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COMMERCIAL ACT

Act No. 1000, Jan. 20, 1962

Amended by Act No. 1212, Dec. 12, 1962

Act No. 3724, Apr. 10, 1984

Act No. 4372, May 31, 1991

Act No. 4470, Dec. 31, 1991

Act No. 4796, Dec. 22, 1994

Act No. 5053, Dec. 29, 1995

Act No. 5591, Dec. 28, 1998

Act No. 5809, Feb. 5, 1999

Act No. 6086, Dec. 31, 1999

Act No. 6488, Jul. 24, 2001

Act No. 6545, Dec. 29, 2001

Act No. 8582, Aug. 3, 2007

Act No. 8581, Aug. 3, 2007

Act No. 9362, Jan. 30, 2009

Act No. 9416, Feb. 6, 2009

Act No. 9746, May 28, 2009

Act No. 10281, May 14, 2010

Act No. 10366, jun. 10, 2010

Act No. 10600, Apr. 14, 2011

Act No. 10696, May 23, 2011

Act No. 12397, Mar. 11, 2014

Act No. 12591, May 20, 2014

Act No. 13523, Dec. 1, 2015

PART I GENERAL PROVISIONS
 Article 1 (Applicable Rules to Commercial Matters)
Where this Act does not provide for a particular commercial matter, the commercial customary law shall apply; and if no such law exists, the Civil Act shall apply.
 Article 2 (Commercial Activities of Public Corporations)
Except as otherwise provided for in any statute, this Act shall apply to commercial activities of a public corporation.
 Article 3 (Unilateral Commercial Activities)
If an act of a party, among all related parties, is considered a commercial activity, this Act shall apply to all such parties involved.
CHAPTER II MERCHANTS
 Article 4 (Merchant-by Nature of Business)
Any person who engages in commercial activities under his/her own name is called a merchant.
 Article 5 (Merchant-by Legal Construction)
(1) Any person who engages in any business in the same manner as a merchant through a store or similar facility shall be deemed a merchant, even if he/she does not carry out commercial activities.
(2) The provisions of the preceding paragraph shall also apply to a company even if it does not carry out commercial activities.
 Article 6 (Business of Incapable Persons and Registration thereof)
When a minor or a quasi-incompetent person engages in any business upon the permission of his/her legal representative, registration thereof shall be required.
 Article 7 (Incapable Persons and General Partners)
When a minor or a quasi-incompetent person has become a general partner of a company upon the permission of his/her legal representative, he/she shall be deemed to have full legal capacity in respect of acts done in the capacity of such person.
 Article 8 (Representation of Business by Legal Representatives)
(1) If a legal representative engages in any business on behalf of a minor, a quasi-incompetent, or an incompetent person, registration thereof shall be required.
(2) The effect of any restriction on the rights of representation of a legal representative shall not be asserted against a third party acting in good faith.
 Article 9 (Petty Merchants)
Provisions relating to managers, trade names, trade books, and commercial registration shall not apply to petty merchants.
CHAPTER III COMMERCIAL EMPLOYEES
 Article 10 (Appointment of Managers)
A merchant may appoint a manager and require him/her to engage in the business at the principal office or at a branch office.
 Article 11 (Rights of Representation by Managers)
(1) A manager may perform all judicial and extrajudicial acts with respect to the business of the business owner on behalf of the business owner.
(2) A manager may appoint and dismiss clerks and other employees who are not managers.
(3) The effect of any restriction on the rights of representation by a manager shall not be asserted against a third party acting in good faith.
 Article 12 (Co-managers)
(1) A merchant may allow several managers to exercise the vicarious authority jointly.
(2) In the case of the preceding paragraph, indications of intent made to any one of the managers shall be effective against the business owner.
 Article 13 (Registration of Managers)
Any appointment of a manager or extinguishment of his/her rights of representation shall be registered by the merchant at the place of the principal office or a branch office to which the said manager is placed. The same shall apply to matters listed in paragraph (1) of the preceding Article, and to any modification thereof.
 Article 14 (Apparent Managers)
(1) A person with a title of head of the principal office or a branch office, or any other person with a title recognized as equivalent to a manager shall be deemed to have the same authority as a manager at the principal office or a branch office: Provided, That this shall not apply in respect of judicial acts.
(2) The provisions of paragraph (1) shall not apply where the other party has acted in bad faith.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 15 (Employee with Partial Comprehensive Agency Authority)
(1) An employee who has been entrusted with certain types of business or certain matters relating to business may perform all acts other than judicial acts.
(2) The provisions of Article 11 (3) shall apply mutatis mutandis to cases falling under the preceding paragraph.
 Article 16 (Employees of Stores Selling Goods)
(1) An employee of a store selling goods shall be deemed to have all the authority in regard to the sale of goods at that store.
(2) The provisions of Article 14 (2) shall apply mutatis mutandis to cases falling under the preceding paragraph.
 Article 17 (Obligations of Commercial Employees)
(1) Without the permission of a business owner, no commercial employee shall effect any transaction in the same type of business as the business owner on his/her own account or for a third party, or serve as a general partner or a director of a company, or an employee of another merchant.
(2) Where a commercial employee has made a transaction in contravention of the preceding paragraph, and such transaction has been made on his/her own account, the business owner may regard such transaction as having been done on his/her own account, and if it has been made on the account of a third party, the business owner may request the employee to transfer the profit accrued from such transaction to him/herself. <Amended by Act No. 1212, Dec. 12, 1962>
(3) The provisions of the preceding paragraph shall not affect the termination of a contract by the proprietor against an employee or the proprietor's claims for damages against a trade employee.
(4) The right provided for in paragraph (2) shall be extinguished two weeks after the business owner becomes aware of such transaction or after one year has elapsed from the date the transaction is effected.
CHAPTER IV TRADE NAMES
 Article 18 (Free Choice of Trade Name)
A merchant may choose his/her name or other names as his/her trade name.
 Article 19 (Trade Name of Company)
The lettering "partnership company", "limited partnership company", "limited liability company", "stock company" or "limited company" shall be contained in the trade name of a company according to its nature.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 20 (Prohibition of Illegal Use of Trade Name of Company)
No person, other than a company, may use in the trade name any lettering indicating a company. This shall also apply where a person has acquired the business of a company.
 Article 21 (Unitary Trade Name)
(1) A single trade name shall be used in the same business.
(2) The trade name of a branch office shall explicitly indicate its dependent relationship to the principal office.
 Article 22 (Legal Effects of Registration of Trade Name)
No trade name registered by another person shall be registered as a trade name of the same kind of business in the same Special Metropolitan City, Metropolitan City, or Si/Gun. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 4796, Dec. 22, 1994; Act No. 5053, Dec. 29, 1995>
 Article 22-2 (Provisional Registration of Trade Name)
(1) If any person intends to establish a stock or limited company, he/she may file an application for provisional registration of the trade name with the registry having jurisdiction over the place of its principal office.
(2) If a company intends to change its trade name and/or purpose, it may file an application for provisional registration of its trade name with the registry having jurisdiction over the place of its principal office.
(3) If a company intends to relocate its principal office, it may file an application for provisional registration of its trade name with the registry having jurisdiction over the place to which it is to relocate.
(4) For the purposes of Article 22, provisional registration of a trade name shall be deemed registration of the trade name.
(5) Deleted. <by Act No. 8582, Aug. 3, 2007>
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 23 (Prohibition of Use of Trade Names Causing Misconception on Ownership of Business)
(1) No person shall, for any unfair purpose, use any trade name likely to induce others to believe that it represents the business of another person.
(2) Where a person has used a trade name in contravention of the provisions of paragraph (1), any person whose interest is likely to be harmed thereby or any person who has registered the trade name may demand cessation of such use. <Amended by Act No. 3724, Apr. 10, 1984>
(3) The provisions of paragraph (2) shall not affect any claim for damages. <Amended by Act No. 3724, Apr. 10, 1984>
(4) Any person who uses the registered trade name of another person in the same Special Metropolitan City, Metropolitan City, and Si/Gun, in respect of the same type of business shall be presumed to have done so for an unfair purpose. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 4796, Dec. 22, 1994; Act No. 5053, Dec. 29, 1995>
 Article 24 (Liability of Persons who have Lent their Names)
Any person who has permitted another person to carry on business using his/her name or trade name shall be liable jointly and severally with the person borrowing his/her name in respect of any obligations arising from a transaction in favor of a third party who has effected such transaction in the belief that such person borrowing the name is the business owner.
 Article 25 (Transfer of Trade Name)
(1) A trade name may be transferred only where business is discontinued or transferred together with the business.
(2) The effect of transfer of a trade name shall not be asserted against a third party unless it has been registered.
 Article 26 (Legal Effects of Non-Use of Trade Name)
If a person who has registered a trade name does not use it for two years without good cause, the trade name shall be deemed nullified.
 Article 27 (Requests for Cancellation of Registration of Trade Name)
If a trade name has been changed or discontinued, and a person who has registered such trade name has failed to register such change or discontinuation within two weeks, any interested person may request for the cancellation of such registration.
 Article 28 (Penalties for Illegal Use of Trade Name)
Any person who violates Article 20 or 23 (1) shall be subject to an administrative fine not exceeding two million won. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995>
CHAPTER V TRADE BOOKS
 Article 29 (Types of, and Principles for Preparation of, Trade Books)
(1) In order to clarify the assets, profits and losses from business, each merchant shall prepare books of account and balance sheets.
(2) Except as otherwise provided for by this Act, trade books shall be made in accordance with generally accepted fair and proper accounting practices.
