Plaintiff (Appointed Party Law LLC, Attorneys Yoon Gyeong-Gyeong et al., Counsel for the plaintiff-appointed party-appellant)

New-ro Co., Ltd. (Law Firm LLC, Attorneys Park Im-sik et al., Counsel for the defendant-appellant)

Defendant 1 and one other (Law Firm LLC, Attorneys Park Im-sik et al., Counsel for the defendant-appellant)

September 11, 2015

Suwon District Court Decision 2013Gahap21755 decided January 8, 2015

1. The part concerning the claim for the cancellation of the resolution of each general meeting of shareholders among the parts concerning the plaintiff (appointed party), 2, 4, 5, 6, 7, 8, 9, 10, and 11 of the judgment of the first instance shall be revoked.

2. The claims for the cancellation of the resolution of the shareholders' meeting by the Plaintiff (Appointeds), 2, 4, 5, 6, 7, 8, 9, 10, and 11 shall be dismissed respectively.

3. All remaining appeals filed by the Defendant against the Defendant’s Appointed 3 and against the Plaintiff (Appointed Party) and the remaining designated parties are dismissed.

4. (a) The costs of appeal against the Claimant 3 are borne by the Defendant.

B. Of the total litigation costs, the part between the Plaintiff (Appointed), 2, 4, 5, 6, 7, 8, 9, 10, 11 and the Defendant out of the total litigation costs incurred shall be borne by the Plaintiff (Appointed Party), the remainder by the Defendant, and the remainder by the Plaintiff (Appointed Party) and the Defendant, respectively. The remainder by the Plaintiff (Appointed Party) and the Defendant, and the remainder by the Defendant, respectively.

1. Purport of claim

A. As to the shares listed in paragraph (1) of [Attachment 1] List 1, the Selection 2 shall confirm that the Selection 3 shall be the shares listed in Annex 1 List 1 List 3 as to the shares listed in Annex 4 as to the shares listed in Annex 1 List 4 as to the shares listed in Annex 5 as to the shares listed in Annex 1 List 5 as to the shares listed in Annex 6 as to the Selection 7 as to the shares listed in Annex 1 List 7 as to the shares listed in Annex 1 List 8, the Selection 9 as to the shares listed in Annex 1 List 8 as to the shares listed in Annex 1 List 9, the Selection 10 as to the shares listed in Annex 1 List 9 as to the shares listed in Annex 1 List 1 List 10, the Selection 11 as a shareholder of each defendant company as to the shares listed in Annex 1 List 1 List 11.

B. As to the shares listed in paragraph (1) of the Schedule 1, the Defendant shall issue to the Selection 2 with respect to the shares listed in Paragraph (2) of the Attached Table 1 to the Selection 3, with respect to the shares listed in Paragraph 3 of the Attached Table 1 to the Selection 4, with respect to the shares listed in Paragraph 4 of the Attached Table 1 to the Selection 5, with respect to the shares listed in Paragraph 5 of the Attached Table 1 to the Selection 6, with respect to the shares listed in Paragraph 6 of the Attached Table 1 to the Selection 7, with respect to the shares listed in Paragraph 8 of the Attached Table 1 to the Selection 8, with respect to the shares listed in Paragraph 9 of the Attached Table 1 to the Selection 10, and with respect to the shares listed in Paragraph 10 of the Attached Table 1 to the Selection 11, each transfer entry procedure shall be implemented to the Selection 11.

C. Each resolution listed in the separate sheet No. 2 attached hereto, made by the Defendant at the temporary shareholders’ meeting on July 9, 2013, shall be revoked.

2. Purport of appeal

The part of the judgment of the court of first instance against the defendant shall be revoked, and all the claims of the plaintiff (appointed party) and the designated parties corresponding to the revoked part shall be dismissed.

1. Scope of adjudication of this court;

The judgment of the first instance court dismissed the part of the Plaintiff’s claim for confirmation of shareholder status among the instant lawsuit and accepted the claim for cancellation of the change of shareholder status and the resolution of the general meeting of shareholders. Accordingly, the Plaintiff appealed only against the Defendant without filing an appeal. Thus, the subject of the judgment of the first instance court is limited to the part of the Defendant’

2. Basic facts

The reason why this Court is used in relation to this part is the same as the corresponding part of the judgment of the court of first instance. Therefore, it is citing this in accordance with the main sentence of Article 420 of the Civil Procedure Act

