Are the Time Limits and Record Dates for Exercising Shareholder Rights Read Only by Their Wording? The Reasonable Period after Permission to Convene, the Document for Proxy Voting, and the Reference Date for the Share Purchase Price

Question

The routes by which shareholders participate in a company's decision-making or withdraw from a decision are for the most part organized by time limits, form, and record dates. A minority shareholder may, after petitioning the board of directors to call a meeting, call a general meeting with the court's permission; an agent submits to the general meeting a document proving the authority of representation; a shareholder who wishes to exercise voting rights in a divided manner notifies the company in advance; and the purchase price of a shareholder who objected to a merger of a listed company is calculated on the basis of the day preceding the date of the board resolution. These thresholds divide the effect of resolutions and the value of shares.

This report addresses three questions. First, if the court permitted the calling of a general meeting without fixing a period for calling it, by when may the minority shareholder call the meeting. Second, to what extent may a company restrict or refuse the exercise of voting rights by proxy, and what effect do the circumstances of failing to bring documents other than the proxy or of missing the notice deadline have on the effectiveness of the exercise of voting rights. Third, in the appraisal claim brought by a dissenting shareholder in a merger of a listed company, may the court depart from the basis of the day preceding the date of the board resolution prescribed by statute and use the market share price at another point in time.

The three questions lie on a single axis of how to read provisions that reconcile, through time limits and form, two interests—the operation of a company's general meetings and the stability of legal relationships, and the protection of shareholders' rights. As shown below, the three judgments at times added temporal constraints not found in the text, at times relaxed the form required by the text in light of its purpose, and at times shifted the calculation reference date prescribed by statute according to the case.

This article organizes, within the scope of what the Holdings, Summary of Decision, and operative parts of three judgments rendered in 2009, 2018, and 2022 state, the materials to check and the divergences in interpretation, and does not determine the effect of any particular resolution or the fair price of any particular share. The provision on the document proving the authority of representation in Article 368 paragraph (3) of the Commercial Act, cited as the Reference Provisions in 2005Da22701, appears in the current text at Article 368 paragraph (2), carrying a notation of amendment on May 20, 2014, and the current wording of Article 368-2 paragraph (1) requires notice in writing or by electronic document three days prior to the date of the general meeting of shareholders, differing from the wording quoted in the judgment at that time. This is why the reading must be based on the statutes and regulations as they stood at the time when the general meeting and the merger took place.

Material to check

First, the provisions on a minority shareholder's petition to call a meeting can be confirmed. Article 366 paragraph (1) of the Commercial Act allows a shareholder holding shares amounting to at least 3/100 of the total number of issued shares to petition the board of directors to call an extraordinary general meeting by submitting a document in writing or by electronic document stating the purpose of the meeting and the reason for the call, and paragraph (2) allows the petitioning shareholder, if the procedure for calling the meeting is not carried out without delay after the petition, to call the general meeting with the court's permission. Article 80 paragraph (1) of the Non-Contentious Case Procedure Act requires that, upon filing a petition for permission, the fact that the directors have neglected to call the meeting be substantiated; Article 81 provides that the matter shall be adjudicated by a decision stating reasons, while precluding a challenge to a decision granting the petition; and Article 72 paragraph (1) fixes the jurisdiction of the collegiate panel of the District Court at the location of the principal office. The fact that no provision fixes a period from the permission to the calling of the meeting is the starting point of 2016Da275679.

Second, the provisions on who represents the company in litigation between the company and a director. Article 394 paragraph (1) of the Commercial Act provides that where the company brings an action against a director, or a director brings an action against the company, the auditor represents the company in that action. Article 386 paragraph (2) allows the court, where the number of directors is deficient, to appoint, upon the claim of an interested person, a person to perform the duties of a director temporarily, and Article 389 paragraph (3) applies this mutatis mutandis to the representative director. Whether a provisional representative director appointed by the court represents the company in an action disputing the status of a director was the second issue in 2016Da275679.

Third, the provisions on the exercise of voting rights. Current Article 368 paragraph (2) of the Commercial Act provides that a shareholder may have an agent exercise voting rights, and that such agent shall submit to the general meeting a document proving the authority of representation. Article 368-2 paragraph (1) allows a shareholder having two or more voting rights to exercise them without unifying them, provided that the shareholder notifies the company in writing or by electronic document of that intention and the reason therefor three days prior to the date of the general meeting of shareholders; paragraph (2) allows the company to refuse a non-unified exercise except where the shareholder has accepted a trust of shares or holds shares for another person. Article 376 paragraph (1) permits an action for revocation of a resolution within two months from the date of the resolution where the procedure for calling the meeting or the method of resolution violates statutes, regulations, or the articles of incorporation, or is manifestly unfair, among other grounds; and Article 529 requires that the invalidity of a merger be asserted only by an action brought by certain persons within six months from the date of registration of the merger.

