[Defendant-Appellant] Plaintiff 1 and two others (Attorney Shin Chang-soo, Counsel for defendant-appellant)

[Defendant-Appellant] Plaintiff 1 and one other (Law Firm Cheongn Law, Attorneys Oh Jeong-hwa et al., Counsel for defendant-appellant)

1. This Court approves the provisional disposition order made on November 19, 2008 between the above parties with respect to the Busan High Court 2007Ra373 case of provisional disposition for suspension of the execution of duties.

2. The costs of lawsuit shall be borne by the obligor;

1. Creditors;

The same shall apply to the order.

2. The debtor;

The decision of provisional disposition as stated in Paragraph (1) of this Article (hereinafter referred to as the "decision of provisional disposition in this case") shall be revoked, and the obligees' application of provisional disposition shall

1. Existence of a provisional disposition;

In order for the creditors to preserve the right to demand dismissal of directors and the execution of the right to demand confirmation of existence of authority against the debtors, the Busan District Court 2007Kahap620 delivered on November 9, 2007 rendered a decision that the Busan District Court dismissed all the obligees' applications on November 9, 2007. Accordingly, as the obligees filed immediate appeal against Busan High Court 2007Ra373, the appellate court ordered the suspension of performance of duties against the debtors 1 and 2 and the appointment of acting directors against the obligor 1, and it is clear that the appellate court issued a decision that the obligees's remaining appeal against the obligor 2 and the appeal against the non-party 3 (hereinafter "the provisional disposition in this case").

2. Basic facts

In full view of the records and the purport of the whole examination, the following facts are substantiated.

A. Establishment, holding shares, and change in management of the non-party 1 corporation

(1) On June 10, 1996, the non-party 1 corporation was established on the part of the creditor 1 with the non-party 4 with the purpose of arranging the cleaning service and collecting and transporting domestic wastes. At the time of its establishment, the non-party 1 and the non-party 4 owned each share of 2,500 shares, and the non-party 4 was appointed as the representative director, and the non-party 4 was in charge of the company's management. The creditor 1 and the non-party 4 was appointed as the representative director, and the deceased Kim ○ (hereinafter "the deceased") was appointed as the auditor on June 24, 1998.

(2) On November 18, 2001, the non-party 2 and the debtor 1, who is his offspring 1's children, married on November 18, 2001. On March 5, 2002, the non-party 4 showed the intention to transfer shares, and on March 5, 2002, the creditor 1 was a director and a representative director, the deceased's director, and the debtor 2 who acquired all shares owned by the non-party 4 from the non-party 4, the debtor 2 was appointed as a director on July 18 of the same year, respectively, and the non-party 4 resigned on the same day and the representative director.

(3) On February 12, 2004, the creditor 1 and the debtor 2 made an agreement on February 12, 2004 that "the creditor 1 resigned from the office of representative director until March 31 of the same year, and simultaneously appoint Nonparty 2 and the debtor 1 as joint representative director, and in response thereto, amend the articles of incorporation, and the settlement of money is dealt with after consultation with the debtor 2" (hereinafter "the agreement dated February 12, 2004"). The creditor 1 resigned from the office of director and the representative director and takes office as the auditor on March 31 of the same year, and the creditor 2 and creditor 2, the debtor 1, and the debtor 2 and the debtor 3 (the debtor 2's children) were appointed as each director, and the creditor 1 and the director were appointed as joint debtor 2 and the debtor 3, and the debtor 2 and the non-party 2, including the debtor 2 and the non-party 3.

(4) Under the agreement dated February 12, 2004, the non-party 1 corporation amended its articles of incorporation on March 26, 2004. The main contents are as follows.

CHAPTER 4 General Meeting of Shareholders

Article 22 (Convocation)

(1) The ordinary general meeting of shareholders of this company shall be convened within three months from the date following the end of each business year, and the extraordinary general meeting shall be convened whenever necessary.

(2) A general meeting shall be convened by the representative director by a resolution of the board of directors, except as otherwise provided in statutes.

Article 23 (Notice of Convocation)

(1) In convening a general meeting of shareholders, the date, time, venue, and the agenda for the meeting shall be dispatched to each shareholder in writing not later than two weeks prior to the date of the general meeting: Provided, That the period may be shortened or omitted with the consent of all shareholders in writing, by telegraph, or facsimile.

