[1] The purport of Article 530-9 of the Commercial Act

[2] In the case of a company division under Article 530-9 (2) of the Commercial Code, where the "individual maximum procedure for the known creditors" under Article 530-9 (4) and Article 527-5 (1) of the Commercial Code is omitted, the relationship between the newly incorporated company and the creditors of the company to be divided (=joint liability)

[1] Where a company that is divided and divided continues to exist even after division, barring any special circumstance, liability property of the company is generally divided into the divided company and the newly incorporated company is jointly and severally liable for the obligations of the company that are divided in order to protect creditors of the company before division. In this case, even if a company is divided, it is not necessary to give separate notice to creditors known as there is no risk of undermining creditors' interests even if it is divided. However, if the principle of joint and several liability is strictly strict, it can act as an element preventing the utilization of the company division system, and thus, it can be determined by a special resolution at the general meeting of shareholders of the company that divides the newly incorporated company from among the obligations of the company that is divided. In such case, it is interpreted that the newly incorporated company bears only its obligations among its liabilities that the newly incorporated company is divided, and the newly incorporated company bears only its liabilities that it does not bear, and in such a case, it is interpreted that the relationship of liability is changed into the relationship of debt division.

[2] In a case where a divided company and a newly incorporated company do not support joint and several liability for the obligations of the company prior to the division, there is a change in the debtor's liability property, which seriously affects the creditor's interest, and thus, it shall be notified individually to the creditors known to the company that is divided for the protection of creditors. Therefore, the change in the debt relationship between the divided company and the newly incorporated company into the divided company into the divided debt relationship shall be deemed as the requirement that the divided company had properly completed the individual procedure for the creditors known to the creditors. If such individual peremptory notice is omitted, it shall not be effective for the divided debt relationship to the creditors, and in principle, it shall be interpreted that the company that is divided and the newly incorporated

[1] Article 530-9 of the Commercial Act / [2] Articles 527-5 (1) and 530-9 (2) and (4) of the Commercial Act

Hadong-gun Fisheries Cooperatives (Attorney Choi Woo et al., Counsel for the defendant-appellant)

Korea Electric Power Corporation (Attorney Choi Han-soo, Counsel for defendant-appellant)

Seoul High Court Decision 2002Na27448 delivered on April 24, 2003

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

1. Comprehensively taking account of the adopted evidence, the court below decided that the above new company will be divided into six separate companies by region under Article 530-12 of the Commercial Act, and that the division plan was approved on March 16, 2001 by the special resolution of the regular general meeting of shareholders, and divided the defendant into six new companies with the approval of the Minister of Commerce, Industry and Energy on March 30, 2001. In accordance with Article 530-9 (2) of the Commercial Act, the defendant shall succeed only to the obligations invested by the newly incorporated company among the defendant's obligations, and the above new company shall be deemed to be in violation of Article 6.1. (General Provisions), Article 6.2 of the defendant's separate plan for the development of electricity industry, which belongs to or mainly to the existing business sector operated in the Republic of Korea except island, and the new company's new company's rights and obligations related to the new company's business and the new company's new company's new company's new business and new business's new business's new business.

2. A. Based on the facts acknowledged above, the court below rejected the Plaintiff’s claim on the ground that the Defendant’s liability for compensation for losses incurred by the operation of the power plant of this case against the Plaintiff was transferred to the development of Southern, a new incorporated company due to the division, and the Defendant, a divided company, dismissed the Plaintiff’s claim, based on its determination that, pursuant to Article 530-9(2) of the Commercial Act, all rights and obligations belonging to the sub-division headquarters pursuant to the sub-division plan pursuant to the provisions of Article 530-9(2) of the Commercial Act, namely, that “the Defendant shall only bear obligations with respect to the invested property among the obligations of the company that is divided.”

B. However, we cannot accept the judgment of the court below for the following reasons.

(1) Article 2 subparag. 1 of the Act on the Promotion of Restructuring of the Electric Power Industry defines the defendant's division as a company division under Article 530-12 of the Commercial Act. Article 530-12 of the Commercial Act provides that the provisions of Articles 530-2 through 530-11 of the Commercial Act concerning the so-called "material division" shall apply mutatis mutandis to the company division. According to the applicable provisions, in the case of a company division, the company established by division (hereinafter "newly incorporated company") is jointly and severally liable for the divided company's obligations with respect to the company before the division (Article 530-9(1) of the Commercial Act): Provided, That a special resolution of the general meeting of stockholders provides that the newly incorporated company shall pay only the company's obligations with respect to the company's obligations that it has invested among those of the company to be divided. In this case, if the company to be divided survives after the division, only the newly incorporated company shall bear the obligations that it does not bear when it is divided after the division (Article 530-9(2) of the Commercial Act).

(2) Comprehensively taking account of these provisions, in a case where a company is divided and divided continues to exist after division, barring special circumstances, liability property of the company is generally separated from that of the divided company and the newly incorporated company is jointly and severally liable for the obligations of the company prior to division to protect creditors of the company prior to the division. In such a case, even if the company is divided, it is not necessary to give separate notice to creditors known to the company since there is no risk of undermining creditors’ interests even if the company is divided. However, if such principle of joint and several liability is strictly strict, it can be deemed as an element preventing the use of the company division system, and thus, it can be determined by a special resolution of the general meeting of shareholders of the newly incorporated company, recognizing an exception to the principle of joint and several liability, to bear only the liabilities of the divided company among the obligations of the newly incorporated company, and in such a case, it is interpreted that the newly incorporated company bears only the obligations of the newly incorporated company, and that the newly incorporated company bears only the obligations of the newly incorporated company, and thus, if it does not affect creditors’ individual liability relationship with the newly incorporated company.

(3) However, according to the records, the plaintiff has continuously demanded compensation against the defendant by asserting that the plaintiff suffered losses from the operation of 1 to 4 nuclear power plants, and on July 14, 1998, "evaluation shall be conducted, and the payment of losses shall be governed by the authoritative interpretation of the relevant agencies" as to the decrease in the plaintiff's consignment on the part of July 14, 1998 after a considerable period of consultation. Under the above agreement, the central appraisal corporation and the fixed appraisal corporation selected by the agreement between both the plaintiff and the defendant shall be deemed as 62,530,00 won before the division of the defendant, and the court below should have determined that the plaintiff's liability for damages occurred from the above 7th of November 200 after the division of the plaintiff's liabilities to the plaintiff's general meeting of shareholders after the division of the above 5th of May 25, 201, the Minister of Oceans and Fisheries should have determined the plaintiff's liability for damages due to the plaintiff's specific construction and operation of the company.

3. Therefore, the judgment of the court below shall be reversed, and the case shall be remanded to the court below. It is so decided as per Disposition.

Justices Lee Yong-woo (Presiding Justice)