Fourth, the provisions on the right to demand purchase of shares of a dissenting shareholder. Article 374-2 paragraph (4) of the Commercial Act allows the company or a shareholder to petition the court to determine the purchase price where agreement on the purchase price is not reached, and paragraph (5) provides that the court shall calculate a fair value in consideration of the company's financial condition and other circumstances. Article 522-3 provides the right to demand purchase of shares of a dissenting shareholder in a merger, and Article 530 paragraph (2) provides for the application mutatis mutandis of Article 374-2 paragraphs (2) through (5) to mergers. Article 165-5 paragraph (3) of the Financial Investment Services and Capital Markets Act (the "Capital Markets Act") provides that, in the case of a listed company, where agreement is not reached, the purchase price shall be the amount calculated, by the method prescribed by Presidential Decree, on the basis of the transaction prices of the relevant shares traded in the securities market before the date of the board resolution, and that where a shareholder objects to that price as well, the shareholder may petition the court to determine the purchase price.

Fifth, the provisions on the calculation method and adjudication procedure. Article 176-7 paragraph (3) subparagraph 1 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act provides, for shares on which trading has been formed in the securities market, the arithmetic mean of three prices obtained by volume-weighted averaging of the closing market prices over the past two months, one month, and one week from the day preceding the date of the board resolution, and subparagraph 2 separately provides the price of shares on which no trading has been formed. Article 11 of the Non-Contentious Case Procedure Act requires the court, ex officio, to ascertain facts and to investigate such evidence as it deems necessary; Article 86-2 paragraph (1) requires that the statements of shareholders and directors be heard before adjudication on the determination of the stock purchase price, and paragraph (2) requires that where multiple petition cases are pending simultaneously, the hearings and adjudications be consolidated.

Sixth, factual materials. For a case involving permission to call a meeting, one needs the purpose stated in the decision granting permission and whether a period for calling was entered, the period between the date of permission and the actual calling, changes in the circumstances that formed the basis of the permission during that interval, such as the appointment of directors and the composition of shareholders, and the circumstances and reasons for the belated calling. For a voting rights case, the proxy and attendance certificates on the day of the general meeting, the receipt records of seal certificates, the reasons for refusing the authority of representation, and the time of arrival of the notice of non-unified exercise and whether the company accepted it can be cross-checked. For a purchase price case, the date of the board resolution and the date of merger disclosure, reports showing market participants' expectations of the merger, the listing date of the related company, and the trend of share prices during that period correspond to the issues.

Possible readings

Regarding the time limit for permission to call a meeting, a reading faithful to the text holds that under Article 366 paragraph (2) of the Commercial Act, if the decision granting permission did not fix a period, the minority shareholder's authority to call is likewise subject to no temporal constraint. A reading that gives priority to the purpose holds that the matters to be resolved have already been determined by the permission, that the circumstances forming the basis of the permission may change as time passes, and that this must be balanced against the fact that the board, upon receiving a request to call, must proceed with the calling procedure without delay; accordingly, the meeting must be called within a reasonable period. 2016Da275679 adopted the latter but did not fix the reasonable period by a number, enumerating only decision factors; the dispute thus moves to how those factors are weighed in individual cases.

Regarding the exercise of voting rights by proxy, a reading that values form holds that if the proxy form prescribed by the company and confirmation documents such as a seal certificate and an attendance certificate are not in place, the company may refuse the authority of representation. A reading that values substance holds that the document proving the authority of representation required by the Commercial Act is the proxy, and that the remaining documents are means of confirmation; accordingly, if the fact of the delegation can be proved by other means, the company cannot deny the authority of representation. 2005Da22701, while adopting the substantive reading on the question of documents, held that an article of incorporation limiting the qualification of an agent to shareholders is valid as a reasonable and appropriate restriction to prevent disruption of the general meeting.

However, the scope of application of that articles-of-incorporation provision is again narrowed by its purpose. Where a shareholder that is the State, a local public entity, or a stock company has its public officials or employees exercise voting rights by proxy, the representative's intention reflecting the shareholder's internal decision-making is reflected and there is no risk of disruption of the general meeting, and to refuse this would in substance deprive that shareholder of the opportunity to exercise voting rights. A reading applying the wording of the articles as it stands and a reading applying it only within the range reached by the purpose of the provision part ways here, and the judgment adopted the latter reading.

