In case where two or more directors retire at the same time and fall short of the minimum number of persons stipulated in law or the articles of incorporation, whether all retired directors have rights and duties as directors (affirmative)

Articles 383(1) and 386(1) of the Commercial Act

Supreme Court en banc Order 2004Ma800 Decided March 8, 2005 (Gong2005Sang, 541) 63Da518 Decided April 28, 1964

Plaintiff, Ltd.

Defendant Co., Ltd. (Law Firm Han-han, Attorneys Hong Hong-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2006Na7756 decided Nov. 9, 2006

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

Article 386(1) of the Commercial Act provides that "in case where a director is determined by law or the articles of incorporation, a retired director due to the expiration of his term of office or resignation shall have the rights and duties of such director until his/her newly appointed director is appointed." Thus, in a case where several directors retire at the same time due to the expiration of his/her term of office or resignation from office, resulting in a result that the number of the members (minimum number of persons or a specified number of persons) of such director as prescribed by law or the articles of incorporation could not be satisfied, barring special circumstances, the retired director shall be deemed to have the rights and

The court below, after compiling the adopted evidence, found facts as stated in its decision. The court below found that the minimum number of directors is three since the total amount of capital of the defendant company is 1 billion won (Article 383 (1) of the Commercial Act), and on February 19, 2002, when the non-party 1 was appointed as director and the non-party 2 and the non-party 3 simultaneously resigned from the office of director, so the number of directors cannot be less than the minimum number of directors. Although the retired non-party 2 and the non-party 3 still have the right and duty as director until the new director is appointed, although the non-party 2 and the non-party 3 still have the right and duty as director, the above decision of the board of directors was held by only two directors including the retired director at the time of the resolution of the board of directors of the defendant company on May 20, 202, and thus, the above resolution of the board of directors was null and void because it did not meet the quorum to demand the attendance of the majority of directors. In light of the above legal principles and records, it is justified.

In addition, as long as the above judgment of the court below is correct, the judgment of the court below that the resolution of the board of directors by the defendant company on May 20, 2002 has no substantive effect is merely an additional and family judgment, and it cannot affect the judgment. Thus, the argument in the grounds of appeal on this cannot be accepted without examining any further.

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.

Justices Kim Ji-hyung (Presiding Justice)