3. Determination on this safety defense

A. Whether to sue in a lawsuit seeking revocation of a resolution of the general meeting of shareholders

1) The defendant's assertion

On June 10, 2012, the Intervenor joining the Defendant (hereinafter referred to as the “ Intervenor”) received the entire shares from the Deceased, and accordingly completed the transfer of the shares on June 18, 2012. After which, the Plaintiffs received the entire transfer of the shares from the Deceased on August 13, 2012, notified the Defendant company of the transfer of the shares of this case, and thereafter, the transfer of the shares was within the fixed date. However, the Plaintiffs’ acquisition of the shares was null and void as they actively participated by the Plaintiffs in the Plaintiff’s breach of trust. Even if the acquisition of the shares is valid, the Plaintiffs did not complete the transfer of the shares of the Defendant Company, and thus, cannot exercise their shareholder rights against the Defendant Company.

In addition, a resolution of the second general meeting of shareholders that appoints 3 of the designated parties as inside directors of the defendant company was adopted to exclude the defendant who was the actual shareholder at the time of the resolution, and thus, 3 of the appointed parties is not a director of the defendant company

Therefore, the plaintiffs are not the shareholders, directors, and auditors of the defendant company who can file a lawsuit to revoke the resolution of the general meeting of shareholders under Article 376 of the Commercial Act.

2) Whether the plaintiffs have standing to sue as shareholders

A) According to Article 376 of the Commercial Act, a person who can file a lawsuit for the cancellation of a resolution of a general meeting of shareholders is limited to a shareholder, director, or auditor. Here, a shareholder does not need to have been a shareholder at the time of the resolution seeking the cancellation, but must be a shareholder at the time of filing

Meanwhile, Article 337(1) of the Commercial Act provides that the transfer of shares shall not be effective against the company unless the acquisitor’s name and address are entered in the register of shareholders. Thus, even if a company received registered shares from a shareholder, it is prohibited from exercising shareholder’s rights against the company unless the transfer of shares is made (see, e.g., Supreme Court Order 2001Da121, Dec. 21, 2001). Thus, insofar as the transferee cannot oppose the transfer of shares as above, there is no benefit in filing a lawsuit to confirm the invalidity of the general meeting of shareholders and the board of directors’ resolution (see, e.g., Supreme Court Decision 90Da6774, May 28, 191). Thus, the transferee of shares without a transfer of shares cannot be deemed as a shareholder who can file a lawsuit seeking cancellation of the general meeting of shareholders under Article 376 of the Commercial Act, even if there is no justifiable reason to reject the transfer of shares, or the transfer of shares cannot be denied as the transferee’s status at the time of the transfer without justifiable reason.

B) According to the evidence evidence No. 7, the deceased’s 10,00 shares out of 40,00 shares of this case to 2 on August 13, 2012, the fact that the deceased transferred 3,00 shares to 3,00 shares, 3, 4, 9, 10, 10, 6, and 7 each of 3,00 shares, 5, 600 shares, 6,00 shares to 8, 6,000 shares, and 6,00 shares to the 2,00 shares to the 2,00 shares, and the 2,00 shares were transferred to the 2,00 shares to the 2,00 shares, and the 3,00 shares were transferred to the 3,00 shares with the 40,00 shares of this case as alleged by the defendant, or the 3,00 shares were transferred to the 2,000 shares with the 3,000 shares transfer title of this case to the 2,

C) However, inasmuch as there is no evidence to prove that the Plaintiffs completed the transfer of title regarding the subsequent transfer of the instant case at the time of the instant lawsuit, or that the Defendant Company unduly rejected or delayed the request by the Plaintiffs, the Plaintiffs cannot be deemed to have a shareholder status entitled to seek revocation of each of the instant resolutions against the Defendant Company. As long as deeming that the Plaintiffs were not in the shareholder status at the time of the instant lawsuit, even if the Plaintiffs filed a claim against the Defendant Company for the implementation of the transfer of title and refused the performance while disputing the claim by the Defendant, the Plaintiffs cannot be deemed to have recovered from the defect of standing to sue and thus, this part of the lawsuit by the Plaintiffs cannot be deemed to have retroactively

D) Ultimately, the Defendant’s main defense on this part is reasonable.

