Whether a partner with limited liability in a limited partnership company may request a declaration of forfeiture of authority against the managing member (affirmative)

Article 205(1) of the Commercial Act provides, “When a member is clearly unfit for the management of affairs or has committed an act violating any of his/her important duties, the court may, upon the request of a member, adjudicate the forfeiture of the power to execute affairs.” Article 269 of the Commercial Act provides, “Article 205(1) shall apply mutatis mutandis to a limited partnership company by stipulating, “The provisions concerning an unlimited partnership shall apply mutatis mutandis to a limited partnership company unless otherwise provided for in this Chapter” and Article 205(1) of the Commercial Act shall apply mutatis mutandis to a limited partnership company. In light of the language and purport of such provisions of the Commercial Act, it is reasonable to interpret that not only the general partner of the limited partnership company but also the limited

Articles 205(1) and 269 of the Commercial Act

Plaintiff 1 and one other

Defendant

Gwangju High Court Decision 2009Na6577 decided September 3, 2010

All appeals are 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).

Article 205(1) of the Commercial Act provides, “When a member is clearly unfit for the management of affairs or has committed an act of violating his/her material duties, the court may, upon the request of a member, adjudicate the forfeiture of the power of the managing member.” Article 269 of the Commercial Act provides, “Article 205(1) of the Commercial Act provides, “The provisions concerning an unlimited partnership shall apply mutatis mutandis to a limited partnership company unless otherwise provided for in this Chapter” and Article 205(1) of the Commercial Act applies mutatis mutandis to a limited partnership company. In light of the language and purport of such provisions of the Commercial Act, it is reasonable to interpret that not only the general partner of the limited partnership company but also the limited partner of the limited partnership company may request the adjudication of the forfeiture of power against each managing member. Accordingly, the Plaintiffs may request the adjudication of the forfeiture of power against the Defendant who is the managing member.

The court below acknowledged the facts as stated in its reasoning based on its adopted evidence. The defendant, as the representative member of Gwangju Commerce, failed to properly deal with the business of accounting and settlement of accounts for a considerable period of time, thereby making it difficult for members including the plaintiffs to exercise their right to self-interest by violating the obligations prescribed in Article 30 of the Articles of incorporation, and did not convene a general meeting of members to resolve this problem without properly performing the duty to register the change of the retired members, thereby seriously abusing the authority of the representative member to cause legal disputes concerning the overall operation of Gwangju ordinary commerce, and on the ground that the defendant committed an act of forging temporary general meeting minutes by using his status as a representative member in a lawsuit against the members or embezzlement of company operating funds, etc., by using the plaintiffs' assertion that the limited partner of Gwangju ordinary trade, who is a limited partner of the company in charge of execution of the business affairs, should be accepted and sentenced to the forfeiture of the defendant's right to conduct the business affairs of Gwangju ordinary trade.

In light of the above legal principles and records, the above measures of the court below are just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the declaration of forfeiture of authority by the managing member of a limited partnership company, incomplete deliberation, and misconception of facts

Therefore, all appeals are 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 on the bench.

Justices Kim So-young (Presiding Justice)