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 30 (Methods of Preparing Trade Books)
(1) In a book of account, there shall be entered transactions and other particulars having effects on assets of the business.
(2) A merchant shall, at the time of commencement of business and thereafter on a set date, at least once a year, prepare a balance sheet based on the books of account and the preparer shall write his/her name and affix his/her seal, or affix his/her signature, thereon, whereas a company shall prepare such balance sheet in the same manner as a merchant at the time of its establishment and at the end of each period for the settlement of accounts. <Amended by Act No. 5053, Dec. 29, 1995>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 31 Deleted. <by Amended by Act No. 10281, May 14, 2010>
 Article 32 (Submission of Trade Books)
A court may, upon request or ex officio, order a party to a lawsuit to submit trade books or any part thereof.
 Article 33 (Preservation of Trade Books, etc.)
(1) Every merchant shall preserve trade books and other important documents relating to business for a period of ten years: Provided, That the slips or documents similar thereto shall be kept for five years. <Amended by Act No. 5053, Dec. 29, 1995>
(2) In cases of trade books, the period set forth in the preceding paragraph shall be computed from the date of closing of the books.
(3) Books and documents referred to in paragraph (1) may be preserved by means of microfilms and other data processing systems. <Newly Inserted by Act No. 5053, Dec. 29, 1995>
(4) Where books and documents are preserved under paragraph (3), the methods of preservation and other necessary matters shall be determined by Presidential Decree. <Newly Inserted by Act No. 5053, Dec. 29, 1995>
CHAPTER VI COMMERCIAL REGISTRATION
 Article 34 (General Rules)
Matters requiring registration under this Act shall, upon application of the relevant party, be registered in the commercial register of the court having jurisdiction over the location of his/her business office.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 34-2 Deleted. <by Act No. 8582, Aug. 3, 2007>
 Article 35 (Registration in Localities of Branch Offices)
Matters requiring registration in the locality in which the principal office is located shall also be registered in the localities in which branch offices are located, unless otherwise provided for in this Act.
 Article 36 Deleted. <by Act No. 5053, Dec. 29, 1995>
 Article 37 (Effects of Registration)
(1) Matters requiring registration shall not be asserted against any third party acting in good faith unless they are registered.
(2) Even after registration is effected, paragraph (1) shall apply if a third party is unaware of such fact for good cause.
[This Article Wholly Amended by Act No. 5053, Dec. 29, 1995]
 Article 38 (Legal Effects of Registration in Localities of Branch Offices)
Where matters requiring registration have not been registered in the locality of a branch office, the provisions of the preceding Article shall apply only to transactions at such branch office.
 Article 39 (False Registration)
No person who has intentionally or negligently registered any matter different from facts shall assert the difference against a third party acting in good faith.
 Article 40 (Registration of Changes or Extinguishment)
Where there has been any change or extinguishment of registered matters, the relevant party shall register such change or extinguishment without delay.
CHAPTER VII TRANSFER OF BUSINESS
 Article 41 (Prohibition of Competition by Transferor of Business)
(1) When a person has transferred his/her business, he/she shall not, for a period of ten years, engage in the same kind of business in the same Special Metropolitan City, Metropolitan City, or Si/Gun, or in any adjacent Special Metropolitan City, Metropolitan City, or Si/Gun, unless the relevant parties have agreed otherwise. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 4796, Dec. 22, 1994; Act No. 5053, Dec. 29, 1995>
(2) Where a transferor has made an agreement not to engage in the same kind of business, such agreement shall be valid, only in the same Special Metropolitan City, Metropolitan City, Si/Gun and in any adjacent Special Metropolitan City, Metropolitan City, Si/Gun, and only for a period not exceeding 20 years. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 4796, Dec. 22, 1994; Act No. 5053, Dec. 29, 1995>
 Article 42 (Liability of Business Transferee who Continues to Use Trade Name)
(1) If a transferee of a business continues to use the trade name of the transferor, he/she shall also be liable for repayment of the obligations of a third party arising out of the business of the transferor.
(2) The provisions of the preceding paragraph shall not apply in cases where the transferee, without delay after the transfer of the business, registers that he/she shall not be liable for the obligations of the transferor. The same shall apply to a third party to whom both the transferor and the transferee have, without delay after the transfer of the business, given notice to the above effect and who has received such notice.
 Article 43 (Repayment to Business Transferee)
In cases falling under paragraph (1) of the preceding Article, repayment to the transferee of claims arising out of the business of the transferor shall be valid only when the obligor effecting the performance has acted in good faith and without gross negligence.
 Article 44 (Liability of Business Transferee who has Made Public His/Her Assumption of Obligations)
If, in cases where the transferee does not continue to use the transferor's trade name, he/she has made public his/her intent to assume the obligations arising out of the business of the transferor, the transferee shall also be liable to repay such obligations.
 Article 45 (Duration of Liability of Business Transferor)
If the transferee is liable for the obligations of the transferor in accordance with Article 42 (1) or the preceding Article, the liability of the transferor to a third party shall be extinguished two years after the transfer of the business or after the assumption of obligations is made public.
PART II COMMERCIAL ACTIVITIES
 Article 46 (Basic Commercial Activities)
The following activities conducted as business are classified as commercial activities: Provided, That this shall not apply to activities conducted by persons who manufacture goods or render services solely for the purpose of earning wages: <Amended by Act No. 5053, Dec. 29, 1995; Act No. 10281, May 14, 2010>
1. Sale of movables, immovables, securities, or any other assets;
2. Lease of movables, immovables, securities, or any other assets;
3. Activities relating to manufacturing, processing, or repair;
4. Activities relating to the supply of electricity, electric wave, gas, or water;
5. Undertaking of subcontracting execution of works or labor services;
6. Activities relating to publishing, printing, or photographing;
7. Activities relating to advertisements, communications, or information;
8. Receiving and giving credit, exchanges, or other financial transactions;
9. Transactions by facilities used by the public;
10. Undertaking of agency for commercial transactions;
11. Activities relating to brokerage;
12. Activities relating to commission agency or any other intermediation;
13. Undertaking of carriages;
14. Undertaking of bailments;
15. Undertaking of trusts;
16. Mutual savings accounts and other similar acts;
17. Insurance;
18. Activities involving the collection of minerals or soil and stones;
19. Activities involving financial lease of machinery, facilities, or any other assets;
20. Activities involving business by consent to the use of a trade name, trademark, etc.;
21. Activities involving purchase, recovery, etc. of business receivables;
22. Undertaking of payment settlement affairs using a credit card, electronic currency, etc.
 Article 47 (Appendage Commercial Activities)
(1) Activities conducted by a merchant for the purpose of his/her business shall be deemed commercial activities.
(2) The activities conducted by a merchant shall be presumed effected for the purpose of his/her business.
 Article 48 (Methods of Agency)
A commercial activity conducted by an agent shall be effective toward the principal, even if the agent does not indicate that he/she is acting on behalf of the principal: Provided, That when the other party was not aware that the commercial activity was performed for the principal, such other party may also demand performance from the agent.
 Article 49 (Entrustment)
A person entrusted with commercial activities may engage in activities which he/she has not been entrusted with in so far as such activities are not contrary to the main objective of the entrustment.
 Article 50 (Continuation of Agency Rights)
Agency rights granted by a merchant in respect of his/her business shall not be extinguished by reason of death of the principal.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 51 (Binding Effect of Offer of Contract Inter Presentes)
An offer to enter into a contract made inter presentes, shall lose effect, if the offeree does not immediately accept such an offer.
 Article 52 Deleted. <by Act No. 10281, May 14, 2010>
 Article 53 (Duty of Notification of Acceptance or Rejection of Offer)
When a merchant has received an offer to enter into a contract that falls within his/her business types from a person with whom he/she is in regular business transactions, he/she shall send a notice of acceptance or rejection without delay. If he/she has neglected to send such notice, he/she shall be deemed to have accepted the offer.
 Article 54 (Statutory Interest Rate in Commercial Activities)
The statutory interest rate on obligations arising out of commercial activities shall be six percent per annum. <Amended by Act No. 1212, Dec. 12, 1962>
 Article 55 (Claim for Statutory Interest)
(1) When a merchant has loaned money to another person in respect of his/her business, the merchant may claim statutory interest.
(2) If a merchant has made substituted donation for another person within the scope of his/her business, the merchant may request for statutory interest thereon from the date of the substituted donation.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 56 (Places of Performance of Obligations Arising out of Transactions at Branch Offices)
If a place of performance of obligations arising out of transactions by a creditor at a branch office has not been specified either by the nature of the activity or by any declaration of intent by the parties, the place of performance of such obligations, other than the delivery of specific articles, shall be deemed the place of such branch office.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 57 (Joint and Several Obligations among Multiple Obligors, or between Obligor and Guarantor)
(1) If two or more persons assume obligations arising out of transactions that are commercial activities in respect of one or all of them, they shall be jointly and severally liable for the obligations.
(2) Where there is a guarantor, if the guaranty itself is a commercial activity, or if the principal obligation has arisen out of a commercial activity, the principal obligor and the guarantor shall be jointly and severally liable for the obligation.
 Article 58 (Mercantile Liens)