(3) Whether the Appointed 3 has standing to sue as a director

Unless there are special circumstances, even if the authority of the representative of the corporation, etc. appointed by the decision of provisional disposition is restricted to ordinary business affairs, it is not limited to the authority of the general meeting of the relevant corporation itself. Thus, the resolution such as the dismissal of the agent and the selection of his successor can be made freely at the general meeting of the relevant corporation, etc. convened in accordance with legitimate procedures (see Supreme Court Order 2004Da113, Jan. 29, 2005; Supreme Court Order 2009Da70395, Feb. 11, 2010). Meanwhile, as seen earlier, in relation to the intervenors, the plaintiffs who have met the requirements for setting up against the third party can assert their preferential status in relation to the intervenors. Thus, even if the plaintiffs did not transfer their rights at the time of the second general meeting of shareholders and thus they could not assert their rights to the defendant company, it is impossible to recognize the plaintiffs as shareholders and proceed with the defendant company as shareholders).

Therefore, in convening the second shareholders' meeting in accordance with the court's decision to permit the convocation of the shareholders' meeting, Nonparty 1, the above acting directors, recognized the plaintiffs as shareholders of the shares of this case, and proceed with the convocation procedure and resolution at the general meeting. A majority of shareholders of the defendant company including the plaintiffs (the number of 58,500 shares of the shareholders present at the general meeting, 40,000 shares) as directors of the defendant company shall be valid. Although the appointed parties 3 were dismissed from office as directors by a resolution at the third shareholders' meeting held thereafter, inasmuch as they asserted the defects of the resolution to dismiss them and filed a lawsuit to revoke the resolution, they shall still be deemed to have standing to sue in the position of directors (see Supreme Court Decision 82Meu957 delivered on December 14, 1982).

The defendant's defense on this part is without merit.

B. Whether the amendment to a claim is legitimate

This Court's use of this part is identical to the corresponding part of the reasoning of the judgment of the court of first instance (from 10th to 12th 4th of the judgment of the court of first instance). Thus, it is citing it as it is in accordance with the main sentence of Article 420 of the Civil Procedure Act.

4. Judgment on the merits

A. Appropriateness of the plaintiffs' claim for implementing transfer procedure

1) As seen earlier, as long as the Plaintiffs lawfully received the shares of this case from the Deceased and can oppose the prior transferee’s transfer of such shares, the Defendant is obligated to implement the transfer procedure for the shares of this case as shown in the separate sheet No. 1.

2) As to this, the defendant asserts that the transfer of the follow-up of this case is null and void as a juristic act contrary to social order, since the plaintiffs actively participated in the act of misappropriation against the intervenors of the deceased.

However, it is not sufficient to recognize that the defendant's testimony of Gap's 5, 7, 17, 19, and Eul's 1, 2, 7 through 11, 13, 16 through 21, 26, 28 through 32, and 35 through 40 as well as some of the testimony of the person who appointed the witness of the party in question, which are cited by the defendant, has actively participated by the plaintiffs in the act of breach of trust against the intervenors, i.e., the defendant's above assertion is not acceptable, since there is no other evidence to acknowledge it.

B. Appropriateness of the claim for revocation of the resolution of the general meeting of shareholders by the designated party 3

1) The fact that each of the instant resolutions was adopted by shareholders without a separate convocation procedure or notice of convening a separate convocation procedure is without dispute between the parties. We examine whether it can be deemed valid as a written resolution under the Articles of incorporation of the Defendant Company and Article 363(4) of the Commercial Act.

2) The fact that the Plaintiffs did not complete or claim a change of holders regarding the transfer of the follow-up shares by the time of each of the instant resolutions is as seen earlier. As such, the Plaintiffs were unable to assert their voting rights as shareholders of the instant shares in relation to the Defendant Company at the time of each of the instant resolutions.

3) Meanwhile, on the other hand, as to whether there was a legitimate transfer of shares by the Intervenor at the time of the instant resolution, the employees of the P&G tax accountant office who were in charge of accounting of the Defendant Company from the beginning of April 2013 prepared the list of shareholders of the Defendant Company (Evidence No. 16) with the approval of the Defendant’s representative director 1 on July 24, 2012. The above list of shareholders did not reflect the fact that the Intervenor’s acquisition of shares in this case (Evidence No. 41, No. 16), ② the above P&G office did not appear to have received a request from the Defendant Company 2 for a change of entry of the entry of the entry of the entry of the shares in this case from the date of the instant provisional disposition No. 20 to April 2013 (Evidence No. 13, No. 2016) as to the Plaintiff’s transfer of shares by the Defendant Company No. 2, and the entry of the entry of the entry of the entry of the Intervenor No. 2 in this case as to the entry

4) If there are circumstances, it shall be deemed that the resolution of the general meeting of shareholders may be substituted by a written resolution only if all the shareholders entered in the legitimate register of shareholders (the former register of shareholders before the entry of a change in the name of the intervenors) at the time of each of the instant resolutions. Since each of the instant resolutions was adopted by a written resolution without undergoing due convocation procedures on the premise that the instant shares in the deceased’s name were transferred to the intervenors, it cannot be deemed that the consent of all the intervenors was met, and thus, it cannot be deemed that the written resolution stipulated in the above Articles of incorporation or Article 363(4) of the Commercial Act is valid.

