One Law Partners recently handled a case where a resolution adopted at a listed company’s shareholders’ meeting to amend its articles of incorporation and introduce a supermajority voting requirement—requiring approval by at least four-fifths of the total issued shares for the appointment or removal of directors—was declared invalid by the court.

This ruling clarifies the illegality of excessively strengthening the statutory requirements for special resolutions under the Korean Commercial Act and carries significant implications for protecting minority shareholders’ rights and improving corporate governance.

Key Issues

• Legality of articles of incorporation adopting a supermajority voting requirement
• Whether the special resolution requirements under Article 434 of the Korean Commercial Act can be further tightened
• If so, what are the limits of such tightening?

Strategy

• Rigorous legal argumentation: Persuading the court on the illegality of the supermajority provision in the articles
• Research on relevant academic papers and lower court precedents
• Development of a well-structured legal reasoning

Outcome

• Confirmed invalidity of the shareholders’ resolution amending the articles to state:
  “When a shareholder proposal seeks to appoint or remove a director, approval by at least four-fifths of the total issued shares is required; the same threshold applies to any resolution amending this provision.”
• Established that the supermajority requirement violates the principle of shareholder equality and infringes on shareholder proposal rights
• Expected activation of minority shareholders’ rights to propose director appointments, enhancing participation in corporate management
• Anticipated increase in objections from minority shareholders against similar provisions in listed companies
• Contributed to improving corporate governance and protecting shareholder value