If a claim that has arisen from a commercial activity between merchants has become due, the obligee may, until he/she obtains performance thereof, retain things or securities belonging to the obligor that have come into his/her possession through a commercial activity with the obligor. However, this shall not apply in cases where there are other agreements between the parties.
 Article 59 (Permission of Foreclosure Agreement)
The provisions of Article 339 of the Civil Act shall not apply to pledges established for the purpose of securing claims arising out of commercial activities.
 Article 60 (Duty to Keep Goods)
Where a merchant has received a sample or any other item with an offer to enter into a contract falling within his/her business type, he/she shall, even though he/she rejects the said offer, keep such goods at the expense of the offeror. This shall not apply, however, in cases where the value of the goods is insufficient to cover the expenses of custody, or where he/she is likely to sustain damage by keeping the goods.
 Article 61 (Merchant's Right to Demand Remuneration)
A merchant who has performed any act on behalf of another person within the scope of his/her business may demand reasonable remunerations in respect of such an act.
 Article 62 (Responsibility of Merchants who Accepted Deposit of Goods)
A merchant who has accepted deposit of goods within the scope of his/her business, even though he/she does not receive any remuneration therefor, shall exercise the due care of a good manager.
 Article 63 (Transaction Hours and Performance of Obligation or Demand therefor)
Where business hours have been established by statutes or custom, the performance of an obligation or demand for performance shall be made during such hours.
 Article 64 (Statute of Limitations for Commercial Claims)
Except as otherwise provided for in this Act, the statute of limitations for a claim arising out of a commercial activity shall expire if it is not exercised for five years: Provided, That if a shorter period of statute of limitations is provided by other statutes, such provision shall apply.
 Article 65 (Securities and Provisions Applicable Mutatis Mutandis)
(1) With respect to claims for payment of money, claims for delivery of things or securities, or to securities indicating status of employees, unless otherwise provided for by other statutes, Article 12 (1) and (2) of the Bills of Exchange and Promissory Notes Act shall apply mutatis mutandis thereto, in addition to the application of Articles 508 through 525 of the Civil Act.
(2) Securities referred to in paragraph (1) may be issued after registration with the electronic registration ledger of the electronic registration authority of Article 356-2 (1). In such cases, Article 356-2 (2) through (4) shall apply mutatis mutandis.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 66 (Quasi Commercial Activities)
The provisions of this Chapter shall apply mutatis mutandis to commercial activities conducted by merchants under Article 5.
CHAPTER II SALE
 Article 67 (Rights of Sellers for Deposit and Auction of Subject Matters)
(1) If, in cases of a sale between merchants, the buyer refuses or is unable to receive the subject matter of such sale, the seller may deposit it or sell it by auction after giving peremptory notice within a reasonable period set by him/her. In such cases, he/she shall send notice thereof to the buyer without delay.
(2) If, in cases falling under the preceding paragraph, the seller is unable to give peremptory notice to the buyer, or the subject matter is likely to be lost or damaged, he/she may sell it by auction without giving peremptory notice.
(3) Where the seller has sold an object which is the subject matter of the sale by auction in accordance with the preceding two paragraphs, he/she shall deposit the balance after deducting the cost of auction therefrom: Provided, That he/she may appropriate such proceeds, in whole or in part, for the purchase.
 Article 68 (Rescission of Contract for Sale at Fixed Time)
In a sale between merchants, if, by the nature of the sale or declaration of the intent of the parties, the purpose of the contract cannot be attained unless such contract is performed at a fixed time or within a fixed period, and one of the parties has allowed the time to elapse without performance on his/her part, the other party shall be deemed to have rescinded the contract unless he/she immediately demands the performance.
 Article 69 (Buyers' Duties to Inspect Subject Matters and to Notify Defects)
(1) In cases of a sale between merchants, the buyer shall, upon receipt of the subject matter, inspect it without delay, and immediately give a notice thereof to the seller if any defect or deficiency in numbers is found therein; otherwise, he/she has no right to rescind the contract, to demand price cuts or to claim damages thereby. The same shall apply in cases where, within six months, the buyer discovers in the subject matter of the sale a defect which was not immediately discoverable.
(2) The provisions of the preceding paragraph shall not apply to a seller acting in bad faith.
 Article 70 (Buyers' Duties to Keep or Deposit Subject Matters)
(1) In cases falling under the preceding Article, the buyer shall, even though he/she has rescinded the contract, keep or deposit the subject matter of the sale at the seller's expense: Provided, That if the subject matter is likely to be lost or damaged, he/she shall, with the permission of a court, sell it by auction and keep or deposit the proceeds therefrom. <Amended by Act No. 3724, Apr. 10, 1984>
(2) When the buyer holds a public auction in accordance with the provisions of the preceding paragraph, he/she shall give a notice thereof to the seller without delay. <Amended by Act No. 3724, Apr. 10, 1984>
(3) If the place for delivery of goods at issue is in the same Special Metropolitan City, Metropolitan City or Si/Gun as the business office or domicile of the seller, the provisions of paragraphs (1) and (2) shall not apply. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 71 (Idem-Cases such as Excess Quantity)
The provisions of the preceding Article shall apply mutatis mutandis to the difference or excess, if the goods delivered by the seller to the buyer are different from the subject matter of the sale or the quantity of the goods delivered exceeds that of the sale.
CHAPTER III ACCOUNT CURRENT
 Article 72 (Definition)
An account current becomes effective when, in cases where there are regular transactions between merchants or a merchant and a non-merchant, they agree to offset the total claims and obligations arising out of transactions within a fixed period and to pay the balance thereof.
 Article 73 (Special Provisions concerning Claims and Obligations Represented by Commercial Papers)
Where claims or obligations based upon a bill or any other commercial paper are included in the account current, and the obligor on such paper fails to repay, the parties may remove items relating to such obligations from the account current.
 Article 74 (Period of Account Current)
If parties have not determined the time period for off-setting, that time period shall be six months.
 Article 75 (Approval of and Objections to Statement of Account)
When parties have approved a statement of account containing each of the items of claims and obligations, they cannot thereafter raise objections regarding any such items: Provided, That this shall not apply where there have been errors or omissions therein.
 Article 76 (Statutory Interest on Credit Balance)
(1) In regard to the balance arising out of the set-off, the creditor may claim statutory interest thereon from the day of closing of the account.
(2) Notwithstanding the provisions of the preceding paragraph, the parties may agree to stipulate interest on each item from the date of inclusion of such item in the account current.
 Article 77 (Termination)
Any party may terminate the account current at any time. In such cases, he/she may immediately close the account current and demand payment of the balance.
CHAPTER IV UNDISCLOSED ASSOCIATION
 Article 78 (Definition)
An undisclosed association shall be duly formed upon agreement between parties that one of them will make an investment in the business of the other and the other will share profits accruing from such business.
 Article 79 (Investments by Association Members)
The investments made in terms of money or property by association members shall be regarded as the property of the business owner.
 Article 80 (External Relations of Association Members)
An association member shall not have any rights or obligations to a third party with regard to the acts of the business owner.
 Article 81 (Liability Based on Consent to Use Association Member Name or Trade Name)
If an association member has consented to the use of his/her name in the trade name of the business owner, or to the use of his/her own trade name as that of the business owner, he/she shall be jointly and severally liable with the business owner for any obligations subsequent to such use.
 Article 82 (Dividend of Profits and Bearing Losses)
(1) If investment made by an association member has been reduced due to losses, he/she cannot demand any dividend of profits until such loss has been compensated.
(2) Even if a loss has exceeded the amount of the investment, the association member shall not be obligated to return the profits which he/she has taken or to increase the capital
(3) The provisions of the preceding two paragraphs shall not apply where the parties have agreed otherwise.
 Article 83 (Termination of Contracts)
(1) If the term of existence of an undisclosed association has not been determined by a contract of association, or if it has been agreed thereby that such association shall continue to exist during the life of one of the parties, either party may terminate the contract at the end of any business year: Provided, That the termination shall be notified to the other party six months prior to such termination.
(2) Where there is any unavoidable cause, either party may terminate the contract at any time, irrespective of whether the term of existence of the association has been fixed or not.
 Article 84 (Natural Reasons for Contract Termination)
A contract of an undisclosed association shall end for any of the following reasons:
1. Cessation or transfer of the business;
2. Death of, or adjudication of incompetency against, the business owner;
3. Bankruptcy of the business owner or of an association member.
 Article 85 (Legal Effects of Termination of Contracts)
Upon the termination of a contract of an undisclosed association, the business owner shall return to the association members the amount of their investments. When the investment has been diminished due to losses, the remaining balance needs to be returned.
 Article 86 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 272, 277 and 278 shall apply mutatis mutandis to undisclosed association members.
CHAPTER IV-II LIMITED PARTNERSHIP
 Article 86-2 (Definition)
A limited partnership shall be duly formed when general partners who, as managers of the partnership, bear unlimited liability for the partnership's obligations and limited partners who bear limited liability within the amount of their investment agree to make a mutual investment in, and jointly manage, a joint business.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 86-3 (Partnership Agreements)