Article 26 (Resolution and Quorum of General Meeting of Shareholders)

(1) A quorum of a general meeting of stockholders shall be the attendance of stockholders who hold stocks equivalent to a majority of the total number of voting stocks issued by this company.

(2) Except as otherwise provided by Acts and the articles of incorporation, the following cases shall require a concurrent vote of a majority of the total number of present shares and a majority of the total number of issued shares:

1. Dividends; and

2. Determination of benefits, bonuses, and other remuneration and retirement allowances of directors and auditors;

4. Appointment of directors and auditors;

(3) The following matters shall be the number of shareholders present at the meeting by not less than two thirds of voting rights and not less than one third of the total number of issued and outstanding voting rights:

5. Dismissal of directors, auditors, and liquidators;

Chapter 5 Officers

Article 29 (Numbers and Appointments of Directors and Auditors)

Not less than one director of this company and not less than one auditor shall be appointed at a general meeting of shareholders: Provided, That auditors shall not be appointed at a general meeting of shareholders: Provided, That the shareholders who hold more than 3/100 of the total number of issued and outstanding shares other than nonvoting shares shall not exercise their voting rights

Article 30 (Representative Director)

(1) This company shall have two joint representative directors, and may have several managing directors and several managing directors to assist them.

(3) Joint representative director shall jointly represent this company.

Article 32 (Term of Office of Directors and Auditors)

The term of office of directors shall be three years after their inauguration: Provided, That if the term of office of directors is terminated before the closing of a regular general meeting for the last period for the settlement of accounts in office, that term shall be extended until the closing of the general meeting. The term of office of auditors shall be extended until the closing of the regular general meeting for the last closing

Part VII Calculation

Article 43 (Business Year) The business year of the Company shall be from January 1st to December 31st of each year.

(5) The shares of the non-party 1 corporation held 50 shares each by the deceased, 500 shares, 2, and 3 (hereinafter referred to as the “creditors”) and held 500 shares, 2,650 shares, 50 shares by the debtor, 30 shares by the debtor, 100 shares by the debtor, and 100 shares by the debtor (hereinafter referred to as the “debtors”), while the non-party 5, 50 shares by the debtor, 150 shares, and 100 shares by both the debtor and the non-party 6 hold 2,50 shares.

(6) On March 24, 2008, the deceased died on March 24, 2008, and jointly succeeded to the deceased. On April 2 of the same year, the deceased’s 1,500 shares of the deceased were agreed upon by creditors 1 to solely inherit, and the deceased took over the instant lawsuit as a shareholder of the non-party 1 corporation.

B. Determination, etc. on suspension of the execution of duties against Nonparty 2

(1) On May 19, 2004, the debtor 1 filed a lawsuit for divorce, etc. against the non-party 2 of Busan District Court 2004Dhap639 (1). The creditor 1 filed a complaint on June 10 of the same year that "the debtor 1 embezzled the public funds of the non-party 1 corporation 10 million won," and the non-party 2 and the debtor 1 of the same year on September 16 of the same year entered into an agreement with the non-party 2 that "if the debtor 1 is subject to a disposition of non-guilty suspicion, the non-party 2 shall resign from the joint chief director, and if the debtor 1 is prosecuted, the non-party 1 shall resign from the joint chief director (hereinafter "the agreement with the court of law of September 16, 2004") and the debtor 1 was suspected as the non-party 2 of the Busan District Prosecutors' Office 204-type 204.

(2) Accordingly, the debtor 1 applied for the provisional disposition of suspending the performance of duties by the joint representative director with respect to non-party 2 on March 25, 2005, based on the agreement made on September 16, 2004, Busan District Court 2005Kahap98, the debtor 1 applied for the provisional disposition of suspending the performance of duties by the joint representative director with respect to non-party 2 on March 25, 2005, and on April 4 of the same year, the provisional disposition of appointing an acting representative with respect to "non-party 2 as a joint representative director of non-party 2" (hereinafter referred to as "provisional disposition decision") was taken by the debtor non-party 3, who was a director, on behalf of the joint representative director of non-party 2 on behalf of non-party 2.

C. Management status of the non-party 1 corporation and holding of the general meeting of shareholders after the provisional disposition was rendered

(1) On April 25, 2006, the debtor 1 has been operating the non-party 1 corporation as a sole representative director by giving a notice of convening the board of directors on May 25, 2006 on his own name.

