The legal nature of the appraisal right that a person who acquired shares exercises against the company under Articles 335-7(2) and 335-2(4) of the Commercial Act due to the refusal to approve the acquisition of shares by the company and the time when the status of the shareholder is transferred (=the time when the purchase price of shares is paid)

Articles 335-2 (2) and (4), 335-7 (1) and (2) of the Commercial Act

Supreme Court Decision 2010Da94953 Decided April 28, 2011 (Gong2011Sang, 1031) Supreme Court Decision 2017Da270916 Decided February 28, 2018 (Gong2018Sang, 635)

Plaintiff (Law Firm Inology, Attorneys Park Ha-young et al., Counsel for plaintiff-appellant)

Advanced Passenger Co., Ltd. (Law Firm Jeong, Attorneys Kim Seo-won et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2018Na2038087 decided October 25, 2018

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

For reasons indicated in its holding, the lower court determined that the Plaintiff’s transfer claim concerning the transfer of shares of this case constitutes a request for approval from the transferee of shares under Article 335-7(1) of the Commercial Act. Examining the reasoning of the lower judgment in light of relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on the transfer claim and the request for approval from the transferee

2. Regarding ground of appeal No. 2

A. In a case where the approval of the board of directors is required for a transfer of shares, the person who acquired shares may file a written request with the company for approval of acquisition of the shares (Article 335-7(1) of the Commercial Act). In a case where a company refuses to approve the acquisition of shares, the person who acquired shares may file a request with the company for purchase of the shares within 20 days from the date of receipt of the notice of refusal to approve the acquisition of shares (Articles 335-7(2) and 335-2(2) and (4) of the Commercial Act). Here, since the right to share purchase is the right to form, a sales contract for the shares is concluded immediately without the company’s consent, regardless of whether the right to exercise the right (see Supreme Court Decision 2010Da94953, Apr. 28, 2011). The shareholder’s position should not be deemed to have been transferred at the time of receiving the purchase price of the shares from the company (see Supreme Court Decision 2017Da270916, Feb. 28).

B. On the grounds indicated in its reasoning, the lower court determined that, in cases where appraisal rights are exercised pursuant to Article 335-2(4) of the Commercial Act, the status of shareholders is transferred only when the purchase price of the relevant shares is to be paid. In light of the aforementioned legal doctrine, the lower court did not err by misapprehending the legal doctrine on appraisal rights, contrary to what is alleged

3. Conclusion

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 Park Jung-hwa (Presiding Justice)