With respect to a partnership agreement for the purpose of establishing a limited partnership, the following matters shall be entered therein and all the partners shall write their names and affix their seals, or affix their signatures, thereon:
1. Objectives;
2. Name;
3. Names or trade names, addresses, resident registration numbers of general partners;
4. Names or trade names, addresses, resident registration numbers of limited partners;
5. Locality of the principal office;
6. Matters on investment of the partners;
7. Matters on distribution of losses and profits to partners;
8. Matters on transfer of shares of limited partners;
9. In the case of having determined that at least two general partners jointly execute affairs of or act as an agent for the limited partnership, the regulation;
10. In the case of having determined that only some of the general partners execute affairs of or act as an agent for the limited partnership, the regulation;
11. Matters on distribution of the residual property upon dissolution of the limited partnership;
12. Matters on the term of existence of the limited partnership or other matters on grounds for dissolution thereof;
13. Effective date of the limited partnership agreement.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 86-4 (Registration)
(1) A general partner of a limited partnership shall register the following matters in the locality in which the principal office is located within two weeks after establishment of the partnership:
1. Matters falling under subparagraphs 1 through 5 (in cases falling under subparagraph 4, it shall be limited to cases where a limited partner executes the partnership's affairs), 9, 10, 12 and 13 of Article 86-3;
2. Objectives of partners' capital investment and, in cases of an investment in kind, the amount of such investment and the portion performed.
(2) Where any matter referred to in the subparagraphs of paragraph (1) is altered, registration of such alteration shall be made within two weeks thereafter.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 86-5 (General Partners)
(1) General partners shall have the rights and obligations to execute and represent affairs of a limited partnership, unless otherwise provided for in a partnership agreement.
(2) General partners shall execute matters under paragraph (1) with the due care of a good manager.
(3) Unless otherwise provided for in a partnership agreement, where there exist two or more general partners, if a general partner objects to any act done by another general partner regarding execution of partnership's affairs, such act shall be suspended and follow a resolution adopted by a majority of general partners.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 86-6 (Liability of Limited Partners)
(1) A limited partner shall be liable for the partnership's obligations to the extent of the amount obtained by deducting the already invested amount from the amount of capital investment determined in the partnership agreement.
(2) In cases falling under paragraph (1), upon determination of the liability amount, any amount of dividend received shall be added to the maximum amount of liability, despite that no profit has accrued to the partnership.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 86-7 (Transfer of Partner's Share)
(1) No general partner may transfer all or part of his/her share to a third party without obtaining the unanimous consent of other partners.
(2) A limited partner may transfer his/her share as provided for in the partnership agreement.
(3) A transferee who acquires the share of a limited partner shall succeed to the transferor's rights and obligations to the partnership.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 86-8 (Provisions Applicable Mutatis Mutandis)
(1) The provisions of Articles 182 (1), 228, 253, 264, and 285 shall apply mutatis mutandis to a limited partnership.
(2) The provisions of Articles 183-2, 198, 199, 200-2, 208 (2), 209, 212, and 287 shall apply mutatis mutandis to a general partner: Provided, That with respect to Articles 198 and 199, this shall not apply if the partnership agreement provides for otherwise.
(3) The provisions of Articles 199, 272, 275, 277, 278, 283 and 284 shall apply mutatis mutandis to a limited partner if the partnership agreement provides for otherwise.
(4) With respect to a limited partnership, unless otherwise provided for by this Act or by the partnership agreement, provisions concerning partnerships of the Civil Act shall apply mutatis mutandis: Provided, That with respect to limited partners, Articles 712 and 713 of the Civil Act shall not apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 86-9 (Administrative Fines)
Where a general partner of a limited partnership, an agent acting for business management or a liquidator as provided for in Article 183-2 or 253, that applies mutatis mutandis pursuant to Article 86-8, neglects registration prescribed in this Chapter, he/she shall be subject to an administrative fine not exceeding five million won.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
CHAPTER V COMMERCIAL AGENTS
 Article 87 (Definition)
A person who engages in the business of acting on behalf of a particular merchant, not as a commercial employee of any person but as agent or broker in transactions falling within the same type of business as such merchant, is called a commercial agent.
 Article 88 (Duty of Notification)
When a commercial agent has acted as agent or broker in any transaction, he/she shall give a notice thereof to the principal without delay.
 Article 89 (Prohibition of Competition)
(1) Without the permission of the principal, a commercial agent shall not make, on his/her own account or for a third party, any transaction in the same type of business as the principal, or serve as general partner or a director of a company whose purpose is to engage in the same kind of business of the principal.
(2) The provisions of Article 17 (2) through (4) shall apply mutatis mutandis if a commercial agent breaches the provisions of the preceding paragraph.
 Article 90 (Authority to Receive Notice)
A commercial agent entrusted with the sale or brokerage of goods shall be entitled to receive notice of defects in the subject matter of the sale or shortage of their volume, and any other notice relating to the performance of the contract for sale.
 Article 91 (Lien of Commercial Agents)
A commercial agent may retain goods or securities which he/she holds in his/her possession on behalf of the principal, in respect of the obligations which have arisen from his/her agency or brokerage in transactions and which have become due, until he/she receives repayment of such obligations: Provided, That this shall not apply if the parties have agreed otherwise.
 Article 92 (Termination of Contracts)
(1) If the parties have not fixed the term of the contract, either party may terminate the contract by giving two months' notice thereof.
(2) The provisions of Article 83 (2) shall apply mutatis mutandis to commercial agents.
 Article 92-2 (Commercial Agents' Right to Request Compensation)
(1) If a principal obtains new customers or his/her business transactions increase substantially through the activities of his/her commercial agent, and he/she receives profits therefrom even after the contract is terminated, the agent may request reasonable compensation from the principal, except when the contract is terminated by any reason attributable to him/her.
(2) The amount of compensation pursuant to paragraph (1) may not exceed the average annual remuneration for the last five years before the contract is terminated. If the term of the contract is less than five years, it shall be based on the average annual remuneration for such period.
(3) A claim for compensation pursuant to paragraph (1) shall be extinguished after six months has elapsed from the termination of the contract.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 92-3 (Duty of Commercial Agents to Keep Trade Secrets)
A commercial agent shall keep trade secrets of the principal which he/she has become aware of in connection with the contract, even after the contract is terminated.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
CHAPTER VI BROKERAGE
 Article 93 (Definition)
A person who engages in the business of acting as an intermediary in commercial activities between other persons is called a broker.
 Article 94 (Brokers' Authority to Receive Payment on behalf of Parties)
A broker may not accept payments or other offerings for the parties in connection with a transaction in which he/she has acted as an intermediary: Provided, That this shall not apply if any special agreement or custom provides otherwise.
 Article 95 (Duty to Retain Samples)
If a broker has received a sample in connection with an activity in which he/she has acted as an intermediary, he shall keep custody of such sample until the completion of the said activity.
 Article 96 (Duty to Deliver Contract Documents)
(1) When a transaction has been effected between the parties, the broker shall, without delay, prepare documents stating the name or trade name of each party, the date and a summary of such contract, and after writing his/her name and affixing his/her seal, or affixing his/her signature, thereon, shall deliver such documents to each party. <Amended by Act No. 5053, Dec. 29, 1995>
(2) Except in cases where the parties are to perform immediately, the broker shall, after having caused each party to write their names and affix their seals, or affix their signatures, on the documents mentioned in the preceding paragraph, deliver them to the other party. <Amended by Act No. 5053, Dec. 29, 1995>
(3) If, in cases falling under paragraphs (1) and (2), one of the parties does not accept, write his/her name and affix his/her seal, or affix his/her signature, on the document, the broker shall give a notice thereof to the other party without delay. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 97 (Duty to Maintain Books)
(1) The broker shall enter into a book the particulars mentioned in the preceding Article.
(2) Either party may, at any time, request the broker to deliver copies of the said book in connection with the brokerage transactions in which the broker has acted as an intermediary for him/her.
 Article 98 (Duty to Remain Silent about Name or Trade Name)
If either party requests the broker not to disclose his/her full name or trade name to the other party, the broker shall not enter such full name or trade name into the document mentioned in Article 96 (1) and in the copy mentioned in paragraph (2) of the preceding Article which are to be delivered to the other party.
 Article 99 (Brokers’ Obligations)
If the broker has not disclosed voluntarily, or in accordance with the provisions of the preceding Article, the full name or trade name of one of the parties to the other party, the latter may request the broker to comply with the contract.
 Article 100 (Right to Demand Remuneration)
(1) A broker shall not demand remunerations unless he/she has completed the procedures prescribed in Article 96.
(2) The broker's remunerations shall be borne equally by the parties.
CHAPTER VII COMMISSION AGENCY
 Article 101 (Definition)
A person who makes it his/her business to effect sale and purchase of goods or securities under his/her own name on the account of another party is called a commission agent.
