[1] Method of determining the heat between the mortgagee of the shares before issuance of the share certificate and the person executing the attachment order for the same shares

[2] Where the grounds for repayment deposit and the grounds for execution deposit occur, whether the obligor may make a mixed deposit (affirmative) and the validity of the mixed deposit

[1] The status of a shareholder may be freely transferred by means of a transfer of shares, contrary to the status of a member of the personnel company. In order to transfer shares, a share certificate shall be delivered (Article 336(1) of the Commercial Act). However, a share certificate may be transferred effectively between the parties only by declaration of intent prior to the issuance of the share certificate. However, when a company transfers shares without a share certificate before the date of incorporation or the date of payment of new shares, it is merely impossible to claim its effect against the company when it transfers shares without a share certificate due to a failure to issue the share certificate

The Commercial Act provides a transfer system to ensure that the legal relationship between shareholders and the company can be uniformly and stable in consideration of the characteristics of collective legal relations that may continuously change due to the circulation of shares. In other words, in order for a person who acquired shares by acquiring shares to exercise shareholders’ rights against the company, the transferee who has transferred shares in the register of shareholders shall record his/her name and address on the register of shareholders (Article 337(1) of the Commercial Act). A transferee who has transferred shares in the register of shareholders may lawfully exercise the rights as a shareholder, such as voting rights, right to dividends, and right to new shares, even if he/she does not separately prove that he/she is a right holder against the company. If a person listed in the register of shareholders is deemed as a shareholder, the company is not liable even if it is not true as a shareholder. However, the Commercial Act only prescribes the entry in the register of shareholders as a requisite for the transfer of shares (Article 337(1)) and does not stipulate it as a requirement for the transfer of shares. Therefore, the transfer is not a shareholder

To oppose the transfer of shares to a third party other than the company prior to the issuance of share certificates, the notification of transfer by means of a certificate with a fixed date or the approval requirements of the company shall be met, as in the case of the transfer of nominative claim. The order between the transferee of shares prior to the issuance of share certificates and the person executing the seizure order with respect to the same shares as the transferee of shares prior to the issuance of share certificates shall be determined after the date and time of notification or acceptance by the certificate with a fixed date and the date and time of the seizure order shall be determined in advance. If the shareholder satisfies the requisite for setting up against the transfer of shares with the notification or consent by the certificate with a certificate with a fixed date which transfers the shares prior to the issuance of share certificates to a third party

A share transfer contract concluded for the purpose of collateral security without a share certificate as it is not issued after its incorporation or within six months after the payment period of new shares is null and void immediately, and a mortgagee becomes an owner of shares externally. The highest order between a mortgagee of shares before the issuance of a share certificate and a person who executed an attachment order with respect to the same shares as the mortgagee of the shares before the issuance of a share certificate is determined by comparing the date of notification or acceptance of the transfer by a certificate with a fixed date and the date of delivery of the seizure order, as in the case of the transfer of shares. In this case, it is irrelevant to whether they

[2] Where the grounds for the repayment deposit and the grounds for the execution deposit occur together, the debtor may make a mixed deposit. The mixed deposit shall be effective as a repayment deposit for the new creditor involved in the repayment deposit, and the execution deposit for the execution creditor, etc. involved in the execution deposit shall be effective as an execution deposit, and even in this case the debtor'

[1] Articles 335(1) and (3), 336(1), and 337(1) of the Commercial Act; Articles 372 and 450 of the Civil Act; Articles 227(3) and 251 of the Civil Execution Act / [2] Article 487 of the Civil Act; Article 248(1) of the Civil Execution Act

[1] Supreme Court Decision 84Da2082 delivered on March 26, 1985 (Gong1985, 623), Supreme Court Decision 93Da8719 delivered on December 28, 1993 (Gong1994Sang, 511), Supreme Court Decision 93Da6138 delivered on July 28, 1995 (Gong195Ha, 2958), Supreme Court Decision 96Da32768, 3275, 32782 delivered on December 23, 1996 (Gong197Sang, 514), Supreme Court Decision 2005Da4537 delivered on September 14, 206 (Gong2006Ha, 206Ha, 1726Da51457 delivered on July 16, 2015) / [207Da516575 delivered on September 14, 2006)

Korea Deposit Insurance Corporation and six others (Law Firm LLC, Attorneys Gyeong-soo et al., Counsel for defendant-appellant)

Korea

Seoul High Court Decision 2016Na2070346 decided March 14, 2017

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Whether the Plaintiffs who concluded a share transfer contract have rights to dividend payment (ground of appeal Nos. 1 and 2)

A. (1) The status of a shareholder may be freely transferred by means of a transfer of shares, different from the status of a member of the personnel company. To transfer shares, a share certificate shall be delivered (Article 336(1) of the Commercial Act). However, prior to the issuance of share certificates, a transfer of shares may be effective only by express intent between the parties. Provided, That when a company transfers shares without share certificates because it did not issue share certificates before the date of incorporation or the date of payment of new shares, it is only impossible to assert its effect against the company (Article 335(3) of the Commercial Act).

Article 337(1) of the Commercial Act provides for a transfer system to ensure the uniform and stable processing of legal relationship between shareholders and the company due to the distribution of shares. In other words, in order for a person who acquired a registered share to exercise shareholder’s rights against the company, the transferee of the shares whose name has been transferred to the register of shareholders shall record his/her own name and address on the register of shareholders (Article 337(1) of the Commercial Act). The transferee of the shares whose name has been transferred to the register of shareholders may lawfully exercise shareholder’s rights, such as voting rights, right to dividends, and right to new shares (see, e.g., Supreme Court Decisions 84Meu2082, Mar. 26, 1985; 2007Da51505, Mar. 11, 2010; 2007Da51505, supra. In addition, if a person recorded in the register of shareholders is deemed a shareholder and recognized as a shareholder, the transferee did not hold true liability even if it was not a shareholder (see Supreme Court Decision 296Da3727372727.

