In case where the registration of retirement of the representative director whose execution of duties has been suspended and the registration of appointment of the representative director whose performance of duties has been suspended has been completed before a provisional disposition order to appoint the representative director and the director has been issued, whether the authority of the representative director appointed by the provisional disposition order remains effective (affirmative), and whether the above director has the authority as the representative director (negative)

Since a provisional disposition suspending the performance of duties of a director and appointing an acting director is effective not only in the relationship between the parties, but also in the relationship with a third party, the act committed against the provisional disposition is null and void. Thus, the authority of a director acting for a director appointed by the provisional disposition shall continue to exist until the court issues a decision of revocation. In addition, the provisional disposition suspending the performance of duties and appointing an acting director, which is a matter to be registered, cannot be asserted against a third party in good faith with the above provisional disposition, although it is not registered under Article 37(1) of the Commercial Act. The provisional disposition suspending the performance of duties of a representative director and a director of a stock company and appointing an acting director, is still effective as against a director whose performance of duties has been suspended prior to such a decision, even if a director has been appointed as a representative director whose performance of duties has been suspended prior to such decision, and thus the authority of the representative director and the acting director of a director acting for such director shall continue to exist, while even if a director whose performance has been suspended prior to such decision, regardless of the legitimacy of such decision.

Articles 37(1), 389, and 407 of the Commercial Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant)

Plaintiff

FDN Co., Ltd. and two others (Law Firm International Law, Attorneys Cho Jae-sik et al., Counsel for the plaintiff-appellant)

Busan High Court Decision 2012Na952 decided April 23, 2013

The judgment below is reversed, and the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. As to Defendant 2 and 3’s grounds of appeal

According to the records, the lower court served Defendant 2 and 3 with the summons of the instant petition of appeal and the date of pleading by service by public notice, and served with the judgment on April 23, 2013, and served with the original copy thereof by public notice. The Defendants filed the instant petition of appeal with the lower court on May 9, 2013, prior to the expiration of the period of appeal against the lower judgment by public notice.

The above Defendants were not aware of the fact that the appeal concerning the instant case was filed without any cause attributable to the service by public notice from the duplicate of the petition of appeal to the contrary, and under such circumstances, the date for pleading of the lower court without the attendance of the above Defendants, and thus the said Defendants’ rights were infringed upon by the procedural rights. In such a case, the said Defendants may apply mutatis mutandis the provisions of Article 424(1)4 of the Civil Procedure Act to the case where the parties were not duly represented by their agents (see Supreme Court Decisions 95Da21365 delivered on May 30, 1997, Supreme Court Decisions 2009Da1665 delivered on May 14, 2009). Accordingly, the lower court’s judgment was no longer maintained more unlawfully. The Defendants’ ground of appeal pointing this out is with merit.

2. As to the grounds of appeal by Defendant Flad Co., Ltd. (hereinafter “Defendant Company”)

A. A provisional disposition suspending the performance of duties of a director of a stock company and appointing an acting director is effective not only in the relationship between the parties but also in the relationship with a third party, so the act committed in violation of such provisional disposition is null and void in relation to the third party. Thus, the authority of a director acting for the representative director appointed by such provisional disposition continues to remain effective until there is a court's decision (see Supreme Court Decision 91Da4355 delivered on December 24, 191, etc.). In addition, a provisional disposition suspending the performance of duties and appointing an acting director who is to be registered is not registered pursuant to Article 37 (1) of the Commercial Act, unless it is registered, against a third party acting in good faith. However, the court's decision suspending the performance of duties to the representative director and the director, and the court's decision appointing the acting director has been still effective as to the director whose performance of duties has been suspended prior to such decision, even if the representative director and the acting director have been registered as the representative director whose performance of duties has been suspended prior to such decision.