 Article 102 (Status of Commission Agents)
By a sale or purchase made on behalf of another party, the commission agent directly acquires rights and assumes obligations with regard to the other party to the transaction.
 Article 103 (Ownership of Goods Consigned)
Goods or securities received by the commission agent from his/her principal, or goods, securities or claims acquired through a sale or purchase by the commission agent, are deemed to belong to the principal so far as the principal and the commission agent or the principal and the commission agent's creditor are concerned.
 Article 104 (Duty to Notify Sale or Purchase and to Submit Statement of Account)
If a commission agent has effected a sale or purchase consigned to him/her, he/she shall send notice of a summary of the contract and of domicile and the full name of the other party, and he/she shall submit the statement of account thereof to his/her principal without delay.
 Article 105 (Liability of Commission Agents to Secure Performance)
If the other party does not perform obligations arising from a sale or purchase which a commission agent has effected for his/her principal, the commission agent shall be liable for the performance thereof: Provided, That this shall not apply where any special agreement or custom provides otherwise.
 Article 106 (Duty to Observe Designated Price)
(1) If a commission agent has sold goods, etc. at a lower price or bought them at a higher price than the price designated by his/her principal and the commission agent bears the difference, the sale or purchase shall be binding upon the principal.
(2) When a commission agent has sold goods, etc. at a higher price or bought them at a lower price than the price designated by his/her principal, the difference shall be deemed to be profits of the principal unless otherwise agreed by the parties.
 Article 107 (Commission Agents' Right of Intervention)
(1) When a commission agent has received a commission to sell or purchase goods having the exchange quotation or securities, he/she may directly become the buyer or seller. In such cases, the price shall be determined by exchange quotation when the commission agent sends notice of the sale or purchase.
(2) In cases falling under paragraph (1), the commission agent may demand remunerations from the principal.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 108 (Effects of Damage or Defects, etc. in Consigned Goods)
(1) When a commission agent becomes aware of, after having acquired the subject matter of the sale through a commission agency, any damage or defect in the goods, or there is a fear of decomposition or decay of the goods, or commercial circumstances which show decline of commodity prices, he/she shall, without delay, send a notice thereof to his/her principal.
(2) In cases falling under the preceding paragraph, if the commission agent is unable to receive the instruction of his/her principal or such instruction is delayed, the commission agent may take an adequate measure for the benefit of his/her principal.
 Article 109 (Right to Place Goods in Public Depository or on Auction)
Where a commission agent is commissioned to make a purchase, Article 67 shall apply mutatis mutandis when the principal refuses or is unable to accept delivery of the purchased goods.
 Article 110 (Cases Where Consignor of Purchase is Merchant)
If the principal who is a merchant commissions a purchase in connection with his/her business, the provisions of Articles 68 through 71 shall apply mutatis mutandis to the relation between the principal and the commission agent.
 Article 111 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 91 shall apply mutatis mutandis to a commission agent.
 Article 112 (Application of Provisions concerning Mandate)
In addition to the provisions of this Chapter, the provisions relating to mandate shall apply to the relations between a principal and a commission agent.
 Article 113 (Quasi-Commission Agents)
The provisions of this Chapter shall apply mutatis mutandis to a person who engage in the business of making transactions other than sale or purchase under his/her own name on the account of another person.
CHAPTER VIII FORWARDING AGENT BUSINESS
 Article 114 (Definition)
A person who engages in the business of intermediation for the carriage of goods in his/her own name is called a forwarding agent.
 Article 115 (Liability for Damages)
A forwarding agent shall not be exonerated from liability for damages caused by the loss of, damage to, or delay in delivery of the goods unless he/she proves that neither he/she nor any of his/her employee has neglected to exercise due care in connection with the receipt, delivery and custody of the goods, the selection of a carrier or a forwarding agent other than himself, and other matters relating to the carriage.
 Article 116 (Right of Intervention)
(1) A forwarding agent may him/herself undertake the carriage, unless otherwise agreed by the parties. In such cases, the forwarding agent shall have the same rights and obligations as a carrier.
(2) When a forwarding agent has produced a bill of lading upon demand of the principal, he/she shall be deemed to have undertaken the carriage of the goods him/herself.
 Article 117 (Subrogation of Interceding Forwarding Agents)
(1) Where two or more persons act as forwarding agents in succession in the carriage of goods, the succeeding agent is liable to exercise the rights of his/her predecessors in their place.
(2) If, in cases falling under the preceding paragraph, a succeeding agent makes payment to his/her predecessor, he/she shall acquire the rights of such predecessor.
 Article 118 (Acquisition of Carriers' Rights)
In cases falling under the preceding Article, when a forwarding agent has made payment to a carrier, he/she shall acquire the rights of such carrier.
 Article 119 (Right to Demand Remuneration)
(1) A forwarding agent may demand remunerations immediately after he/she has delivered goods to a carrier.
(2) Where the amount of freight has been determined by a forwarding agency contract, a forwarding agent shall not demand any other remuneration unless otherwise agreed by the parties.
 Article 120 (Liens)
A forwarding agent may retain goods only to the extent of the remuneration, freight charges, and other substituted donations for another person or advances made for his/her principal in connection with the transportation of such goods.
 Article 121 (Statute of Limitations for Liability of Forwarding Agents)
(1) The statute of limitations for liability of a forwarding agent shall expire upon the lapse of one year from the date the consignee of the goods received the goods.
(2) Where all the transported goods have been lost, the period mentioned in the preceding paragraph shall be computed from the date the goods should have been delivered. <Amended by Act No. 1212, Dec. 12, 1962>
(3) The provisions of the preceding two paragraphs shall not apply where a forwarding agent or any of his/her employees has acted in bad faith.
 Article 122 (Statute of Limitations for Claims of Forwarding Agents)
The statute of limitation for any claim of a forwarding agent against the principal or the consignee shall expire if it is not exercised for one year.
 Article 123 (Provisions Applicable Mutatis Mutandis)
In addition to the provisions of this Chapter, the provisions relating to a commission agent shall apply mutatis mutandis to forwarding agents.
 Article 124 (Idem)
The provisions of Articles 136, 140 and 141 shall apply mutatis mutandis to forwarding agencies.
CHAPTER IX CARRIAGE BUSINESS
 Article 125 (Definition)
For the purposes of this Act, the term "carrier" means a person who engages in the business of carrying goods or passengers by land or on lakes and rivers, and in ports and bays.
SECTION 1 Carriage of Goods
 Article 126 (Waybills)
(1) A consignor shall, upon the request of a carrier, issue a waybill. <Amended by Act No. 8581, Aug. 3, 2007>
(2) The following particulars shall be entered into a waybill, and a consignor shall write his/her name and affix his/her seal, or affix his/her signature, thereon: <Amended by Act No. 5053, Dec. 29, 1995; Act No. 8581, Aug. 3, 2007>
1. The type of the transported goods, and their weight or dimensions, as well as the description and number of packages and markings therereon;
2. The destination;
3. The name or trade name, place of business, or domicile of the consignee and the carrier;
4. The freight charge and the distinction between advance payment and payment after arrival;
5. The place and date where the waybill was prepared.
 Article 127 (Liability for False Entries in Waybills)
(1) When a consignor has entered a false or inaccurate statement into a waybill, he/she shall be liable for damage resulting therefrom to a carrier. <Amended by Act No. 8581, Aug. 3, 2007>
(2) The provisions of the preceding paragraph shall not apply in cases where a carrier has acted in bad faith.
 Article 128 (Delivery of Bills of Lading)
(1) A carrier shall, upon the request of a consignor, deliver to him/her a bill of lading.
(2) The following particulars shall be entered into a bill of lading, and the carrier shall write his/her name and affix his/her seal, or affix his/her signatures, thereon: <Amended by Act No. 5053, Dec. 29, 1995>
1. The particulars mentioned in Article 126 (2) 1 through 3;
2. The name or trade name, place of business, or domicile of the consignor;
3. The freight charge and any other expenses incurred in relation to the transported goods, and the distinction between advance payment or payment after arrival;
4. The place and date where the bill of lading was prepared.
 Article 129 (Exchangeability of Bills of Lading)
If a bill of lading has been prepared, request for delivery of the transported goods is not possible unless the bill of lading is exchanged with the goods.
 Article 130 (Bills of Lading as Instrument to Order)
Even where a bill of lading is in the form of the order of a specified person, it may be transferred by endorsement: Provided, That the same shall not apply if the bill of lading contains entries forbidding endorsement.
 Article 131 (Legal Effects of Entries in Bills of Lading)
(1) When a bill of lading has been issued pursuant to Article 128, it is assumed that a contract of carriage has been entered into between the carrier and the consigner, as stipulated in the bill of lading, and the transported goods have been received as such.
(2) In regard to a holder who has acquired a bill of lading in good faith, a carrier is deemed to have received the transported goods, as stipulated in the bill of lading, and shall be responsible for the goods as the carrier, as stipulated in the bill of lading.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 132 (Bill of Lading-Disposition of Goods)
Where a bill of lading has been prepared, disposition of the goods is possible only by means of using the bill of lading.
 Article 133 (Bill of Lading-Property Rights' Legal Effects)
If a bill of lading has been delivered to a person who is entitled thereby to receive the transported goods, such delivery shall have the same effect as delivery of the goods themselves in respect of the acquisition of rights exercised over the transported goods.
 Article 134 (Loss of Goods and Freight Charges)
