Open Decision Ledger · Capital markets & finance
Liability for damages of an outside director for false entries in a business report and the meaning of the exculpatory requirement of due care
Translated from the Korean original. Read the Korean
Supreme Court, Dec. 24, 2014, 2013Da76253 (judgment)
No holding summary · checked against points at issue. The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Case name: 손해배상(기)
Official text on the National Law Information Center
Question
May an outside director who has been sued for damages on account of a false entry in a business report be regarded as having exercised due care and thereby been unable to know of the false entry, on the sole ground that the director engaged in no substantive activity, such as attending work or attending board meetings?
Holding
To prove that one was unable to know despite having exercised due care means proving that, after conducting the investigation reasonably expected of one in one's position, one had a reasonable basis for believing that there was no false entry, and that one in fact held that belief. The Supreme Court held that an outside director also has a duty to supervise, so that the fact that the director did not attend work or attend board meetings is merely a fact showing that the director did not perform his or her duties, and does not constitute a ground for exculpation.
Points at issue, verbatim
병이 사외이사로서 실질적인 활동이 없었던 점 등에 비추어 상당한 주의를 하였더라도 허위기재 사실을 알 수 없었을 것이라고 본 원심판결에 법리오해의 위법이 있다고 한 사례
Unofficial English translation
A case in which it was held that the judgment of the court below, which found that, in light of the fact that C had no substantive activity as an outside director and other circumstances, C would not have been able to know of the false entries even if he had exercised due care, involved a misapprehension of legal principles
Disposition
Partly reversed and remanded Stated in the decision
원심판결 중 피고 2에 대한 부분을 파기하고 이 부분 사건을 서울고등법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed with respect to Defendant 2, and this part of the case is remanded to the Seoul High Court.
Form of the test
Elements stated Stated in the decision
자신의 지위에 따라 합리적으로 기대되는 조사를 한 후 그에 의하여 허위기재 등이 없다고 믿을 만한 합리적인 근거가 있었고 또한 실제로 그렇게 믿었음
Unofficial English translation
after having conducted the investigation reasonably expected in light of his position, he had a reasonable basis for believing that there were no false entries, etc., and in fact actually so believed
Factors
- 사업보고서 제출대상 법인의 이사
- 사업보고서의 허위기재 등으로 인하여 입은 손해
- 상당한 주의를 하였음에도 불구하고 이를 알 수 없었음
- 사외이사로서 실질적인 활동이 없었던 점
Unofficial English translation
• A director of a corporation subject to the filing of business reports
• Losses suffered due to false entries in a business report, etc.
• Despite having exercised due care, could not have known of such fact
• The fact of having had no substantive activity as an outside director
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2002. 9. 24. 선고 2001다9311, 9328 판결
Unofficial English translation
Supreme Court Decision 2001Da9311, 9328 decided September 24, 2002
Decisions referred to
[1] 대법원 2002. 9. 24. 선고 2001다9311, 9328 판결(공2002하, 2485), 대법원 2002. 10. 11. 선고 2002다38521 판결(공2002하, 2716), 대법원 2007. 9. 21. 선고 2006다81981 판결(공2007하, 1656)
Burden of proof
The party asserting Stated in the decision
배상의무자인 이사가 책임을 면하기 위하여는 자신이 상당한 주의를 하였음에도 불구하고 이를 알 수 없었음을 증명하거나
Unofficial English translation
in order for the director liable for damages to be exempted from liability, he must prove that he exercised due care and nevertheless could not have known of it, or
Open question and revisit condition
Where an outside director actually attended a board meeting and reviewed an agenda item approving the financial statements, to what extent must the director have conducted an investigation before the director may be regarded as having completed the investigation reasonably expected of one in that position?
If the legal principle concerning the exculpatory requirement under the proviso to Article 162 (1) of the Financial Investment Services and Capital Markets Act or the duty to supervise of an outside director is amended or is newly declared, this reading will be re-examined.
Cross-family AI independent reading & axis check
6 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
When compared with an independent reading conducted by another family of AI (GPT-6 Astra), which read only the original text without seeing the initial reading, 6 of the 8 axes agreed, while the readings diverged on Axis 7 (Burden of proof) and Axis 8 (Open question and revisit condition).
Axis 7 (Burden of proof): Primary “The party asserting” vs Independent “The opposing party”
Because the original text addresses proof of the exculpatory requirement by the person liable for compensation, the value may differ depending on whether the same director is described as the party asserting exculpation or as the opposing party of the claimant for damages.
배상의무자인 이사가 책임을 면하기 위하여는 자신이 상당한 주의를 하였음에도 불구하고 이를 알 수 없었음을 증명하거나Axis 8 (Open question and revisit condition): Primary “Where an outside director actually attended a board meeting and reviewed an agenda item approving the financial statements, to what extent must the director have conducted an investigation before the director may be regarded as having completed the investigation reasonably expected of one in that position?” vs Independent “If, on remand, another ground for exculpation or the absence of causation between the loss and the false entry is proved, how is the scope of the outside director's ultimate liability for compensation determined?”