Regarding the deadline for notice of non-unified exercise, a strict reading holds that, since the three-day period is a requirement in the wording, a non-unified exercise pursuant to a notice that arrived late constitutes a defect in the method of resolution. A relaxed reading holds that the period is intended to give the company time to decide whether to refuse and to avoid impeding the administrative operation of the general meeting; accordingly, if the company itself saw no impediment and accepted it, the exercise is not unlawful. 2005Da22701, while stating that the notice must reach the company three days before the meeting date, adopted the relaxed reading but left as exceptions special circumstances such as violation of the principle of shareholder equality or arbitrary acceptance for the purpose of manipulating the outcome of the exercise of voting rights. Whether the company's discretion in acceptance was used to the advantage of a particular shareholder becomes the fact that distinguishes this exception.

Regarding the reference date for the purchase price, a reading that gives priority to legal stability holds that, since Article 165-5 paragraph (3) of the Capital Markets Act and Article 176-7 paragraph (3) subparagraph 1 of the Enforcement Decree take the day preceding the date of the board resolution as the basis, it accords with predictability for the court to follow that standard as well. A reading that gives priority to fairness holds that the reference date is a device to capture a point in time before the value of the shares is affected by the merger; accordingly, if the market already anticipated the merger before the disclosure and the share price was affected, a point in time prior to that should be used. 2016Ma5394, while adopting the latter, maintained the principle of market share price by stating that the market share price must not readily be rejected merely because it differs somewhat from a price calculated on the basis of net asset value or earnings value.

All three judgments first asked after the purpose of the time limits, form, and reference dates, and supplemented or relaxed the wording in light of that purpose, but the direction is not the same. In the case involving permission to call a meeting, a constraint not found in the wording was added and the minority shareholder's authority was narrowed; in the voting rights case, formal requirements were relaxed and shareholders' exercise of voting rights was broadened; in the purchase price case, the calculation reference date was shifted and the dissenting shareholder was protected. Which reading to adopt is a matter for the reader to decide after matching the decisions with the general meeting records, disclosures, and share price materials.

What the decisions held

Supreme Court Judgment 2016Da275679 rendered on 15 March 2018 held that, even where a court grants permission to convene a general meeting under Article 366(2) of the Commercial Act without specifying the period for convening it, "a shareholder who has obtained permission to convene must convene the general meeting within a reasonable period in light of the purpose of the convocation", and that "if a general meeting has not been convened even after a reasonable period has elapsed from the date of the decision permitting convocation, the authority to convene under that decision is extinguished, unless there are special circumstances." It held that whether a reasonable period has elapsed must be determined by considering the purpose of convening the general meeting, the circumstances in which the decision granting permission was made, the period between the decision and the convening of the meeting, whether the circumstances on which the decision was based have changed, and the circumstances of and reasons for the belated convening of the meeting.

The same judgment stated that Article 394(1) of the Commercial Act, which has the auditor represent the company, exists "because conflicts of interest are likely to arise between a director and the company, and it is intended to prevent such conflicts and to ensure the fair conduct of litigation." In a case where, on the ground that there was no one who could lawfully represent the company, a shareholder applied for the appointment of a temporary representative director and directors and an attorney-at-law was appointed as temporary representative director and director, the Court held that, even if that temporary representative director represented the company in an action for confirmation of the non-existence of director status brought against a director elected at the general meeting convened by the minority shareholder, this could hardly be regarded as impairing the fair conduct of litigation, and that the above provision therefore did not apply. In the operative part, all the appeals were dismissed.

Supreme Court Judgment 2005Da22701 rendered on 23 April 2009 held that proxy voting by shareholders is not permitted without limit, so that "where there are special circumstances, such as a risk that the holding of the general meeting of shareholders would be unduly obstructed or the interests of the company would be unduly infringed by the proxy exercise of the voting rights, the company may refuse it." It held that the document evidencing the authority of the proxy means the power of attorney, and that even if the proxy did not bring a certificate of seal impression or an attendance card, "if the authenticity of the power of attorney or the fact of delegation can be proved by other means, the company cannot deny the proxy's authority." It held that a provision of the articles of incorporation limiting proxies to shareholders is valid, but that a public official, staff member or employee belonging to a shareholder that is the State, a local public entity or a stock company must be allowed to exercise voting rights as proxy on behalf of that shareholder.