(1) If transported goods have been lost, in whole or in part, by a reason for which the consignor is not liable, the carrier may not demand freight charges therefor. If the carrier has already received all or some of the freight charges, he/she shall refund such charges.
(2) If transported goods have been lost, in whole or in part, due to their nature or inherent defects or due to the negligence of the consignor, the carrier may demand payment of the full amount of the freight charges.
 Article 135 (Liability for Damages)
A carrier shall be liable for damage resulting from the loss of, damage to or delay in the delivery of goods unless he/she proves that the carrier, forwarding agents, his/her employees, or other persons employed in respect of the carriage did not fail to exercise due care in connection with the receipt, delivery, custody, and carriage of the goods.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 136 (Liability for Valuables)
With respect to money, securities, or other valuables, the carrier shall be liable for damage only if the consignor has expressly stated the type and value thereof when consigning the transportation of the carriage.
 Article 137 (Amount of Damages)
(1) If transported goods have been totally lost or their delivery has been delayed, the amount of damages shall be determined by the price prevailing at the place of destination on the day they should have been delivered. <Amended by Act No. 10600, Apr. 14, 2011>
(2) In cases of a partial loss of or damage to goods, the amount of damages shall be determined by the price prevailing at the place of destination on the date of delivery.
(3) Where the loss of, damage to or delay in delivery of goods has arisen from the willfulness or gross negligence of the carrier, he/she shall be liable for all damages.
(4) Any freight charges and other expenses, the payment of which has been obviated by the loss of or damage to the goods, shall be deducted from the amount of the damages mentioned in the preceding three paragraphs.
 Article 138 (Joint and Several Liability and Right of Recourse of Successive Carriers)
(1) If there exist two or more successive carriers, they shall jointly and severally be liable for damage arising from the loss of, damage to, or delay in delivery of the goods.
(2) Where damages have been paid by one of the carriers in accordance with the preceding paragraph, such carrier shall have the right of recourse against the carrier who has committed an act having caused the damages.
(3) If, in cases falling under the preceding paragraph, a carrier who has committed an act having caused the damages cannot be ascertained, all the carriers shall compensate for the damages in proportion to the amount of the freight charges: Provided, That he/she is not bound to bear apportionment of the damages if he/she has proved that such damages have not incurred in his/her part of the carriage.
 Article 139 (Right to Demand Disposition of Goods)
(1) A consignor or the holder of a bill of lading, if the bill of lading is issued, may request the carrier to suspend the carriage, return the goods or take any other measure. In such cases, the carrier may demand payment of freight charges in proportion to the transportation already effected as well as of any substituted donation for another person and other expenses incurred in relation to the measures.
(2) Deleted. <by Act No. 5053, Dec 29, 1995>
 Article 140 (Status of Consignees)
(1) When the transported goods have arrived at the destination, the consignee shall acquire the same rights as that of the consignor.
(2) When the consignee requests delivery of transported goods after they arrive at the destination, the rights of the consignee shall prevail over those of the consignor. <Newly Inserted by Act No. 5053, Dec. 29, 1995>
 Article 141 (Duty of Consignees)
When the consignee has received the transported goods, he/she is obligated to pay the freight charges and any other expenses incurred in relation to the carriage, as well as any substituted donation for another person, to the carrier.
 Article 142 (Right to Deposit or to Refer to Auction in Cases where Consignee is Unknown)
(1) If the consignee cannot be ascertained, the carrier may deposit the goods to the public depository.
(2) In cases falling under paragraph (1), if the carrier gives peremptory notice to the consignor demanding instructions for the disposal of the goods, with a set reasonable period of time, but the consignor fails to give such instructions within the said period, the carrier may sell the goods by auction. <Amended by Act No. 5053, Dec 29, 1995>
(3) If the carrier deposits or sells by auction the goods under paragraphs (1) and (2), he/she shall give a notice thereof without delay to the consignor <Amended by Act No. 5053, Dec 29, 1995>
 Article 143 (In Cases of Refusal to Receive Goods or where Receipt is Impossible)
(1) The provisions of the preceding Article shall apply mutatis mutandis where a consignee refuses, or is unable to receive transported goods.
(2) In selling goods by auction, a carrier shall give peremptory notice to the consignee demanding receipt of the goods with a reasonable period set before giving such peremptory notice to the consignor. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 144 (Public Notification)
(1) If the consignor, the holder of a bill of lading, or the consignee cannot be ascertained, the carrier shall, for the benefit of the holder of the right over the goods, publicly notify the right holder that he/she should assert his/her right within a prescribed period exceeding six months.
(2) The public notification under the preceding paragraph shall be made twice or more in the Official Gazette or a daily newspaper. <Amended by Act No. 3724, Apr. 10, 1984>
(3) If, even after public notification under paragraphs (1) and (2) has been made by the carrier, no person asserts his/her right within the prescribed period, the carrier may sell the goods by auction. <Amended by Act No. 3724, Apr. 10, 1984>
 Article 145 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 67 (2) and (3) shall apply mutatis mutandis to sales by auction mentioned in the preceding three Articles.
 Article 146 (Statute of Limitations for Carriers' Liability)
(1) The liability of a carrier shall be extinguished when the consignee or the holder of a bill of lading has received the goods without reservation and has paid the freight charges and other expenses. This, however, shall not apply where there is damage to or partial loss of goods which are not immediately discoverable and the consignee has given notice thereof to the carrier within two weeks of the date of delivery.
(2) The provisions of the preceding paragraph shall not apply if the carrier or his/her employee has acted in bad faith.
 Article 147 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 117, and 120 through 122 shall apply mutatis mutandis to carriers.
SECTION 2 Carriage of Passengers
 Article 148 (Liability for Damages to Passengers)
(1) A carrier cannot be exonerated from liability for damage received in the carriage of passengers unless he/she proves that he/she or his/her employees have not neglected to exercise due care in connection with the carriage.
(2) In determining the amount of damages, the court shall take into account the conditions of the victim and his/her family.
 Article 149 (Liability for Luggage Delivered to Carriers)
(1) A carrier of passengers shall, in regards to luggage received from passengers, bear the same liability as a carrier of goods, even though he/she has not taken freight charges in respect thereto.
(2) If a passenger fails to demand delivery of his/her luggage within ten days of the date of its arrival at the destination, the provisions of Article 67 shall apply mutatis mutandis: Provided, That the notice or peremptory notice needs not to be given to a passenger whose domicile or temporary domicile is not known.
 Article 150 (Liability for Luggage not Delivered to Carriers)
No carrier shall be liable for damage caused by the loss of or damage to luggage not delivered to him/her by a passenger unless it was due to the negligence of the carrier or his/her employees.
CHAPTER X HOSPITALITY BUSINESS
 Article 151 (Definition)
Any person who engages in the business of making transactions by theaters, hotels, restaurants, or other facilities used by the public is called a hospitality service provider.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 152 (Liability of Hospitality Service Providers)
(1) Unless a hospitality service provider proves that he/she has not been negligent in giving due care in the custody of articles deposited from his/her guests to him/her or his/her employee, the hospitality service provider shall be liable for damage resulting from the loss of or damage to the articles kept in his/her custody.
(2) A hospitality service provider shall be liable for damage for the loss of or damage to portable goods brought into his/her establishments, even if not particularly deposited by the guest, when it is due to the lack of due care of the business entity or any of his/her employees.
(3) No hospitality service provider shall be exonerated from liability under paragraphs (1) and (2), even if he/she has informed that he/she is not liable for the loss of or damage to the portable goods of guests.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 153 (Liability for Valuables)
With respect to money, securities and other valuables, no hospitality service provider shall be liable for damage resulting from the loss of or damage to such articles unless the guest deposits them to the business entity by expressly stating the description and value thereof.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
 Article 154 (Statute of Limitations for Liability of Hospitality Service Providers)
(1) The statute of limitation for liability under Articles 152 and 153 shall expire, six months after a hospitality service provider returned the deposited articles to the relevant guest, or the portables were recovered by the guest.
(2) The period mentioned in paragraph (1) shall be computed from the date the guest left the establishment, if the articles were totally lost.
(3) The provisions of paragraphs (1) and (2) shall not apply where a hospitality service provider or his/her employee has acted in bad faith.
[This Article Wholly Amended by Act No. 10281, May 14, 2010]
CHAPTER XI WAREHOUSING
 Article 155 (Definition)
A person who engages in the business of storing goods in a warehouse for another person is called a warehouse business entity.
 Article 156 (Issuance of Warehouse Receipts)
(1) A warehouse business entity shall, upon the demand of the depositor, deliver a warehouse receipt to the depositor.
(2) The following matters shall be stated in a warehouse receipt, and the warehouse business entity shall write his/her name and affix his/her seal, or affix his/her signature, thereon: <Amended by Act No. 5053, Dec. 29, 1995>
1. The type, quality, quantity of the deposited goods, and the type and number of packages and markings thereon;
2. The name or trade name, place of business or domicile of the depositor;
3. The place of storage;
4. The storage fees;
5. The period for storage, if such has been fixed;
6. The amount of insurance, the duration of insurance, the name or trade name, and place of business or domicile of the insurer, in cases where the deposited goods are insured;
7. The place and date of the preparation of the warehouse receipt.
