Whether the issuance of convertible bonds also requires a special resolution of a general meeting of shareholders pursuant to the articles of incorporation in cases where the articles of incorporation of a company determines matters concerning issuance and acceptance of new stocks at a general meeting of shareholders and the increase and decrease of capital are subject to a special resolution

In a case where the articles of incorporation of a company provides that matters concerning issuance of new shares and acceptance shall be decided at a general meeting of shareholders and increase and decrease of capital shall be decided with the attendance of shareholders holding stocks equivalent to a majority of the total number of issued stocks and with the consent of two-thirds or more of the voting rights of shareholders present, convertible bonds shall have the meaning of issuing new shares in fact because the exercise of convertible rights can be converted into a primary stock.

Article 416 of the Commercial Act

Plaintiff 1 and one other (Attorney Yoon-soo, Counsel for the plaintiff-appellant)

New LLC Co., Ltd. and (Attorney Yoon Il-young, Counsel for defendant-appellant)

Seoul High Court Decision 98Na49021 delivered on February 23, 1999

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

The board of directors may determine convertible bonds to issue them at a general meeting of shareholders, except as otherwise provided in the articles of incorporation.

However, according to the records, pursuant to Articles 9 and 20 of the company's articles of incorporation at the time when the board of directors of the defendant company makes a resolution for the issuance of convertible bonds of this case, the matters regarding the issuance and acceptance of convertible bonds shall be determined at the general meeting of shareholders, and the increase or decrease of capital shall be decided with the attendance of shareholders holding more than 2/3 of the total number of issued and outstanding shares with the consent of more than a majority of the voting rights of shareholders present. Thus, since convertible bonds can be converted into a primary stock upon the exercise of convertible rights, issuing convertible bonds has the meaning as the issuance of new stocks, the court below is just in holding that the defendant company requires a special resolution of the general meeting of shareholders for the issuance of convertible bonds.

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 on the bench.

Justices Lee In-hee (Presiding Justice)