Category: Corporate

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In January 31, the Seoul Central District Court ordered the Samsung Group to repay more than 2.33 trillion won ($2.46 billion) to the 14 creditors of its defunct Samsung Motors, which was the country’s biggest-ever financial civil lawsuit.  Samsung Group said yesterday that it will appeal that court ruling.

Samsung Motors applied for a court-administered debt restructuring program in June 1999, and Chairman Lee Kun Hee announced his plan to inject private money. Two months later, Samsung signed a deal with the creditors to cover a 2.45 trillion won debt by the end of 2000. Under the agreement, Lee handed over his 3.5 million shares of the unlisted Samsung Life Insurance Co. to the creditors and promised to list the company. However the insurance firm never went public, and creditors were unable to convert all their share to cash due to the large volume. Creditors filed a lawsuit in December 2005, claiming 5 trillion won including penalties.

One of the biggest issues on this trial was the validity of the agreement between Samsung Group and the creditors. Samsung Group alleged that the agreement is void because it was entered under duress. However the court rejected it.

As I’m a lawyer, it was very interesting who would represent Samsung Group and the creditors. There (more…)

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According to the Korean Commercial Act, a transaction between a director and a company shall acquire an approval by the board of directors(Article 398 of the Commercial Act). This is for the purpose of preventing the director from using his status in engaging in a transaction of the company leading to promoting his or a third party’s interest and causing damages to the company and its shareholders.

Here comes the question: if the general meeting of shareholders adopts a resolution ratifying an interest-conflicting transaction which had not yet been approved by the board of directors, the transaction can be validated ex post facto?

The Supreme Court denied it in its Decision 2005Da4284 Delivered on May 10, 2007.

In this case, Mr. Choi Soon Young, who at that time served as the representative director of Daehan Life Insurance Co., Ltd(the plaintiff) and the president of the Shindonga Educational Institute(the defendant), had donated about 18,000,000 USD to the defendant on behalf of the plaintiff company.

The Supreme Court held that “unless there are special circumstances where there should be the consent of all shareholders or that the approval is stipulated in the articles of incorporation as the right of the shareholders’ meeting, the approval of an interest-conflicting transaction between a director and the company shall be deemed to be subject to an arbitrary decision by the board of directors, so if an interest-conflicting (more…)