 Article 157 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 129 through 133 shall apply mutatis mutandis to warehouse receipts.
 Article 158 (Demand for Warehouse Receipt concerning Portion of Goods Divided)
(1) Any holder of a warehouse receipt may return the previous warehouse receipt and may request the warehouse operator to divide the deposited goods and deliver a warehouse receipt for each portion of the goods thus divided.
(2) Expenses incurred in the division of deposited goods and the delivery of warehouse receipts under the preceding paragraph shall be borne by the holder of the receipt.
 Article 159 (Pledges by Warehouse Receipt and Removing Portion of Goods from Warehouse)
Where the deposited goods have been pledged with a warehouse receipt and the pledgee has given his/her consent, the depositor may demand the return of any portion of the deposited goods even prior to the time for repayment of obligations. In such cases, the warehouse business entity shall enter the type, quality and quantity of the goods thus returned in the warehouse receipt.
 Article 160 (Liability for Damage)
No warehouse business entity shall be exonerated from liability for damage resulting from the loss of or damage to the deposited goods unless he/she proves that he/she or his/her employees have not neglected to exercise due care in the custody thereof.
 Article 161 (Right of Inspection of Deposited Goods, Taking Samples and Disposition for Preservation)
A depositor or the holder of a warehouse receipt may, at any time during its business hours, request the warehouse business entity to inspect the deposited goods, to take samples thereof, or to take any measures necessary for the preservation thereof.
 Article 162 (Right to Demand Storage Charges for Storage)
(1) No warehouse business entity shall demand payment of charges for storage, or any other expenses and substituted donation for another person except at the time when the goods bailed are taken out of the warehouse: Provided, That he/she may demand such payment, even prior to the taking out of the warehouse, with the lapse of the period for storage.
(2) Where any portion of the goods is removed, the warehouse business entity may demand payment of the storage fees, other expenses and substituted donation for another person in proportion thereto.
 Article 163 (Storage Periods)
(1) If a storage period has not been determined by the parties, the warehouse business entity may return the deposited goods any time after six months has elapsed from the date of entry of the goods.
(2) In cases falling under the preceding paragraph, in order to return deposited goods, advance notice shall be given two weeks prior to the return thereof.
 Article 164 (Storage Period-Unavoidable Circumstances)
In unavoidable circumstances, a warehouse business entity may return the deposited goods at any time, notwithstanding the provisions of the preceding Article.
 Article 165 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 67 (1) and (2) shall apply mutatis mutandis where the depositor or the holder of a warehouse receipt refuses, or is unable to receive the deposited goods.
 Article 166 (Statute of Limitations for Liability of Warehouse Business Entities)
(1) The statute of limitations for liability of a warehouse business entity arising from the loss of or damage to the deposited goods, shall expire after one year has elapsed from the date the goods were taken out of the warehouse.
(2) The period mentioned in the preceding paragraph shall, in cases of total loss of the deposited goods, be computed from the date of giving notice of such loss to the depositor and the holder of the warehouse receipt who is known to him/her.
(3) The provisions of the preceding two paragraphs shall not apply where a warehouse business entity or any of his/her employees has acted in bad faith.
 Article 167 (Statute of Limitations for Claims of Warehouse Business Entities)
The statute of limitations for a claim by a warehouse business entity against a depositor or the holder of a warehouse receipt shall expire if it is not exercised for one year from the date the deposited goods are removed from the warehouse.
 Article 168 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 108 and 146 shall apply mutatis mutandis to warehouse business entities. <Amended by Act No. 1212, Dec. 12, 1962>
CHAPTER XII FINANCIAL LEASE BUSINESS
 Article 168-2 (Definition)
A person who engages in the business of acquiring and borrowing machinery, facilities and other property (hereafter referred to as "article under financial lease" in this Chapter) selected by a financial lessee from any third party (hereafter referred to as "supplier" in this Chapter), and then making financial lessees use such machinery, facilities and other property is called a financial lease business entity.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-3 (Duties of Financial Lease Business Entities and Financial Lessees)
(1) A financial lease business entity shall ensure that a financial lessee can receive an article under financial lease appropriate for a financial lease agreement at the time specified in the financial lease agreement.
(2) A financial lessee shall pay a financial lease fee as soon as he/she receives an article under financial lease pursuant to paragraph (1).
(3) When the receipt of an article under financial lease has been issued, it shall be assumed that an appropriate article under financial lease has been received between the parties of the financial lease agreement under paragraph (1).
(4) Once a financial lessee has received an article under financial lease, he/she shall maintain and manage the article under financial lease with the due care of a good manager.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-4 (Duties of Suppliers)
(1) The supplier of an article under financial lease shall deliver the article to the financial lessee at the time specified in the supply agreement.
(2) If an article under financial lease is not supplied at the time and according to the details specified in the supply agreement, the financial lessee may either directly claim for damages, or request for the delivery of the article under financial lease satisfying the details of the supply agreement to the supplier.
(3) A financial lease business entity shall provide a financial lessee with necessary cooperation in exercising the right under paragraph (2).
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-5 (Cancellation of Financial Lease Agreements)
(1) Where a financial lease agreement is cancelled for a cause attributable to the financial lessee, the financial lease business entity may either request the financial lessee to pay an amount equivalent to the remaining financial lease fees in lump sum or to return the relevant article under financial lease.
(2) The demand of a financial lease business entity under paragraph (1) shall have no influence on a claim for damages filed by a financial lease business entity against a financial lessee.
(3) If a financial lessee is unable to continue to use an article under financial lease due to significant changes in circumstances, he/she may cancel the financial lease agreement by giving three months' prior notice. In such cases, the financial lessee shall compensate for damages suffered by the financial lease business entity due to cancellation of such agreement.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
CHAPTER XIII FRANCHISE BUSINESS
 Article 168-6 (Definition)
A person who carries on business according to the quality standards and business polices designated by a person (hereinafter referred to as "franchisor") who engages in the business of providing his/her own trade name, trademark, etc. (hereafter referred to as "trade name, etc." in this Chapter) after obtaining a permit for the use of the trade name, etc. from the franchisor is called a franchisee.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-7 (Duties of Franchisors)
(1) A franchisor shall provide necessary support for the business of his/her franchisees.
(2) Unless agreed otherwise, a franchisor may not engage in the same or similar type of business or enter into a franchise agreement for the same or similar type of business as a franchisee within the business area of the franchisee.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-8 (Duties of Franchisees)
(1) A franchisee shall ensure that he/she does not infringe on the rights of a franchisor for his/her business.
(2) A franchise shall keep a franchisor's trade secret he/she has become aware of in connection with a franchise agreement even after the franchise agreement is terminated.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-9 (Transfer of Business by Franchisees)
(1) A franchisee may transfer his/her business to another person with the consent of a franchisor.
(2) A franchisor shall consent to the transfer of business under paragraph (1), except in extenuating circumstances.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-10 (Cancellation of Agreements)
Under unavoidable circumstances, any party to a franchise agreement may cancel such agreement after giving prior notice to the other party within a set reasonable period, regardless of whether a stipulation concerning the period of existence is provided for in the franchise agreement.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
CHAPTER XIV BONDS PURCHASING BUSINESS
 Article 168-11 (Definition)
A person who engages in the business of purchasing and recovering business bonds (hereafter referred to as "business bonds" in this Chapter) acquired or to be acquired by another person through the sale of goods or securities, provision of services, etc. is called a bonds purchasing business entity.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
 Article 168-12 (Claims for Redemption by Bonds Purchasing Business Entities)
When a debtor of business bonds fails to settle his/her debt, a bonds purchasing business entity may require the debtor under a bonds purchasing agreement to redeem the amount of the business bonds: Provided, That this shall not apply if separately provided for in the bonds purchasing agreement.
[This Article Newly Inserted by Act No. 10281, May 14, 2010]
PART III COMPANY
 Article 169 (Definition of Company)
The term "company" used in this Act means a corporation incorporated for the purpose of engaging in commercial activities and any other profit-making activities.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 170 (Types of Companies)
Companies are categorized into five types, namely, partnership companies, limited partnership companies, limited liability companies, stock companies, and limited companies.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 171 (Address of Company)
The address of a company shall be the location of its principal office.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 172 (Incorporation of Company)
A company shall come into existence upon registration for its incorporation at the location of its principal office.
 Article 173 (Restrictions on Legal Capacity)
No company shall become a general partner of another company.
 Article 174 (Merger of Companies)
(1) A merger of companies shall be permissible.
(2) In cases where one or both sides of the companies to be merged is a stock company, limited company or limited liability company, the surviving company or the newly incorporated company as a result of the merger must be a stock company, limited company or limited liability company. <Amended by Act No. 10600, Apr. 14, 2011>
