2019Da291399 Damage, Claim

Research Institute of Good Corporate Governance of Limited Liability Company

Law Firm C&K (Attorney Kim Jong-soo, Counsel for the defendant-appellant)

Defendant 1 and five others

Law Firm LLC et al., Counsel for the defendant-appellant

[Defendant-Appellee] Plaintiff 1 and 3 others

Defendant 2 and eight others

Law Firm Han-ro, Counsel for defendant-appellant

[Defendant-Appellee]

Seoul High Court Decision 2015Na2056305 Decided October 30, 2019

may 13, 2021

All appeals are dismissed.

The costs of appeal by the Plaintiff are assessed against the Plaintiff. The costs of appeal by the Plaintiff are assessed against the Defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15.

The grounds of appeal are examined.

1. Plaintiff’s ground of appeal

A. Regarding the acquisition of the instant RG insurance

For the reasons indicated in its reasoning, the lower court determined that it was difficult for Defendant 1, Defendant 5, Defendant 6, Defendant 7, Defendant 8, Defendant 9, and Defendant 10 to intentionally be exempted from monitoring and supervision by using the internal control system of the interesting fire and marine insurance company (hereinafter “interesting fire insurance”).

In light of the relevant legal principles and records, the judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the director's violation of surveillance duty, or by violating

B. Purchase of membership in the instant golf course

For the reasons indicated in its holding, the lower court determined that the amount equivalent to operating profit from August 18, 2010 to August 17, 2020 is included in the scope of compensation for damages, in calculating the amount of compensation for the interesting fire insurance of Defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15 with respect to the purchase of the instant golf course membership, the difference between the purchase price of the instant golf course membership and the arm’s length price of the instant golf course membership is 4.8 billion won.

In light of the relevant legal principles and records, such determination by the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the calculation of damages, or by violating the

2. As to the grounds of appeal by Defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15

A. Whether the shareholder representative lawsuit satisfies the requirements (defendants 2, 3, 4, 5, 11, 12, 13, 14, and 15)

1) Article 403(1), (2), and (3) of the Commercial Act provides that “A shareholder who holds shares equivalent to 1/100 or more of the total number of issued and outstanding shares may file a lawsuit against the company to enforce directors’ liability with a document stating the reasons therefor, and if the company fails to file a lawsuit within 30 days from the date it receives such request, the above shareholder may immediately file a lawsuit for the company.” The purport of Article 403(1), (2), and (3) of the Commercial Act is to protect the interests of the company by recognizing a representative lawsuit that can enforce directors’ responsibility for the company for the company, while the shareholder seeks to protect the interests of the company by exercising directors’ rights for the company, but to prevent the company from filing a lawsuit by preparing the requirements for filing a lawsuit (see, e.g., Supreme Court Decisions 2009Da98058, Apr. 15, 2010; 2017Da270916, Feb. 28, 2018)

Therefore, the “reasons to be written in writing under Article 403(2) of the Commercial Act” shall include the contents on the director to be held responsible and the facts on the cause of occurrence of liability so that the company, the subject of rights, can decide whether to file a lawsuit. However, it cannot be said that the shareholder always has accurate knowledge and appropriate information about the company’s business affairs, etc., and thus, even if the shareholder does not always state the name of the director to be held liable in writing submitted under Article 403(2) of the Commercial Act or somewhat outlines on the cause of occurrence of liability, if the company can specify the facts on the cause of occurrence of liability by taking into account the contents in writing, the minutes of the board of directors’ meeting, etc., and if the company can specifically specify the facts on the cause of occurrence

2) The lower court, on the premise that even if the name of the director subject to the presumption of liability is not indicated in the document under Article 403(2) of the Commercial Act, if the company can specify the director subject to the presumption of liability by comprehensively taking account of the contents written therein, the minutes of the board of directors’ meeting, etc., and if it is possible to specify the relevant director subject to the presumption of liability, such written claim shall be deemed to have satisfied the requirements prescribed in Article 403(2) of the Commercial Act. On the contrary, the lower court rejected the Plaintiff’s derivative suit based on the Plaintiff’s written claim, which did not meet the requirements under Article 403(2) of the Commercial Act, on the ground that the Plaintiff’s claim for the suit against interesting fire insurance did not contain the name of the director subject to the presumption of liability, did not meet the requirements for filing the suit, and thus, rejected the Plaintiff

3) Examining the aforementioned legal principles and records, the lower court’s determination is justifiable. In so determining, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the requirements for filing a suit

B. Whether the amendment to the claim is legitimate (defendants 2, 3, 4, and 5)

For the reasons indicated in its holding, the lower court determined that the Plaintiff’s existing claim against Defendant 2, Defendant 3, and Defendant 4 was unlawful to change the claim for damages related to the purchase of the instant golf club membership and to add the claim for damages related to the purchase of the instant golf club membership to the existing claim against Defendant 5.

In light of the relevant legal principles and records, such determination by the lower court is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on changes

C. Whether there was negligence in purchasing membership rights of the instant golf course (Defendant 2, Defendant 3, Defendant 4, Defendant 11, Defendant 12, Defendant 13, and Defendant 14)

For the reasons indicated in its reasoning, the lower court determined that Defendant 2, Defendant 3, Defendant 4, Defendant 11, Defendant 12, Defendant 13, and Defendant 14 committed an act in violation of the relevant statute by negligence in connection with the purchase of membership of the instant golf course.

In light of the relevant legal principles and records, the judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles regarding the director's liability for the company under Article 399 of the Commercial Act, or by failing

D. Whether the instant golf course membership agreement exists (Defendant 5, Defendant 15)

For the reasons indicated in its holding, the lower court determined that Defendant 5 and Defendant 15 instructed Defendant 2, Defendant 3, Defendant 4, Defendant 11, Defendant 12, Defendant 13, and Defendant 14, who is a director of the interesting country fire insurance in connection with the purchase of membership of the instant golf course.

In light of the relevant legal principles and records, the judgment of the court below is just, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal principles on the responsibility of an executive instruction under Article 401-2(1)1 of the Commercial Act, or by failing to exhaust all necessary

3. Conclusion

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 Park Jung-hwa

Justices Lee Ki-taik

Justices Kim Jong-soo