[A. In view of the fact that a legitimate change of holders in the preceding transfer of shares was completed at the time of each resolution of this case, it is necessary to consider the difference between the shareholders and the independent person with independent status to exercise voting rights and exercise voting rights by claiming that the shareholders are shareholders, unlike the general cases where a resolution of shareholders' meeting is replaced with a resolution of shareholders' meeting by a written agreement of shareholders, it is necessary to consider the difference between the shareholders and the independent person with independent status to depend on the exemption function of the shareholders' list and the general cases where the convocation procedure and resolution were adopted. Therefore, in view of the fact that the shareholders in the list of shareholders knew or could have known who were the beneficial shareholders or the transferee of the shares with preferential rights, it is unreasonable to view that the resolution of this case was valid solely on the ground that they completed their legitimate change of holders, for the purpose of excluding the exercise of rights by all the intervenors who were listed in the list of shareholders in the list of shareholders, and that the plaintiffs were entitled to vote of this case for the purpose of 201 shareholders and the intervenors who were entitled to vote of this case.

5) Ultimately, each of the instant resolutions was adopted without a convocation procedure and notice by a person with the authority to convene a meeting as prescribed by the statutes or the articles of incorporation, and it is deemed that there is a defect in the procedure and method of resolution, etc. Therefore, this part of the claim by 3

5. Conclusion

Therefore, the plaintiffs' request for the cancellation of the resolution of the general meeting of shareholders is justified, and it shall be dismissed as it is unlawful since the plaintiffs' request for the cancellation of the resolution of the general meeting of shareholders other than the designated parties 3. Since the part concerning the plaintiffs other than the designated parties 3 of the judgment of the court of first instance is unfair, the part concerning the request for cancellation of the resolution of the general meeting of shareholders is revoked, and the above plaintiffs' request for cancellation of the resolution of the general meeting of shareholders is dismissed. Since the remaining part of the judgment of the court of first instance is legitimate, the appeal against the designated parties 3, and each remaining appeal against the remaining plaintiffs are dismissed as it

[Attachment Omission]

Judges Kim Jong-soo (Presiding Judge)

1) In relation to the interpretation of Article 403(1) of the Commercial Act, which provides that “a shareholder who holds no less than 1/100 of the total number of issued and outstanding shares can bring a suit against a representative shareholder,” a person who actually acquires shares and pays shares under his/her name with another person’s consent shall be deemed as a de facto shareholder and only the nominal shareholder who actually pays the shares shall not be deemed as a de facto shareholder, and whether a person can bring a suit against a representative shareholder shall not be deemed as a shareholder, and thus, he/she shall not be deemed as a mere nominal shareholder, and as such, whether a person is a shareholder entitled to bring a suit against a representative shareholder shall also be determined in accordance with the above legal doctrine (see Supreme Court Decision 79Da1989, Dec. 9, 1980). However, the foregoing legal principle shall not apply to a case where a person borrowed shares under the name of another person and another person (see Supreme Court Decision 2010Da2552, May 26, 2011).

2) The transfer of shares made before the issuance of share certificates under Article 335(3) of the Commercial Act is effective against the company when six months have elapsed since the company's incorporation. Since the transfer of shares before the issuance of share certificates is in accordance with the general principles of the transfer of nominative claims, it is reasonable to view that the transfer of nominative claims against a third party prior to the issuance of share certificates is the notification of transfer or the consent of the company with a certificate with a fixed date as well as the transfer of nominative claims (see, e.g., Supreme Court Decision 2009Da88631, Apr. 29, 2010). In a case where the dual transfer of shares before the issuance of share certificates is at issue, the order between dual assignees shall be determined by the date of receipt of the notice of transfer with a fixed date or after the date of acceptance with a fixed date with a fixed date (see, e.g., Supreme Court Decision 2005Da45537, Sept. 1

3) The provision of Article 337(1) of the Commercial Act means that a person who acquired a registered share cannot assert a shareholder’s right against the company unless the person who acquired the registered shares has opened the name of the shareholder on the shareholder registry. It is unreasonable to recognize a real shareholder who did not transfer the ownership as a shareholder on the company’s side (see, e.g., Supreme Court Decisions 89Meu14714, Oct. 24, 1989; 2001Da12973, May 15, 2001).