[1] The method of acquiring possession of share certificates

[2] In a case where the approval of the board of directors is required for the transfer of shares, whether the transferee who acquired shares but received notice of the refusal to approve the transfer of shares from the company can exercise the appraisal right against the company (affirmative) / Whether the exercise of appraisal right by the transferee who did not acquire shares is effective (negative), and whether the defect is cured if the transferee satisfies the requirements for acquisition of shares ex post facto (negative)

[1] The transfer of shares after the issuance of share certificates takes effect (Article 336(1) of the Commercial Act), and the delivery of share certificates may take effect by simple delivery, alteration of possession, and transfer of right to request a return, in addition to the delivery of the reality.

[2] The transferee who acquired shares and received notice of refusal to approve the transfer of shares from the company may exercise the appraisal right against the company pursuant to Article 335-7 of the Commercial Act. Such appraisal right is so-called formative right recognized as the transferee of shares and established a sales contract for shares regardless of the company’s consent, and thus, even if the transferee who did not acquire shares requests purchase of shares against the company, it is not effective, and even if the transferee satisfies the requirements for the acquisition of shares ex post facto, the defect cannot be cured.

[1] Article 336 (1) of the Commercial Act, Articles 188, 189, and 190 of the Civil Act / [2] Articles 335-2 (4), 335-7, and 336 (1) of the Commercial Act

[1] Supreme Court Decision 76Da1292 decided Mar. 8, 197 (Gong1977, 9944) Supreme Court Decision 2008Da96963, 96970 decided Feb. 25, 2010 (Gong2010Sang, 627)

Plaintiff

Accounting Industry Corporation

Defendant joining the Defendant (Attorney Lee Sang-soo, Counsel for the defendant-appellant)

further Bank Savings Bank Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Seo-dong et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2013Na202025, 202032 decided July 11, 2014

The appeal is dismissed. The costs of appeal are assessed against an independent party intervenor, including the part resulting from the supplementary participation.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

The transfer of shares after issuance of share certificates takes effect (Article 336(1) of the Commercial Act), and the delivery of share certificates may take effect by simple delivery, alteration of possession, and transfer of right to request a return, in addition to the delivery of the reality (see, e.g., Supreme Court Decisions 76Da1292, Mar. 8, 197; 2008Da96963, Feb. 25, 2010).

The court below held that even if the plaintiff acquired the shares of this case by the method of occupation amendment, it cannot be deemed as legitimate acquisition of shares for exercising appraisal rights, on the premise that it is difficult to recognize the method of occupation amendment as legitimate acquisition of shares for exercising appraisal rights.

However, in light of the legal principles as seen earlier, even if share certificates are transferred by the possession and alteration of shares, the transferee can acquire shares lawfully. Thus, the judgment of the court below that the method of occupancy and alteration does not constitute legitimate acquisition of shares for the exercise of appraisal rights cannot be said to be correct.

However, according to the reasoning of the lower judgment and the record, the Plaintiff and the Intervenor drafted a share transfer contract on January 6, 2012, stating that “the instant shares are transferred to the Plaintiff with a right to collateral security and all rights as shareholders,” and the Defendant’s Intervenor prepared a written statement of refusal of shares stating that “the Plaintiff waives ownership to the shares transferred to the Plaintiff,” on the same day. However, it is difficult to deem that the Plaintiff was transferred a share certificate by means of possession revision, and there is no other evidence to support this. Rather, according to the reasoning of the lower judgment and the record, the Defendant’s Intervenor was aware that the Plaintiff delivered the share certificate to the Plaintiff on July 17, 2013, and the Plaintiff appears to have failed to acquire the instant shares at the time of February 20, 2012 when the Plaintiff exercised the right to share ownership against the Defendant.

As long as the Plaintiff cannot be deemed to have acquired shares at the time of exercising the appraisal right, the Plaintiff’s claim for purchase price of shares against the Defendant cannot be accepted. Therefore, the lower court’s conclusion rejecting the Plaintiff’s claim based on an assignment order on the claim for purchase price of shares is justifiable, and the lower court’s error did not err by misapprehending the legal doctrine that affected the conclusion of the judgment.

2. Regarding ground of appeal No. 2

If the transfer of shares requires the approval of the board of directors, but the transferee was notified of the refusal to approve the transfer of shares by the company, he/she may exercise the appraisal right against the company pursuant to Article 335-7 of the Commercial Act. Such appraisal right is so-called formative right recognized to the transferee of shares, and thus a sales contract for shares is established regardless of the company’s consent. Thus, even if the transferee who did not acquire shares has requested the purchase of shares against the company, it is no longer effective, and even if the transferee satisfies the requirements for the acquisition of shares ex

Although the reasoning of the court below is somewhat inappropriate or inadequate, it is just to reject the allegation by the independent party intervenor that the defect at the time of exercising the right to purchase shares was cured by acquiring shares ex post facto, and contrary to the allegations in the grounds of appeal, there is no error of law by misapprehending the legal principles on transfer of shares

3. As to the third ground for appeal

The ground of appeal on the purport that the court below violated the duty of explanation and did not conduct necessary deliberation as to whether the share certificates issued with respect to the shares of this case were legitimately issued in accordance with the defendant's articles of incorporation, is nothing more than a new assertion at the court of final appeal as to the legitimacy of the issuance of share certificates that are not asserted in the court of final appeal, and

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party, including the portion arising from the participation in the appeal. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Chang-suk (Presiding Justice)