitutes a crime of giving profits to shareholders under the Commercial Act

[1] The crime of granting pecuniary benefits to a shareholder under the Commercial Act may not be established in a case where the defendant has provided property benefits without regard to the exercise of shareholder’s rights, or there is no criminal intent as to such relation. In a case where the defendant acknowledged the fact that he provided property benefits and asserts that there was no criminal intent as to the fact that there was no criminal intent as to the provision of shareholder’s exercise of shareholder’s rights, there is considerable legal disadvantage for the person concerned when the company provided property benefits to a specific shareholder free of charge or excessive pecuniary benefits pursuant to Article 467-2(2) and (3) of the Commercial Act. The determination of the connection of facts ought to be reasonably made based on the empirical rule based on the fact revealed through the certification and the indirect facts before and after the provision.

Meanwhile, in a case where there exist special circumstances, such as the provision of a shareholder’s pecuniary advantage in relation to the exercise of rights, such provision constitutes “act which is acceptable in light of the overall spirit of legal order or the social ethics or social norms surrounding it, and which does not violate the social rules” as stipulated under Article 20 of the Criminal Act. Whether there exists such special circumstance should be determined according to social norms by comprehensively taking into account the motive, method, content and mode of the provision of benefits, the size of the company, the degree of the profit gained by the company, and the degree of the profit gained by the provision.

[2] In a case where the defendant, the representative director of Gap corporation, was prosecuted for violating the Commercial Act by attending the general meeting of shareholders of Gap corporation, etc. in such a way as to encourage the shareholders to exercise specific voting rights at the general meeting of shareholders, etc., and providing the shareholders who exercised voting rights by advance polling or direct voting, the case affirming the judgment of the court below which held that the defendant's offering of advance polling and direct voting rights to shareholders, etc. at least KRW 200,000,000,00,000, without compensation, to the shareholders who held voting rights at Gap corporation's account, constitutes a crime of giving profits to shareholders under the Commercial Act

[1] Articles 13 and 20 of the Criminal Act; Articles 467-2 (1), (2), and (3), and 634-2 (1) of the Commercial Act / [2] Article 20 of the Criminal Act; Articles 467-2 (1) and (2), and 634-2 (1) of the Commercial Act

Defendant

Defendant

Attorney Kim Sang-hoon

Changwon District Court Decision 2014No2934 decided April 29, 2015

The appeal is dismissed.

The grounds of appeal are examined.

1. As to the grounds of appeal on prohibition against granting profits

Article 634-2(1) of the Commercial Act provides that a director, etc. of a stock company shall be punished by imprisonment for not more than one year or by a fine not exceeding three million won, if he/she provides any pecuniary benefit on the company’s account in connection with the exercise of the shareholder’s rights. Meanwhile, Article 467-2(1) of the Commercial Act provides that “No company may give any pecuniary benefit in connection with the exercise of the shareholder’s rights.” In addition, Article 467-2(2) provides that “Where the company has provided any pecuniary benefit to any specific shareholder without compensation, it shall be presumed that it has provided such benefit in connection with the exercise of the shareholder’s rights. Where a company has provided any pecuniary benefit to a specific shareholder with compensation, the same shall also apply in cases where the company has provided such benefit significantly less than the benefit gained by the company than the benefit gained by the company

Therefore, the crime of granting benefits to a shareholder in relation to the exercise of a shareholder’s right may not be established in a case where, without regard to the exercise of a shareholder’s right, the defendant gives property benefits to a third party or there is no criminal intent as to such relation. In a case where the defendant acknowledged the fact that he provided property benefits and asserts that there was no criminal intent as to the exercise of shareholder’s right, and that there was no criminal intent as to such provision, the defendant is subject to considerable legal disadvantage for the relevant person when the company provided property benefits to a specific shareholder free of charge or excessive profits pursuant to Article 467-2(2) and (3) of the Commercial Act. The determination of the connection status of facts ought to be reasonably made based on the prudentive observation or analysis power based on the empirical rule

Meanwhile, in a case where there exist special circumstances, such as the provision of a shareholder’s pecuniary advantage in relation to the exercise of rights, such provision constitutes “act which is acceptable in light of the overall spirit of legal order or the social ethics or social norms surrounding it, and which does not violate the social rules” as stipulated under Article 20 of the Criminal Act. Whether there exists such special circumstance should be determined according to social norms by comprehensively taking into account the motive, method, content and mode of the provision of benefits, the size of the company, the degree of the profit gained by the company, and the degree of the profit gained by the provision.

Examining the above legal principles and evidence duly admitted, although the reasoning of the judgment of the court below is partially inappropriate, the Defendant’s provision of 200,000 won to the shareholders who made advance polling and direct voting on the company’s account as the representative director of the company’s account of goods exchange rights, etc. goes beyond the scope permitted by social norms. Therefore, the court below’s conclusion that it constitutes a crime of granting benefits to shareholders under the Commercial Act relating to the exercise of shareholders’ rights is justifiable. Contrary to the allegations in the grounds of appeal, the court below did not err by misapprehending

2. As to the remaining grounds of appeal

For the reasons indicated in its holding, the lower court determined that even if the Defendant had obtained a resolution of the board of directors after hearing the attorney’s opinions, such circumstance alone cannot be deemed as a case where there is a legitimate ground for law mistake or there is no possibility of expectation of lawful act. In light of the relevant legal principles and duly adopted evidence, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the legal error under Article 16

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

Justices Park Jung-hwa (Presiding Justice)