To oppose the transfer of shares to a third party other than a company prior to the issuance of share certificates, the notification of transfer by means of a certificate with a fixed date or the company’s consent requirements (see, e.g., Supreme Court Decision 2005Da45537, Sept. 14, 2006). The highest order between the transferee of shares prior to the issuance of share certificates and the person executing the attachment order for the same shares as the transferee of the same shares shall be determined after the lapse of the date of the notification or consent by a certificate with a fixed date and the date of the delivery of the seizure order. If a shareholder satisfies the requisite to oppose the transfer of shares with the notification or consent by transferring the shares prior to the issuance of share certificates to a third party and the notification or consent by a certificate with a fixed date, even if other shareholders seize the transferred shares, there is no room to assert the effect of the seizure against the

(2) As stock certificates are not issued after its incorporation or within six months after the payment period of new shares, a contract for stock transfer which is concluded for the purpose of mortgage without stock certificates becomes effective immediately, and the mortgagee becomes an owner of shares out of the public (see, e.g., Supreme Court Decisions 93Da8719, Dec. 28, 1993; 93Da6138, Jul. 28, 1995). The highest order between the mortgagee of the shares before the issuance of stock certificates and the person who executed the attachment order against the same shares is determined after the date and time of the notification or consent of the transfer by a certificate with a fixed date and the date of the seizure order, as in the case of the transfer of shares. In this case, it is irrelevant to whether he has a transfer in the register of shareholders.

(3) Meanwhile, where the grounds for repayment deposit and the grounds for execution deposit arise together, a debtor may make a mixed deposit. A mixed deposit shall be effective as a repayment deposit for a new creditor involved in the repayment deposit, and the execution creditor, etc. involved in the execution deposit shall be effective as an execution deposit for the execution creditor, etc. (see Supreme Court Decision 2006Da56015, Jan. 17, 2008, etc.). In such cases, the debtor's obligation becomes extinct due

B. The reasoning of the lower judgment and the evidence duly admitted reveal the following facts.

(1) On July 29, 2009, the Plaintiffs: (a) leased KRW 35 billion to L&Wn Partners Co., Ltd., a representative director, and entered into a stock transfer agreement on KRW 15,000 of the Non-Party’s shares issued by the Non-Party, as security; and (b) concluded a stock transfer agreement on KRW 15,000 of the Non-Party’s shares. The third-party accepted the said shares transfer with a certificate with a fixed date on November 30, 2010.

(2) However, on November 12, 2012, the decision of provisional seizure of the instant shares rendered by the Nonparty as the debtor, the garnishee, the co-defendant of the lower court, the co-defendant of the lower court, as the creditor, was served on the third party obligor, the third party obligor, and the Defendant as the creditor, and the notification of provisional seizure of the instant shares was served on the third party obligor, the third party obligor, and the Defendant as the creditor on November 26, 2012.

(3) Pursuant to the latter part of Article 487 of the Civil Act and Article 248(1) of the Civil Execution Act and Article 248(1) of the Civil Execution Act, a depositee shall be the Plaintiffs or the Nonparty, on the grounds that the transfer of shares, the provisional seizure of shares, and the seizure of shares are concurrent on four occasions from May 2, 2013 to April 5, 2016.

(4) The share certificates of the instant shares do not have been issued, and the Plaintiffs did not enter the register of shareholders on the instant shares.

C. We examine the above facts in light of the legal principles as seen earlier.

(1) The Plaintiffs are satisfied the requisite for setting up against a third party by entering into a security agreement for transfer of stocks prior to the issuance of share certificates and obtaining the consent from the third party by a certificate with a fixed date. As long as the seizure order issued by the Defendant against the Nonparty, who was the person who established the security right for transfer of shares, was served on the debtor after meeting such requisite for setting up, the Plaintiffs should be deemed to be legally entitled to exercise their rights to the instant shares. Therefore, the Plaintiffs are the holders of the instant shares, and the Plaintiffs are reverted to the Plaintiffs, including the right to claim the payment of the instant dividends. This is likewise true even if the Plaintiffs

(2) The obligation to pay the instant dividend amount was extinguished as the instant mixed deposit. The Plaintiffs concluded a share transfer agreement with the Nonparty, and obtained the consent from the third party by a certificate with a fixed date, and thereafter, seized shares with the Nonparty as the obligor. Whether to whom the right to claim the payment of the deposit belongs among the Plaintiffs and the Defendant is a matter of determination to whom the right to claim the payment of the deposit belongs or to whom the right to claim the payment of the deposit belongs. Therefore, as seen above, the right to claim the payment of the deposit amount between the Plaintiffs and the Defendant ought to be deemed to be externally owned by the Plaintiffs, as seen earlier, as it appears,.

(3) 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 scope of security rights of stock-backed security holders and the exercise of shareholder rights by shareholders who did not complete a change of entry in the register of shareholders, thereby affecting

2. Whether there is benefit in confirmation (Ground of appeal No. 3)

The allegation in the grounds of appeal that there is no interest in confirmation against the plaintiffs is premised on the absence of the right to claim dividend of the shares in this case. However, as seen earlier, since the right to claim dividend of the shares in this case belongs to the plaintiffs, the above grounds of appeal cannot be accepted without further review.

3. Conclusion

The Defendant’s appeal is dismissed in entirety as it is without merit, 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 Lee Dong-won (Presiding Justice)