(2) On January 15, 2007, the obligees demanded the convocation of an extraordinary general meeting of shareholders for the appointment of directors, etc. whose final term of office expires as of March 31, 2007. However, the debtors 1, etc. refused the convocation of an extraordinary general meeting of shareholders on the ground that the regular general meeting of shareholders held before March 31 of the same year would make a resolution on the appointment of directors, etc.

(3) On March 16, 2007, the debtor 1 sent a notice of convening a regular general meeting of shareholders to the effect that the case of approving financial statements, such as ① balance sheet, income statement, etc., ② the case of approving the remuneration of officers, ③ the auditor, ④ the case of appointing directors, ④ the case of amending the articles of incorporation, etc., on the agenda items, and the notice containing an explanation by each of them (hereinafter referred to as an “statement”) to the effect that the notice is sent to the effect that “an auditor (1) has not performed an audit for several reasons, and Nonparty 2 has not submitted the receipt book, etc., and the notice is required to approve the financial statements, ② the agenda items are raised as KRW 3 million per month of the remuneration of the representative director who has been decided on the agenda items for three years, ③ the appointment of directors is terminated on March 31 of the same year, and ④ Article 30 of the articles of incorporation is changed to that of the separate representative director.”

(4) In the regular general meeting of shareholders held on March 31, 2007 among the eight shareholders (the deceased, the obligee 8, the obligee 9, the obligee 2, the obligee 1 did not attend respectively, and the obligee 1 did not attend) and proposed that the obligor 1, the representative director of the board of directors, appoint Nonparty 10 as a new auditor upon the expiration of the auditor’s obligee 1, and agreed with the obligor, the obligor, the obligee, and the obligee 2, and the obligee 3, and the obligor 1, the chairman of the general meeting of shareholders, who was the chairman of the meeting of shareholders, declared that the decision was rejected on the ground of the non-performance of the quorum. The decision was rejected by the obligor as well as by the obligor, the obligee’s appointment of Nonparty 2, the obligee’s obligee, and the rest of the obligor’s appointment recommended by the obligees, the obligor and the obligee were also rejected.

(5) On April 17, 2007, creditors were required to convene a provisional shareholders' meeting on the agenda "(i) to appoint directors, (ii) to submit in writing the reasons for not conducting dividends for the last three years from directors," and on the 21st of the same month, debtors 1 issued a notice of convening a provisional shareholders' meeting to the effect that "the extraordinary shareholders' meeting was held as an agenda item" in the name of sole representative director on the 26th of the same month. On the 26th of the same month, the debtors were the chairman of the 8 shareholders' general shareholders' meeting, the appointment of directors was rejected, and the number of shareholders was also the 6th shareholders' meeting (the 1st of the 6th shareholders' meeting was also the 5th shareholders' meeting)'s extraordinary shareholders' meeting, and the 1st of the 6th shareholders' meeting was the 5th of the 6th shareholders' meeting (the 6th shareholders' meeting was the 5th of the 20th shareholders' meeting, and the 5th of the 10th shareholders' resolution was adopted again.

(6) Subsequent to this, creditors' side and debtors' side have resolved disputes over the appointment of directors and auditors. At a provisional shareholders' meeting held on August 29, 2007, a resolution of dismissal of directors against the deceased, creditors 2, debtors 1, and 3 and a resolution of dismissal against the auditor 10 was rejected. On December 6 and April 18, 2008, each of the provisional shareholders' meetings held on April 18, 2008, the creditors did not appoint a new director (the creditors' non-party 2,8, debtors' debtor 1, and non-party 3) and reached the present.

(7) The non-party 1 corporation’s un disposed earned surplus is 76,648,393 won (net profit 30,353,368 won) in the fiscal year of 2003, 176,629,922 (net profit 96,981,529 won) in the fiscal year of 2004, 243,538,522 (net profit 66,908,600 won), 298,542,534 (net profit 66,908,600 won) in the fiscal year of 2006, 352,216,034 won (net profit 5,04,012 won) in the fiscal year of 207, and there was no distribution to shareholders.

