법무법인바른 사이트는 IE11이상 혹은 타 브라우저에서
정상적으로 구동되도록 구현되었습니다.
익스플로러 10 이하버전에서는 브라우저 버전 업데이트 혹은
엣지, 크롬, 사파리등의 다른 브라우저로 접속을 부탁드립니다. 감사합니다.
익스플로러 10 이하버전에서는 브라우저 버전 업데이트 혹은
엣지, 크롬, 사파리등의 다른 브라우저로 접속을 부탁드립니다. 감사합니다.
2) Background of the case
(1) The clan agreed to sell the Land owned by it to B company for KRW 85 billion, which is located in a place where a logistics complex is planned to be developed. Since the Land is virtually the only property of the clan and is located in an important location that is indispensable for the development of the logistics complex, several companies including Company B were trying to conclude a purchase and sale agreement for the Land with the clan. The members of the clan were sharply divided between those who were in favor of concluding the purchase and sale agreement with Company B (such as Mr. C, the former chairman) and those who were against (such as Mr. D, the current chairman).
(2) Mr. C, the former chairman of the clan, convened an extraordinary general meeting around October 2021, with the agenda of making a resolution to sell the Land to a company (“Company B”) despite the strong opposition of the members. A proxy form was attached to the convening notice so that voting rights could be exercised by proxy, and the proxy form stated that it could be submitted by “mail, fax, email, text message transmission, or individually delivered to the attending members and submitted to the reception desk of the extraordinary general meeting by the members themselves”. The opposing party applied to the court for a preliminary injunction to prevent the extraordinary general meeting from being held, but the court dismissed the application on the eve of the extraordinary general meeting.
(3) On the day of the extraordinary general meeting, in order to exercise the right to vote on the agenda of the case, voters were required to check whether they were members of the clan at the reception desk at the entrance to the venue, enter their names in the attendance register, and receive a ballot. In particular, if the voter was a proxy, they were required to present both the proxy's identification card and the executed proxy, and if they brought multiple proxies, they were required to go through the above verification procedure for each proxy. At that time, the ballot had to be filled in with (1) a mark for or against, (2) the voter's full name, and (3) the first six digits of the national identification number.
(4) Upon the opening of the extraordinary general meeting, a fight broke out between the proponents and opponents over the selection of the moderator, and the proponents blocked the entrance to the ballot box after the former chairman, Mr. C, declared the vote closed 52 minutes after the start of the vote. Even after the proponents blocked the entrance to the ballot box, some members put ballots into the ballot box, and when the opponents tried to put an envelope containing several proxies and ballots into the ballot box, the proponents blocked them, causing another fight. Finally, it was agreed that the envelope should be placed on top of the ballot box and the entire envelope should be wrapped with tape and attached to the ballot box.
(5) The day after the extraordinary general meeting, Mr. C conducted a counting of the votes due to the expiration of the time to borrow the venue. Mr. C declared that the resolution to sell the Land to Company B was passed, with 217 votes in favor, 56 votes against, and 16 invalid votes. At that time, 103 ballots and 57 proxies from the envelope attached to the ballot box with tape were not counted as valid votes and proxies.
(6) In January 2022, the opposing parties, including Mr. D, filed a lawsuit against the clan for confirmation of the non-existence (invalidity) of the extraordinary general meeting resolution, citing procedural and substantive defects in the extraordinary general meeting. Meanwhile, in March 2022, the clan elected Mr. D, who was an opponent of the above extraordinary general meeting resolution, as chairman, and turned around to oppose the sale and purchase agreement with Company B. Then, on Company B, which was concerned that the lawsuit would be terminated due to the clan’s confession, filed an application for participation of an independent party to confirm the validity of the extraordinary general meeting resolution on August 8, 2022.
3) Judgment of the court of first instance (Daejeon District Court, Cheonan Branch, Decisions 2022Gahap100014 and 2022Gahap102294, dated October 14, 2022) : The court of first instance dismissed the claims made by the opposing party on the grounds that (i) it could not find that the members’ exercise of voting rights was illegally obstructed since the former president of the clan, Mr. C had terminated the extraordinary meeting on the basis of his legitimate authority, (ii) it did not find that 160 ballots and proxies in total from the document envelope attached to the ballot box were valid since confirmation of the valid number of members validly present at the time of resolution at an extraordinary general meeting was ultimately made through the vote counting procedure, and (iii) considering that there were no other procedural defects of the extraordinary general meeting in this case, and confirmed that the resolution of the extraordinary general meeting was valid, accepting Company B’s claims.