B. However, according to the records, the following facts are revealed.

1) The court below, which is the domicile of the defendant company, received a duplicate of the petition of appeal and a notice of first date for pleading on the fourth and fourth floor, and received by the clerk of the defendant company, but the representative director of the defendant company was absent on the first date for pleading, and thereafter, served the notice of the second through fifth date for pleading and the statement of reasons for appeal on the above domicile of the defendant company, but when the director was unable to serve on the defendant company, the delivery by registered mail was carried out, and the representative director of the defendant company was absent on the above date for pleading. The plaintiff company's representative director was absent on the above date for pleading. The plaintiff company's representative director was corrected to non-party 1 on February 25, 2013, which was after the court below decided to resume pleading on January 29, 2013, and corrected the representative director of the defendant company to the non-party 1

2) After that, while the court below served a duplicate of the petition of appeal and the notice of the sixth date for pleading, etc. to the domicile of the defendant company as corrected, it was impossible to serve the notice of the sixth date for pleading by registered mail to the address corrected by the defendant company, but thereafter served the notice of the sixth date for pleading to the individual address of the above non-party 1, and then served both the duplicate of the petition of appeal, the application for correction of indication of the party, the statement of reasons for appeal, and the sixth date for pleading, and the non-party 1 was directly served with the notice. The non-party 1 received the notice of the seventh date for pleading, the party principal examination, and the witness application, which were served to his individual address. However, the non-party 1

3) Meanwhile, on June 20, 201, Nonparty 2 was appointed as the inside director and the representative director of the Defendant Company. Defendant 2 was appointed as the inside director of the Defendant Company on May 4, 2012. Nonparty 1 completed the general meeting minutes stating that “Nonindicted 2 and Defendant 2 made a resolution to appoint Nonparty 1, 3, 4, 5, 6, and 7 as the inside director of the Defendant Company, by holding a general meeting of shareholders on June 28, 2012 and appointing Nonparty 1, 3, 4, 5, 6, and 7 as the inside director of the Defendant Company.” Based on the above, Nonparty 2 dismissed Nonparty 2 from the inside director and the representative director of the Defendant Company, dismissed Defendant 2 from the inside director of the Defendant Company, and appointed Nonparty 5 as the inside director and the representative director of the Defendant Company.”

4) After that, Nonparty 2, Defendant 2, and Defendant 3 filed an application for provisional disposition against the Plaintiff, Nonparty 1, 3, 4, 5, 6, and 7 (hereinafter “instant provisional disposition application”) with the Busan District Court Branch Branch Branch of Busan District Court (hereinafter “instant provisional disposition application”). On November 19, 2012, Nonparty 5 did not perform the duties of the representative director and directors, and Nonparty 1, 3, 4, 4, 6, and 7 did not perform the duties of the Defendant Company’s director. Nonparty 2 was unable to appoint Nonparty 2 as the representative director and director of the Defendant Company’s acting director and director as the representative director of the Defendant Company. However, the provisional disposition application of this case was made on November 19, 2012 by Nonparty 1 and Nonparty 2, the title of the provisional disposition registration of this case, which was the provisional disposition registration of this case, to which Nonparty 1 had been registered as the representative director of the Defendant Company and the representative director of the Plaintiff.

C. Examining these facts in light of the legal principles as seen earlier, although the registration of the instant provisional disposition did not have been completed, the instant provisional disposition order is naturally effective to the Plaintiff, who was the party. From November 19, 2012 through the instant provisional disposition order, a person who was duly authorized to represent the Defendant Company, is appointed as the representative director and the director acting for the representative director. Nevertheless, the Plaintiff, who can be seen as aware of such circumstance, applied for the correction of an unlawful party indication with the content of correcting the representative director of the Defendant Company to Nonparty 1 on February 25, 2013, and the document of lawsuit was delivered to Nonparty 1, who is not a legitimate representative of the Defendant Company, without any cause attributable to Nonparty 2, who is the representative of the Defendant Company, was deprived of the opportunity to present at the sixth and seventh date for pleading and to submit defense methods, and as such, the Defendant Company violated the right granted under the procedure. Thus, the Defendant Company’s ground of appeal cannot be asserted to the effect that Article 424(1)4 of the Civil Procedure Act can no longer be applied by analogy.

3. Conclusion

Therefore, without examining the remaining grounds of appeal by the Defendants, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)