3. The assertion and judgment

A. The assertion

(1) Summary of obligees' claims

(A) Although the term of office as a director has expired, the debtors intentionally violated the provisions of Articles 383 and 32 of the Commercial Act and Article 32 of the Articles of Incorporation by intentionally rejecting the appointment of a new director at a general meeting of shareholders, and committed an act of violating the statutes or the articles of incorporation, such as violating Article 412 of the Commercial Act and Article 42 of the Articles of Incorporation, by failing to recognize the authority of Nonparty 1 as an auditor by failing to recognize the authority of Nonparty 1 as a new auditor at the general meeting of shareholders, by interpreting the provisions of the Articles of incorporation in the process of the regular general meeting of shareholders on March 31, 2007 and the temporary general meeting of shareholders on April 26, 2007.

(B) In addition, even though the term of office as a director has expired as seen earlier, the debtors are engaged in illegal or unfair business as seen earlier on the ground of the right to work as a retired director under Article 386 of the Commercial Act.

(C) Therefore, the obligees seek, at their option, the suspension of the performance of their duties and the appointment of each acting person for them as stated in the purport of the application, by regarding the right to demand dismissal or the right to demand confirmation of non-existence of authority as a director under Article 385 of the Commercial Act against the debtors who are directors.

(2) Summary of the debtor's assertion

(A) On March 5, 2005, the deceased was on July 18, 2005, the debtor 2, the creditor 2, the non-party 2, the debtor 1, and the non-party 3 had expired on March 31, 2007 the term of office as each director, and thus less than two persons who are the minimum number of directors under the articles of incorporation of the non-party 1 corporation. The debtor 2 is the largest shareholder of the non-party 1 corporation, who is the non-party 1 corporation, and it is not necessary to perform his duties as the retired director on the ground that the term of office expires since the non-party 2 was not appointed as the retired director. Since the retired director has the right and duty as a director until the newly appointed director takes office, and this is the same as in the case of the representative director (Article 389 (2) of the Commercial Act). Thus, the creditor's claim to confirm the existence of authority or the right to preserve the provisional disposition of this case cannot be cited since there is no vindication of the creditor's right to preserve the right.

(B) The debtor 1 did not have a sole operating of the non-party 1 corporation and did not hold a regular general meeting of shareholders and a temporary general meeting of shareholders at the creditor's request, and operated the company reasonably according to the result. The debtor 1 was engaged in the work as a joint representative director, and there is no need to preserve the debtor 1 as to the non-party 1 corporation.

B. Determination

(1) Part of the right to demand dismissal of directors as preserved right

A lawsuit for removal of a director may be brought only when a director commits an unlawful act in connection with his/her duties or violates the statutes or the articles of incorporation, and thus, a lawsuit for removal of a director under Article 385(2) of the Commercial Act can be brought only when the general meeting of shareholders rejected such dismissal. Thus, a lawsuit for removal of a director may not be brought by applying mutatis mutandis Article 386(1) of the Commercial Act, provided that a director retired at the expiration of his/her term of office performs his/her duties as a director under Article 386(1) of the Commercial

However, as seen earlier, the articles of incorporation of the non-party 1 corporation provides that "the term of office of the director shall be three years, but if the term of office of the director is terminated before the closing of the general shareholders' meeting with respect to the last period for the settlement of accounts in office, such term shall be extended to the closing of the general shareholders' meeting, and the business year of the non-party 1 corporation shall be from January 1 to December 31 each year, and as the regular shareholders' meeting with respect to the business year in 2006 was held on March 31, 207, the debtor 2 shall be held on July 18, 2005, the debtor 1, and the non-party 3 shall have expired as each director on March 31, 2007, it is not possible to bring a lawsuit for dismissal even if he is performing his duties as a retired director, so this part of the obligees's claim in this part shall not be further justified.

(2) Part on the right to claim a director's status or the non-existence of authority as preserved right

(A) Common legal principles

Article 386(1) of the Commercial Act provides that "in cases where a director is determined by law or the articles of incorporation, a retired director due to the expiration of his/her term of office or resignation has the rights and duties of a director until his/her newly appointed director is appointed." Thus, in cases where several directors retire at the same time due to the expiration of his/her term of office or the resignation from office, resulting in a result that the number of the members (minimum number of persons or a specified number of persons) of a director as prescribed by law or the articles of incorporation could not be satisfied, barring special circumstances, it is reasonable to view that all retired directors have the rights and duties as a director until the new appointed director takes office (see Supreme Court Decision 2006Da83697, Mar.