Because the original text of the same judgment could not be opened, it could not be confirmed what the judgment determined regarding the time of arrival of a notice of non-uniform exercise and the acceptance of late notices, re-delegation by a standing proxy and applications to the depository institution for proxy exercise, or its holdings and operative part.

Supreme Court Decision 2016Ma5394 dated 14 April 2022 held that, in determining the purchase price for shareholders dissenting from a merger of a listed corporation, "the court must, in principle, calculate the purchase price by reference to the market price of the shares of the corporation concerned", while stating that the price need not be calculated only according to the method prescribed by the Enforcement Decree, and that "the court must not readily conclude that the market price fails to reflect the objective value of a listed corporation merely because the market price differs somewhat from a price calculated on the basis of net asset value or earnings value." It held that, even under the principle of ex officio investigation, "it is the same as in civil litigation that the finding of facts requires a high degree of probability such that an ordinary person would harbour no doubt." It further held that "where the merger had not been publicly disclosed but the market price is found to have already been affected by the merger because major participants in the capital market anticipated it, it cannot be said that the share purchase price must necessarily be calculated with the day before the date of the board resolution as the reference date", and, accepting the lower court's use, in a merger between affiliated companies, of the day before the listing date of the counterparty company as the reference date, it dismissed all the re-appeals.

Practical checklist

This item is not advice but a bundle of questions that may be asked when cross-checking the Records. First, one may ask about the timetable of the permission to call. One can confirm how the decision granting permission recorded the purpose matters and whether a period for calling was entered, how much time elapsed from the date of permission to the notice of calling and the date of the general meeting, whether circumstances forming the basis of the permission changed during that interval, such as the appointment of a director or the transfer of shares, and whether there are materials showing the reason for the delay.

Second, one may ask about the intake records at the general meeting venue. What documents the company required of the agent and on what grounds it refused, whether the refused agent sought to prove the fact of delegation by other means, and, if there is a restriction on agent qualifications under the articles of incorporation, whether the refused agent falls within employees affiliated with the shareholder, can be cross-checked against the intake ledger and the minutes.

Third, one may ask about the time of arrival of notices and applications. When the notice of non-unified exercise or the application for exercise by proxy reached the company or the depository institution, the circumstances under which the company accepted it and whether the same standard was applied to other shareholders as well, and what effect that acceptance had on the outcome of the resolution, can be matched by date.

Fourth, one may ask about the point in time when the share price began to be affected by the merger. The date of the board resolution and the date of disclosure, the timing of reports and press coverage by financial investment business entities mentioning the possibility of a merger, the timing of the listing of the related company, and the changes in share price and trading volume before and after can be confirmed through reliable materials. This is in any event only a list of materials to check, and the conclusion is drawn by the reader.

Glossary

Permission to convene a general meeting refers to a ruling by which a court permits a minority shareholder to convene a general meeting where, despite the shareholder's request for convocation, the board of directors does not take the convocation procedure without delay. 2016Da275679 held that the authority to convene arising from such permission is extinguished once a reasonable period has elapsed, unless there are special circumstances.

The document evidencing the authority of the proxy is the document that the Commercial Act requires a proxy to submit to the general meeting, and 2005Da22701 held that it is the power of attorney. The certificate of seal impression or attendance card that the company additionally requires is explained as a means of confirming the proxy's qualification more reliably.

Non-uniform exercise of voting rights refers to a shareholder holding two or more votes exercising them separately, for example voting some in favour and some against. Article 368-2 of the current Commercial Act provides both for prior notice and for the possibility of refusal by the company.

The principle of ex officio investigation refers to a method by which the court itself gathers the materials forming the basis of its ruling without being bound by the parties' assertions, and it is provided for in Article 11 of the Non-Contentious Case Litigation Procedure Act. 2016Ma5394 held that, even under this method, the finding of facts requires a high degree of probability and reliable materials.

Sources and limitations

The sources of the provisions are the current original texts on the National Law Information Center. Articles 366, 368, 368-2, 374-2, 376, 386, 389, 394, 522-3, 529 and 530 of the Commercial Act are based on Act No. 21044 [in force 10 September 2026]; Article 165-5 of the Financial Investment Services and Capital Markets Act on Act No. 21857 [in force 2 October 2026]; Article 176-7 of the Enforcement Decree of the same Act on Presidential Decree No. 36756 [in force 13 October 2026]; and Articles 11, 72, 80, 81 and 86-2 of the Non-Contentious Case Litigation Procedure Act on Act No. 21490 [in force 2 October 2026]. The date of checking was 16 October 2026.

