[1] Whether the person bears the burden of proving the title trust relationship in the shareholder registry under the shareholder registry

[2] The case holding that in order to recognize a third party as a real shareholder solely on the ground that a third party, who is not a shareholder on the register of shareholders, paid the purchase price of new shares, it cannot be readily concluded that the third party is a real shareholder based on the title trust relationship under the shareholder's name, and thus, in order for the third party to be recognized as a real shareholder, the third party should prove that

[1] Article 288 of the Civil Procedure Act, Article 352 of the Commercial Act, Article 103 of the Civil Act / [title trust] Article 288 of the Civil Procedure Act, Article 352 of the Commercial Act, Article 103 of the Civil Act / [title trust]

[1] Supreme Court Decision 84Meu2082 delivered on March 26, 1985 (Gong1985, 623)

Plaintiff (Law Firm Ro-Hy, Attorneys Cho Yong-sung et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm Dadam, Attorneys Kim Yong-jin et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2006Na16170 decided April 6, 2007

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

We examine the grounds of appeal.

According to the reasoning of the judgment below, the court below found, based on the evidence of employment of the court below, that the defendant company was established as 10 million won (10,000 common shares per share) for the purpose of running an entertainment business, etc., and the non-party 1 and the non-party 2 were registered in the register of shareholders at 30% of the shares issued at the time of incorporation, respectively (the executive relationship was registered as representative director, the plaintiff and the non-party 2 as the director, and the non-party 1). The total subscription price of new shares was paid with loan money at the time of incorporation of the defendant company, and the non-party 1 and the non-party 2 were not able to receive the plaintiff's share payment under the name of the non-party 1's company's company's name for the reason that the non-party 1 did not actually receive the plaintiff's share payment under the agreement to the non-party 1 and the non-party 1's company's company's company's company's company's new shares payment without the plaintiff's consent.

However, we cannot accept the above determination by the court below for the following reasons.

A person registered as a shareholder in the register of shareholders is presumed to be a shareholder of the company and has the burden of proving the denial of the shareholder's right in order to reverse the presumption (see, e.g., Supreme Court Decision 84Meu2082, Mar. 26, 1985). To assert that the name of a shareholder in the register of shareholders was trusted and that there was a real shareholder as the name borrowed, the party asserting such title trust relationship must prove the existence of a separate shareholder. However, even if a third party, other than a shareholder in the register of shareholders, actually paid new shares, as stated in its reasoning, the underlying relationship of such act is the underlying relationship of the act, such as the title trust relationship as set forth in the judgment of the court below, and also various forms of legal relations such as a partnership with one party's investment obligation, or a mere loan relationship with the acquisition price of new shares, etc., without identifying the underlying relationship or real relationship with the third party's share acquisition procedure, it cannot be readily concluded that the third party merely paid new shares based on a title trust relationship.

Therefore, in order to recognize non-party 1 as a de facto shareholder unlike the entry in the register of shareholders, in addition to the fact that the payment of new shares was made by non-party 1, a third party on the part of the defendant company disputing the plaintiff's shareholder's shareholder rights, the defendant company should prove that such payment was made based on a title trust agreement between the plaintiff and the non-party 1, not by the agreement between the plaintiff and the non-party 1. Nevertheless, the court below determined that the non-party 1 was a de facto shareholder of the shares of this case as a de facto shareholder, and rejected the plaintiff's assertion that the plaintiff's assertion regarding the above title trust agreement was based on the trade relation of the shares of this case on the ground that there is insufficient evidence by the plaintiff, which affected the judgment. Such illegality was clearly affected by the judgment.

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Dai-hee (Presiding Justice)