(B) The debtor 2

As the articles of incorporation of the non-party 1 corporation set the number of directors as one or more, the number of directors actually required is two or more. The debtor 2 lost his status as a director upon expiration of his term of office on July 18, 2005. At that time, four directors such as creditor 2, non-party 2, and the debtor 1 and non-party 3 were in office, and the debtor 2 did not have any legal basis or necessity to perform his duties as a retired director. Nevertheless, according to the records and the purport of the whole examination, the debtor 2 is proved to have been involved in the operation of the board of directors and the execution of duties of the non-party 1 corporation even after he lost his status as a director.

If so, the existence of the right to preserve against the debtor 2 is clearly explained, and the necessity of preservation is recognized as well as the possibility that the creditor who is the shareholder or the non-party 1 corporation may cause irrecoverable damage, so it is necessary to suspend the performance of duties as a director, but it is not necessary to appoint an acting director.

(C) The debtor 1

On the other hand, the creditor 2, the debtor 1, and the non-party 3 from the time of expiration of their terms of office as each director on March 31, 2007, which prevents the non-party 1 corporation from meeting the number of members (minimum number of members or a specific number of members) of the board of directors under the articles of incorporation. In light of the above legal principles, unless there are special circumstances, it is reasonable to view that the non-party 1 corporation has the rights and duties as the director and the co-representative director until the newly appointed director and the co-representative director take office. Accordingly, it is reasonable to consider whether there are special circumstances to deny the status as the debtor 1's retired director and the co-representative director and prohibit his duties.

In light of the above facts, ① the debtor 1 has been operating the non-party 1 corporation by exercising the rights as the sole representative director since April 4, 2005, which is the non-party 2's joint representative director. ② The terms of office of the creditor 2 and the non-party 2, the debtor 1 and the non-party 3 on March 31, 2007 were 50% of the shares of the non-party 1 corporation owned by the creditors and the debtor were 50% of the shares of the non-party 1 corporation (2,50 shares of the non-party 1 corporation) since the non-party 2's shareholders' meeting was held as the non-party 2's non-party 1's non-party 2's non-party 2's non-party 2's non-party 2's non-party 2's non-party 2's non-party 2's non-party 2's non-party 3's non-party 2's non-party 1's non-party 2's shareholders meeting.

In full view of these circumstances, it is reasonable to view that there are special circumstances to deny the status of the debtor 1 as a retired director and a joint representative director and prohibit the performance of his/her duties. Therefore, the debtor 1 is also attested as a preserved right.

Furthermore, according to the above circumstances, creditors who are shareholders or non-party 1 corporation may incur irrecoverable damages, and in light of the fact that the debtors dispute the existence of the preserved right and raised an objection against provisional disposition, the necessity of preservation is also recognized. Thus, there is no need for preservation on the sole ground that the management status of the non-party 1 corporation is somewhat limited since the director's team composed of the debtors has been in charge of management.

With respect to the necessity to appoint an acting director, the minimum number of directors of the non-party 1 corporation is two, because the non-party 1 corporation has a joint representative director system in its articles of incorporation. As seen earlier, even if the performance of duties of the debtor 1 is suspended, the creditor 2, the non-party 2, and the non-party 3 may satisfy the minimum number of directors as stipulated in the articles of incorporation because there is room for them to perform their duties as a retired director. However, as long as the debtor 1 orders the suspension of duties as a joint representative director, the non-party 3, the non-party 2's joint representative director, the non-party 3 alone, who is the co-representative of the non-party 2's joint representative director, to appoint the acting director as well as the acting director

4. Conclusion

Thus, the decision of provisional disposition of this case shall be approved and it shall be decided as per the Disposition.

Judges Lee Young-young (Presiding Judge)

1) On October 27, 2006, the judgment became final and conclusive and divorced from Nonparty 2.

Note 2) On March 24, 2006, the creditor 1 was prosecuted for a false accusation, and the judgment of conviction became final and conclusive.

Note 3) However, the registration of its appointment was not made.

(4) As seen earlier, Nonparty 2 still held the status as a director only when the duties as a joint representative director have been suspended in accordance with the decision of provisional disposition.

5) On March 5, 2005, the Deceased’s term of office expired first.