CONTENTS
- 1. Corporate Legal Advisory Attorney | Conflict Between the Major Shareholder and Management
- - Request to Convene an Extraordinary Shareholders' Meeting and Its Legal Basis
- 2. Corporate Legal Advisory Attorney | The Major Shareholder's Demand to Convene and the Company's Refusal
- - The Representative Director's Rebuttal Logic
- 3. Corporate Legal Advisory Attorney | Strategy to Prove the Representative Director's Management Neglect
- - The Court's Examination and the Response Logic
- 4. Corporate Legal Advisory Attorney | Permission to Convene the Meeting and the Significance of the Matter
- - Provisions on Electronic Notification for Shareholders' Meetings Under the Amended Commercial Act
1. Corporate Legal Advisory Attorney | Conflict Between the Major Shareholder and Management
The client who consulted with the corporate legal advisory attorney was a major shareholder of a mid-sized manufacturing-based company. This case is one in which the corporate legal advisory attorney represented the major shareholder and obtained permission to convene an extraordinary shareholders' meeting.
In the course of operating a company, conflicts between shareholders and management frequently arise.
In particular, where the representative director's reckless management and circumstances suggesting opaque misuse of company funds continue, it becomes inevitable for the shareholders to raise their own voices and demand the normalization of management.
In such a situation, convening a shareholders' meeting becomes a key means of control, but if the board of directors refuses or delays it, the matter must go through the court's permission procedure.
Request to Convene an Extraordinary Shareholders' Meeting and Its Legal Basis
Article 366 of the Commercial Act grants a shareholder holding 3% or more of the total number of issued shares the right to request the convening of an extraordinary shareholders' meeting.
However, where the board of directors does not proceed with the procedure without justifiable reason, the shareholder may apply to the court for permission to convene the meeting and may chair the meeting directly.
The problem is that there are many cases in which the board of directors avoids convening the meeting on formal grounds, or the representative director uses litigation as a shield to drag out time.
Therefore, in order to obtain the court's permission, merely satisfying the superficial formal requirements is not enough; it is necessary to prove why the meeting should be held and whether an objective necessity for the benefit of the company exists. In this process, the role of the corporate legal advisory attorney is decisively important.
2. Corporate Legal Advisory Attorney | The Major Shareholder's Demand to Convene and the Company's Refusal
The client in this matter was a principal shareholder of a mid-sized company, Company D, holding 5% or more of the total issued shares.
Since the client's shareholding far exceeded the statutory requirement for the right to request the convening of a shareholders' meeting, the client's standing to request the convening of a shareholders' meeting was clear.
The client formally requested the board of directors to hold an extraordinary shareholders' meeting with the dismissal of the representative director and the appointment of a new director on the agenda, but the company delayed or avoided this.
In particular, there was no response at all to the first certified mail, and the certified mail sent again was also returned due to refusal of receipt. In effect, the company avoided its duty to convene the meeting.
The Representative Director's Rebuttal Logic
In addition, once the legal procedure commenced, the representative director put forward two arguments.
First, the argument was that the applicant shareholder was not the actual owner but merely a person who had received a title trust, and therefore could not exercise shareholder rights.
Second, the logic was that the request for an extraordinary shareholders' meeting was an abuse of rights intended to interfere with management and to pressure the representative director.
These two arguments are defenses frequently raised in cases involving permission to convene a shareholders' meeting, and they can have a significant influence on the court's actual judgment.
Therefore, how to rebut them determines the success or failure of the case.
3. Corporate Legal Advisory Attorney | Strategy to Prove the Representative Director's Management Neglect
In this matter, the corporate legal advisory attorney concentrated on proving that the representative director's management conduct had caused a serious risk to the company.
This is because the client's mere satisfaction of the shareholding requirement provided a weak basis for obtaining permission to convene the meeting, so it was necessary to demonstrate, with objective materials, that convening the meeting was necessary for the survival of the company.
Specifically, the following evidence was collected.
Such conduct went beyond a shareholder's business judgment and was a factor threatening the very survival of the company.
Therefore, the attorney emphasized that the extraordinary shareholders' meeting was not a means to keep the representative director in check or to pressure him, but an unavoidable measure to normalize the company.
The Court's Examination and the Response Logic
The corporate legal advisory attorney rebutted the representative director's arguments of title trust and abuse of rights, respectively, as follows.
- Rebuttal of the title trust argument: the attorney presented a Supreme Court precedent (2015Da248342) holding that a person formally entered in the register of shareholders may, absent special circumstances, exercise shareholder rights
- Rebuttal of the abuse of rights argument: the right of minority shareholders to request the convening of a meeting is a system established to ensure the sound operation of the company, and for it to be recognized as an abuse of rights the holding of the meeting would have to be clearly harmful to the company, whereas in this matter the purpose was, on the contrary, to prevent the collapse of the company; the attorney highlighted this point
4. Corporate Legal Advisory Attorney | Permission to Convene the Meeting and the Significance of the Matter
The court granted the client's claim, permitted the convening of the extraordinary shareholders' meeting, and appointed the applicant as chair.
The conclusion was reached that, in light of the company's current management situation and the representative director's conduct, the necessity of convening the meeting was found.
With this decision, the client was able to lawfully hold the shareholders' meeting and thereafter proceed with the dismissal of the director and the appointment of new management.
The procedure for permission to convene a shareholders' meeting is a significant turning point that determines the company's future governance structure and the direction of management normalization.
Where there is unlawful conduct or arbitrary control by the representative director, appropriate legal measures must be taken promptly, whether by a major shareholder or a minority shareholder, in order to preserve corporate value.
In this process, the corporate legal advisory attorney advises not only on procedural guidance and document submission, but also on fact-finding investigation, securing evidence, constructing legal logic, and post-event strategies for stabilizing management control.
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Provisions on Electronic Notification for Shareholders' Meetings Under the Amended Commercial Act
If permission to convene an extraordinary shareholders' meeting has been obtained from the court, lawful notice and public announcement of the convening also become key issues.
According to the Commercial Act amended in July 2025, a listed company may now hold an electronic shareholders' meeting by resolution of the board of directors, unless otherwise provided by its articles of incorporation.
A shareholder who attends an electronic shareholders' meeting is deemed to have attended the place of convening in person, and is now able to exercise voting rights and participate in the meeting even from a remote location.
In particular, large-scale listed companies must hold an electronic shareholders' meeting in a form that is conducted in parallel with an offline shareholders' meeting on a mandatory basis.
This provision takes full effect from January 1, 2027.
In addition, with respect to electronic notification methods, a listed company will be able to give notice of convening or make a public announcement by electronic means, through electronic documents or internet announcements, in accordance with what is provided in its articles of incorporation.
For major agenda items, direct individual notice to each shareholder is the principle, while for small shareholders an electronic announcement may, exceptionally and in part, be used in lieu thereof.
This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
Unauthorized reproduction, duplication, or distribution and other copyright infringements may result in legal action under applicable laws.
