[1] The meaning of "transfer of the whole or essential part of the business" under Article 374 (1) 1 of the Commercial Act, and the standard for determining whether a corporation's business is "transfer of the essential part of the business" under Article 374 (1) 1 of the Commercial Act in a case where the corporation transfers part of the business it serves as its business purpose

[2] Where Company A transferred its financial business sector to Company B without a special resolution of the general meeting of shareholders, the case affirming the judgment below holding that the transfer of the financial business sector of Company A constitutes “transfer of important part of business” under Article 374(1)1 of the Commercial Act

[1] The term “transfer of the whole or essential part of business” under Article 374(1)1 of the Commercial Act, which requires a special resolution of the general meeting of shareholders, means a transfer of the whole or essential part of the whole or essential part of the property organized and systematically integrated for a certain business purpose. Since the transfer of the whole or essential part of the business activity of the transferor company by the transferee company should be accompanied by the succession of the whole or essential part of the business activity of the transferor company, it does not constitute a mere transfer of the business property. Furthermore, if a company transfers a part of the business which it uses as its business purpose, the determination of whether the transfer of a part of the business is a “transfer of important part of the business” under Article 374(1)1 of the Commercial Act shall be made by comprehensively taking into account the characteristics of the business subject to transfer, sales, profit, etc.

[2] In a case where Company A transferred its financial business sector to Company B without a special resolution of the shareholders' general meeting, the case affirming the judgment below that the transfer constitutes "transfer of an important part of business" as stipulated in Article 374 (1) 1 of the Commercial Act, in light of all the circumstances, including the fact that the asset value of the financial business sector reaches approximately 33.79% of the entire assets of Company A and that the essential value lies only in the financial business sector in the case of the essential value, and that the financial business sector is a business sector which is highly likely to generate profits only within the company A and that the financial business sector is a business sector that is highly likely to generate profits only within the company A, and the transfer company A continues to engage in the same business as before by taking over most assets and customers related to the financial business sector A without paying any particular transfer price.

[1] Article 374 (1) 1 of the Commercial Act / [2] Article 374 (1) 1 of the Commercial Act

[1] Supreme Court Decision 2004Da13717 decided Jul. 8, 2004 (Gong2004Ha, 1308)

Korea Securities Finance Co., Ltd. and three others (Law Firm Yang Hun, Attorneys Lee Ho-chul et al., Counsel for the plaintiff-appellant)

1. The term “the term “the term” means “the term” means “the term or “the term” means “the term or “the term” in this case.

Seoul High Court Decision 2012Na24851 decided May 8, 2013

The appeal is 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 374(1)1 of the Commercial Act, which requires a special resolution of the general meeting of shareholders, refers to the transfer of the whole or essential part of the whole or essential part of the property organized and functioned as an organic whole for a certain business purpose. Since the transfer company's business activity should be succeeded to in whole or in part by the transferor company, it does not constitute a mere transfer of the property for business purpose (see Supreme Court Decision 2004Da13717, Jul. 8, 2004, etc.). Furthermore, in a case where a corporation transfers a part of its business purpose, whether it constitutes "transfer of an essential part of the business" under Article 374(1)1 of the Commercial Act should be determined by comprehensively taking into account the assets, sales, profits, etc. of the business subject to transfer from the whole business purpose, the influence of a partial transfer on the size of its business, profitability, etc.

The lower court determined that the instant transfer constitutes a transfer of business, on the grounds that the instant net (hereinafter referred to as “net”) has been carried out by the Defendant Company, while maintaining the functional identity of the source of revenue systematically organized as well as the business rights, intellectual property rights, publication rights, web site ownership, hardware, software, office fixtures and office fixtures in the financial business sector during the business sector, and the Defendant Company has been engaged in the same business as that of the relevant net’s financial business sector upon transfer of the said financial business sector, and thus, the instant transfer constitutes a transfer of business.

In addition, the lower court determined that, in light of the fact that the asset value of the financial sector of the instant case was 3,92,027,674 won, and the total net assets of the instant company were 3.79%, and that the transferee company continued to engage in the same financial business sector as the transferee company’s 10th anniversary of the transfer of the company’s total assets, and that the transferee company did not engage in the same business sector as the transferee company’s 2th anniversary of the transfer of the previous net assets, and that the transferee company did not engage in the same financial business sector as the transferee company’s 10th anniversary of the transfer of the company’s net assets at the time of the instant transfer contract, and that the transferee company did not actually engage in the same business sector as the transferee company’s 2nd of the previous net assets at the time of the transfer of the instant case, it would be difficult for the transferee company to take account of the total operating share of the company, not the interest of the transferee company’s 2nd of the new net assets market.

Furthermore, the lower court rejected the Defendant’s assertion that, on the grounds indicated in its reasoning, it did not become invalid even if there was no special resolution of the general meeting of shareholders regarding the transfer contract of this case, since it was in fact in the suspension of business around November 2008, which was at the time of the transfer contract of this case.

In light of the above legal principles and records, the above judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there are no errors in the misapprehension of legal principles concerning violation of Article 374 (1) of the Commercial Act, transfer of business and transfer of important parts of business, violation of the rules of evidence, mistake of facts, omission

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 Shin Young-chul (Presiding Justice)