The initial reading asks about the degree of investigation required of an outside director who actually engaged in activity, whereas the independent reading asks about the scope of ultimate liability where, on remand, another ground for exculpation or the absence of causation is proved.
병이 사외이사로서 실질적인 활동이 없었던 점 등에 비추어 상당한 주의를 하였더라도 허위기재 사실을 알 수 없었을 것이라고 본 원심판결에 법리오해의 위법이 있다고 한 사례Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The court below accepted the exculpation argument of Defendant 2, on the grounds, among others, that although Defendant 2 held the position of an outside director, the director engaged in no substantive activity such as attending work or attending board meetings and participating in resolutions, and that the confirmation bearing the name of Defendant 2, which was submitted at the time of the external audit, had been arbitrarily prepared by the representative director, and therefore that the director was unrelated to the false entry or would have been unable to know of it even having exercised due care. As to Defendant 2 accounting firm, the court below found it proved that the firm had not neglected its duties of external audit, and denied liability.
Supreme Court standard: The Supreme Court regarded the court below's determination as to the accounting firm as just, and dismissed that portion of the final appeal. However, the Supreme Court held that a director stands in a position to supervise the execution of business by the representative director and others, that the same is true of an outside director, and that the fact that the director did not attend work or attend board meetings merely indicates that the director did not perform his or her duties at all, and is not a circumstance warranting the view that the director exercised due care or that the director could not have known even having exercised such care; accordingly, the Supreme Court reversed and remanded the portion concerning Defendant 2.
Distinguishing conditions
- Where the record reveals the fact that the director actually conducted the investigation reasonably expected of one in that position and had a reasonable basis for believing that there was no false entry
- Where it is proved that the acquirer of shares knew of the false entry at the time of acquisition, or that the loss did not arise from the false entry
- Where the basis of the claim is not Article 162 of the Financial Investment Services and Capital Markets Act but another provision, such as the liability of the auditor under the Act on External Audit of Stock Companies
Record verification notes
Before asserting the same conclusion, one must first check whether the director in question held the position of a director at the time the business report was submitted, and whether there are materials showing that the director actually conducted the investigation called for by that position, such as attending board meetings or reviewing the financial statements.
From the official text
Points at issue
[1] 주식 취득자가 사업보고서 제출대상 법인의 이사에게 사업보고서의 허위기재 등으로 인하여 입은 손해의 배상을 청구하는 경우, 배상의무자의 면책요건으로 자본시장과 금융투자업에 관한 법률 제162조 제1항 단서에서 정한 ‘상당한 주의를 하였음에도 불구하고 이를 알 수 없었음’을 증명한다는 것의 의미 [2] 갑 주식회사의 주식을 취득한 을 등이 사외이사 병을 상대로 사업보고서 허위기재에 따른 손해배상을 구한 사안에서, 병이 사외이사로서 실질적인 활동이 없었던 점 등에 비추어 상당한 주의를 하였더라도 허위기재 사실을 알 수 없었을 것이라고 본 원심판결에 법리오해의 위법이 있다고 한 사례
Unofficial English translation
[1] The meaning of proving, as a ground for exemption of the person liable for damages, 'that one could not have known of such fact despite having exercised due care' as provided in the proviso to Article 162, paragraph (1) of the Financial Investment Services and Capital Markets Act, where a purchaser of shares claims from a director of a corporation subject to the filing of business reports damages for losses suffered due to false entries in a business report, etc. [2] In a case where B and others, who acquired shares of Company A, sought damages from C, an outside director, on account of false entries in the business report, an instance in which it was held that the judgment of the court below, which found that, in light of the fact that C had no substantive activity as an outside director and other circumstances, C would not have been able to know of the false entries even if he had exercised due care, involved a misapprehension of legal principles
Summary of the holding
The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Order
원심판결 중 피고 2에 대한 부분을 파기하고 이 부분 사건을 서울고등법원에 환송한다. 피고 2 회계법인에 대한 상고를 기각한다. 피고 2 회계법인에 대한 상고비용은 원고들이 부담한다.
Unofficial English translation
The judgment of the court below is reversed with respect to Defendant 2, and this part of the case is remanded to the Seoul High Court. The final appeal of Defendant 2, the accounting firm, is dismissed. The costs of the final appeal of Defendant 2, the accounting firm, shall be borne by the plaintiffs.
Provisions referred to
[1] 자본시장과 금융투자업에 관한 법률 제162조 제1항, 제4항 [2] 자본시장과 금융투자업에 관한 법률 제162조 제1항, 제4항
Read 2026-10-16 · Cross-read 2026-10-16. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.
Every entry is published only after all quotes have been matched character by character against the official text, and audited by an independent second reading from a different model family across all eight axes. Both agreed axes and text-grounded interpretive divergences are recorded openly. The ledger is a research record, not an assessment of the court or advice on any matter.
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