In a case where the articles of incorporation provide that the amount of retirement allowances shall be determined by the resolution of the general meeting of shareholders, and where only the amount of retirement allowances is prescribed, whether a resolution of the general meeting of shareholders on the interim settlement of retirement allowances is required to exercise the claim for interim settlement of

According to Article 388 of the Commercial Act, remuneration for a director of a corporation 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 by a director to promote personal interests in connection with his/her remuneration. Therefore, if the articles of incorporation, etc. stipulate that the remuneration for a director is determined by a resolution of the general meeting of shareholders, barring any evidence to acknowledge that there was

A director’s retirement allowance includes remuneration stipulated in Article 388 of the Commercial Act, and takes the form of advance settlement of the retirement allowance is also the same as the retirement allowance. However, given that the retirement allowance for a director is a kind of remuneration paid in return for the discharge of his/her duties during his/her service, as long as the director holds office, there is no possibility that the director is liable to pay the retirement allowance for the director, and the director is liable to pay only when he/she retires. However, the interim settlement of the retirement allowance incurs the duty to pay the retirement allowance before the retirement of the director on the premise that the director’s application is the right holder, unlike regular remuneration or the retirement allowance generally determined. Thus, whether a director can receive the retirement allowance in the interim settlement form

Therefore, the articles of incorporation provide that the amount of retirement allowances shall be determined by the resolution of the general meeting of shareholders, and if there is no evidence to prove that there was a resolution of the general meeting of shareholders on interim settlement of retirement allowances, the directors cannot exercise their right to claim interim settlement of retirement allowances.

Article 388 of the Commercial Act

Supreme Court Decision 92Da28228 Decided December 22, 1992 (Gong1993Sang, 560) Supreme Court Decision 2014Da11888 Decided January 28, 2016 (Gong2016Sang, 340)

Dongbu District Court Decision 201Na1444 decided May 1, 201

Defendant (Law Firm International, Attorneys Yellow-z., et al., Counsel for the defendant-appellant)

Busan High Court Decision 2016Na264 decided April 12, 2017

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

According to Article 388 of the Commercial Act, remuneration for a director of a corporation 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 a director to promote personal interests in connection with his/her remuneration. Therefore, in cases where the articles of incorporation, etc. provide that the remuneration for a director is determined by a resolution of the general meeting of shareholders, barring any evidence to prove that there was a resolution of the general meeting of shareholders on the amount, payment method, payment time, etc., the director cannot exercise his/her right to claim remuneration for the director (see, e.g., Supreme Court Decisions 92Da2828, Dec. 22, 199; 2

A director’s retirement allowance includes remuneration stipulated in Article 388 of the Commercial Act, and takes the form of advance settlement of the retirement allowance is also the same as the retirement allowance. However, given that the retirement allowance for a director is a kind of remuneration paid in return for the discharge of his/her duties during his/her service, as long as the director holds office, there is no possibility that the director is liable to pay the retirement allowance for the director, and the director is liable to pay only when he/she retires. However, the interim settlement of the retirement allowance incurs the duty to pay the retirement allowance before the retirement of the director on the premise that the director’s application is the right holder, unlike regular remuneration or the retirement allowance generally determined. Thus, whether a director can receive the retirement allowance in the interim settlement form

Therefore, the articles of incorporation provide that the amount of retirement allowances shall be determined by the resolution of the general meeting of shareholders, and if there is no evidence to prove that there was a resolution of the general meeting of shareholders on interim settlement of retirement allowances, the directors cannot exercise their right to claim interim settlement of retirement allowances.

For the reasons indicated in its holding, the lower court: (a) deemed that a director’s claim for interim settlement of accounts of retirement allowance is not permissible unless otherwise stipulated in the articles of incorporation or the general meeting of shareholders; and (b) accepted a claim for return of unjust enrichment equivalent to the interim settlement of accounts of retirement allowance paid by the Plaintiff to the Defendant.

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, the lower court did not err in its judgment by misapprehending the legal principles as to the legal nature, recognition, method of payment, etc. of interim settlement of retirement allowances, such as the grounds of appeal.

Therefore, the defendant's 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.

Justices Noh Jeong-hee (Presiding Justice)