1) The alleged obstruction of the exercise of voting rights by the members former chairman, Mr. C’s obstruction of the exercise of voting rights by the assenting members, including the former chairman Mr. C
Considering that (i) proxy voting is expected to take a considerable amount of time, and the opposing members brought a number of proxies; (ii) even though Mr. C never announced the exact voting end time in advance, he suddenly declared the end of the vote without checking whether any member failed to finish voting, and it was impossible for the other members to predict when the vote would end, (iii) the opposing party could not receive ballot papers for or the proxies brought by them; (iv) from before, there was a division between members who were opposed to this agenda item and those who were in favor; (v) even after the ballot box slot was blocked, some of the assenting party were able to put their filled-out ballots into the ballot box, while when the dissenting party tried to put their ballots or proxy letters that they could not insert into the ballot box, the assenting party blocked them again; (vi) it is necessary to be more careful in disposing of property with a significant value such as the Land; (vii) given the circumstances at the time, such as the remaining rental time, it appears that there was no urgent need for the asserting party to block the dissenting members from putting their ballots already filled out into the ballot box; and (viii) the number of proxies whose voting rights were prevented from being exercised was significant, so if they had been reflected in the vote count, the resolution result would have differed, the high court ruled that the assenting party’s act of preventing the dissenting from inserting their already-filled ballots into the ballot box constituted the obstruction of the fair voting or exercise of voting rights, and that it was a “significant defect” in the proceedings of the extraordinary general meeting in this case, and therefore, the extraordinary general meeting resolution in this case was invalid.
2) Quorum
The high court judged that it was reasonable to find that the resolution in this case was not passed for the following reasons:
(i) Pursuant to Article 73, Paragraph 2 and Article 75, Paragraph 2 of the Civil Act, with regard to 95 negative votes that were not cast, even though a power of attorney was submitted to the registration desk of the general meeting to receive a ballot paper and the holder thereof indicated whether the principal was for or against, since the voting right was exercised, the principal must be considered “present” at the extraordinary general meeting.
(ii) In the case of 57 unsubmitted proxies, in light of the assenting party’s act of obstruction and the method and procedure of proxy voting based on proxies, even though the opposing party did not submit the proxies to the registration staff, they possessed the proxies to submit them at the registration desk of the general meeting, which stemmed from their intention to exercise the voting rights. For example, even if the opposing party intentionally did not receive a ballot for an unsubmitted proxy, whether or not to vote depends entirely on the intention of the member, and not participating in the vote while at the general meeting venue is also a passive way of expressing one's intention. According to the rules of the clan, there is no provision that only members who has exercised voting rights are considered to be present. The ballots were attached to the ballot box in the premises of the general meeting before the closing of the general meeting. Considering the above, it was also reasonable to view that the principal was duly “present” at the extraordinary general meeting.
(iii) Among the unentered ballots, excluding the 95 negative votes, the remaining 8 ballots were accompanied by a legally prepared proxy and should be considered “present” at the extraordinary general meeting for the above reasons.
The clan signed a sale and purchase agreement to sell the Land for KRW 170 billion to a company in March 2023 after it had received the district court decision. If the decision was confirmed, there was no choice but to sell the Land at a low price of KRW 85 billion. On behalf of the clan, we argued as follows:
(i) Those in favor, including the former chairman Mr. C, interfered with the exercise of voting rights by the members during the extraordinary general meeting.
(ii) If a person holding a proxy is present when the general meeting of an unincorporated association is resolved, the proxy must be considered present when calculating the quorum. Therefore, the 160 ballots and proxies from the document envelope attached to the ballot box must be considered as being present.
(iii) The resolution of the extraordinary general meeting at issue in this case because it does not have a majority.
The property of unincorporated associations such as the families of a clan, churches, etc. is required to be managed and disposed of only by resolution of a general meeting (pursuant to Article 276, Paragraph 1 of the Civil Act). The above decision is significant in that it confirms that the obstruction of the exercise of voting rights in such general meeting resolutions constitutes a serious procedural defect and it presents standards for calculating quorum when exercising voting rights by proxy.
□ Attorneys in charge: Lee Chul-gyu, Park Sung-ho, Son Ju-yeong