The sources of the rulings are the holdings, summaries of the judgment and operative parts of the three rulings published on the National Law Information Center. The quoted summaries reproduce the original wording, and company names, business group names, shareholding ratios, purchase prices and the specific reference dates are not stated beyond what appears in the summaries.

This brief did not check the original texts of the Commercial Act and the Enforcement Decree of the Financial Investment Services and Capital Markets Act as in force at the time of the general meetings and the merger, the former Act on the Structural Improvement of the Financial Industry, the former Securities and Exchange Act and the former Regulations on Supervision of Securities Business addressed in 2005Da22701, the full reasoning of the judgments, or the lower court rulings. The parts of the summary of 2005Da22701 concerning the merger ratio and the inaugural general meeting of a company established by consolidation were also not included in the scope of citation of this brief.

Points left open

How long a reasonable period after permission to convene is remains an open question. Whether cases in which convocation was delayed by a challenge to the decision granting permission or by other pending litigation, or cases in which the composition of shareholders changed after permission was granted, fall within the special circumstances referred to in the judgment cannot be determined from the summary of the judgment alone.

How far the special circumstances justifying refusal of proxy authority and the exception to qualification restrictions in the articles of incorporation extend also remains an open issue. Whether the same doctrine applies as it stands to shareholders that are legal persons or organisations other than the State, local public entities and stock companies mentioned in the summary of the judgment, or to cases of delegation by electronic means, is a point to be revisited together with the current wording.

If the company has discretion to accept late notices or applications, a further question is who must prove, and how, that the discretion was exercised according to the same standard for other shareholders. The summary of the judgment did not address which side bears the burden of that proof in an action to revoke a resolution.

There is also room to clarify further the conditions under which the reference date for the purchase price may be moved earlier, that is, the level of material required to find that the market anticipated the merger. 2016Ma5394 stated that the relevant point in time needs to be determined more strictly in a merger between affiliated companies, but how the same standard should apply to mergers between independent companies or to split-off mergers is a matter to be confirmed by later rulings.

When to reconsider

This report will be rewritten if the provisions of the Commercial Act on convocation requests by minority shareholders, proxy voting and non-uniform exercise of voting rights, or dissenting shareholders' appraisal rights, or the special provisions of the Financial Investment Services and Capital Markets Act on appraisal rights and the calculation method under its Enforcement Decree, are amended, or if the Supreme Court issues a new ruling on these matters.

At that time, the method of reading time limits, formal requirements and reference dates will be restated on the basis of the laws in force at the time of the general meetings and the merger, within the scope of what the holdings and summaries of the three rulings and the new ruling state.

Statutes referred to

• 상법 제366조, 제368조, 제368조의2, 제374조의2, 제376조, 제386조, 제389조, 제394조, 제522조의3, 제529조, 제530조
• 자본시장과 금융투자업에 관한 법률 제165조의5
• 자본시장과 금융투자업에 관한 법률 시행령 제176조의7
• 비송사건절차법 제11조, 제72조, 제80조, 제81조, 제86조의2

Decisions referred to

• 대법원 2018. 3. 15. 선고 2016다275679 판결 · Decision ledger
• 대법원 2009. 4. 23. 선고 2005다22701 판결 · Decision ledger
• 대법원 2022. 4. 14. 자 2016마5394 결정 · Decision ledger

Verification status

The cited provisions (Articles 366, 368, 368-2, 374-2, 376, 386, 389, 394, 522-3, 529 and 530 of the Commercial Act; Article 165-5 of the Financial Investment Services and Capital Markets Act; Article 176-7 of the Enforcement Decree of the same Act; and Articles 11, 72, 80, 81 and 86-2 of the Non-Contentious Case Litigation Procedure Act) were checked against the current original texts on the National Law Information Center on 16 October 2026. The cited rulings (Supreme Court Judgment 2016Da275679 rendered on 15 March 2018, Supreme Court Judgment 2005Da22701 rendered on 23 April 2009, and Supreme Court Decision 2016Ma5394 dated 14 April 2022) were checked against the holdings, summaries of the judgment and operative parts in the original texts on the National Law Information Center. The original texts of the laws in force at the time of the general meetings and the merger, the former Securities and Exchange Act and the former Regulations on Supervision of Securities Business, and the full reasoning of the judgments were not checked.