(3) A company after its dissolution may be involved only in a merger whereby it is merged into an existing company and the latter company survives after merger.
 Article 175 (Idem-Incorporation Member)
(1) Where a new company is to be incorporated after a merger, the preparation of its articles of incorporation and the performance of other activities relating to its incorporation shall be effected jointly by incorporation members appointed by each of constituent companies.
(2) Articles 230, 434 and 585 shall apply mutatis mutandis to appointment under the preceding paragraph.
 Article 176 (Dissolution Order against Company)
(1) A court may, upon the request of an interested person or a prosecutor or ex officio, order that a company be dissolved, in any of the following cases:
1. Where the company was incorporated for an illegal purpose;
2. Where a company, without good cause, failed to commence its business within one year after its establishment or discontinued its business for one year or more;
3. Where a director or a member managing the affairs of the company violated statutes or the articles of incorporation of the company, as a result of which it is deemed impermissible for the company to continue its existence.
(2) In cases where a request under the preceding paragraph has been filed, the court may, at the request of an interested person or a prosecutor or ex officio, appoint an administrator or take any other necessary disposition for the preservation of the company's assets, even before issuing the dissolution order.
(3) In cases where a request under paragraph (1) has been filed by an interested person, the court may, upon the request of the company, order such interested person to furnish adequate security.
(4) In order to make a request under the preceding paragraph, the company shall meet the minimal showing with respect to the fact that the application was filed in bad faith.
 Article 177 (Starting Point of Calculation of Registration Period)
If any matter to be registered in accordance with this Part requires a permit or authorization of government authorities, the time period for registration shall be calculated starting from the date of the arrival of the document regarding the said permit or authorization.
CHAPTER II PARTNERSHIP COMPANY
 Article 178 (Drawing up of Articles of Incorporation)
In order to incorporate a partnership company, articles of incorporation shall be drawn up jointly by at least two members of the company.
 Article 179 (Matters Absolutely Required to be Entered in Articles of Incorporation)
The following matters shall be entered in the articles of incorporation of a partnership company, and all members shall write their names and affix their seals, or shall affix their signatures, thereon: <Amended by Act No. 5053, Dec. 29, 1995>
1. Objectives;
2. Trade name;
3. Name, resident registration number and domicile of each member;
4. The subject matter, value, or the basis for valuation of investment by each member;
5. Place of the principal office;
6. Date of execution of the articles of incorporation.
 Article 180 (Registration for Incorporation)
In registration for incorporation of a partnership company, it is required to register the following matters: <Amended by Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
1. Matters listed in subparagraphs 1 through 3 and 5 of Article 179 and the location of a branch office, if any: Provided, That if a member representing the company has been designated, the domicile of other members shall be excluded;
2. The subject matter of investment by each member and, in cases of investment in kind, its value and the part already effected;
3. The time period of existence or reasons for dissolution, if such period or reasons have been determined;
4. The name, address and resident registration number of the member representing the company, if such member has been designated;
5. A provision, if any, to the effect that the company is represented jointly by two or more members.
 Article 181 (Registration for Establishment of Branch Offices)
(1) If a branch office is established simultaneously with the incorporation of the company, matters listed in the main body of subparagraph 1 of Article 180 (excluding the places of other branch offices) and in subparagraphs 3 through 5 of the same Article shall be registered at the location of such branch office within two weeks of the registration for incorporation: Provided, That in cases where a member who is to represent the company has been designated, other members shall not be registered.
(2) If a branch office is established after the incorporation of the company, the place and establishment date of such branch office shall be registered within two weeks at the location of the principal office, and matters listed in the main body of subparagraph 1 of Article 180 (excluding the places of other branch offices) and in subparagraphs 3 through 5 of the same Article shall be registered within three weeks at the place of such branch office: Provided, That in cases where a member who is to represent the company has been designated, other members shall not be registered.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 182 (Registration of Transfer of Principal Office and Branch Offices)
(1) If a company transfers its principal office, the new place and the transfer date shall be registered within two weeks at the previous place and matters listed in Article 180 (excluding the places of other branch offices) shall be registered within two weeks at a new place. <Amended by Act No. 5053, Dec. 29, 1995>
(2) If a company transfers its branch office, the new place and the transfer date shall be registered within two weeks at the location of the principal office and at the previous place of such branch office and matters listed in the main body of subparagraph 1 of Article 180 (excluding the places of other branch offices) and in subparagraphs 3 through 5 of the same Article shall be registered within two weeks at the new place: Provided, That in cases where a member who is to represent the company has been designated, other members shall not be registered. <Amended by Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
(3) Deleted. <by Act No. 5053, Dec. 29, 1995>
 Article 183 (Registration of Changes)
Where there have been changes in any of the matters listed in Article 180, such changes shall be registered within two weeks at the location of the principal office and within three weeks at the place of each branch office, respectively.
 Article 183-2 (Registration of Temporary Disposition, etc. for Suspension of Business Management)
Where a provisional disposition has been made to suspend the management of business by a member, or a representative of the member has been appointed or where there has been any change in or cancellation of such provisional disposition, the registration shall be made at the registry in the localities where the head and branch offices are located.
[This Article Newly Inserted by Act No. 6545, Dec. 29, 2001]
 Article 184 (Lawsuits for Nullification or Revocation of Incorporation)
(1) Nullification of the incorporation of a company can be asserted only by a member of the company and revocation of the incorporation of a company can be asserted only by a person who has the right to revoke the incorporation, in both cases only by a lawsuit filed within two years after the date of the incorporation.
(2) The provisions of Article 140 of the Civil Act shall apply mutatis mutandis to the revocation of incorporation under the preceding paragraph.
 Article 185 (Lawsuits for Revocation of Incorporation by Creditors)
If a member has incorporated a company with the knowledge that he/she would thereby injure his/her creditors, the creditors may demand the revocation of the incorporation of the company by a lawsuit filed against the member and the company.
 Article 186 (Exclusive Jurisdiction)
Lawsuits under the preceding two Articles shall be subject to the exclusive jurisdiction of the district court having jurisdiction over the place of the principal office of the company.
 Article 187 (Public Notice of Filing of Lawsuits)
If a lawsuit is filed for nullification or revocation of the incorporation of a company, the relevant company shall give a public notice thereof without delay.
 Article 188 (Combined Hearings of Lawsuits)
If two or more lawsuits are filed for nullification or revocation of the incorporation of a company, the court shall hear the lawsuits jointly.
 Article 189 (Correction of Defects and Dismissal of Lawsuits)
A court may dismiss a lawsuit for nullification or revocation of the incorporation of a company, if the defects constituting the cause of action have been remedied in the course of the hearing and the court considers it improper to nullify or revoke the incorporation of the company in light of the present condition of the company and all other circumstances.
 Article 190 (Legal Effects of Judgments)
A judgment confirming nullification or revocation of the incorporation of a company shall be effective against any third party: Provided, That it shall not affect the rights and obligations which have arisen between the company and its members as well as a third party before the judgment becomes final and conclusive.
 Article 191 (Liability for Losing Plaintiffs)
If plaintiffs in a lawsuit for nullification or revocation of the incorporation of a company have lost in such lawsuit and it is found that they, in bad faith or by gross negligence, filed such lawsuit, they shall be jointly and severally liable for damage against the company.
 Article 192 (Registration of Nullification or Revocation of Incorporation)
Where a judgment confirming nullification or revocation of the incorporation of a company has become final and conclusive, such fact shall be registered at the location of the principal office and branch offices of the company.
 Article 193 (Effects of Judgment Confirming Nullification or Revocation of Incorporation)
(1) Where a judgment confirming nullification or revocation of the incorporation of a company has become final and conclusive, the company shall be liquidated as if the company had been dissolved.
(2) In cases falling under the preceeding paragraph, the court may appoint a liquidator upon the request of any member of the company or any other interested person.
 Article 194 (Nullification or Revocation of Incorporation and Continuation of Company)
(1) If a judgment confirming nullification or revocation of the incorporation of a company has become final and conclusive and the cause of such nullification or revocation rests only with a particular member, the company may remain incorporated with the unanimous consent of all the other members.
(2) In cases falling under the preceding paragraph, a member in respect of whom the cause of the nullification or revocation rests shall be deemed to have withdrawn from the company.
(3) The provisions of Article 229 (2) and (3) shall apply mutatis mutandis in cases falling under the preceding two paragraphs.
SECTION 2 Internal Relationship of Company
 Article 195 (Provisions Applicable Mutatis Mutandis)
Unless otherwise provided for in the articles of incorporation or in this Act, provisions concerning partnerships of the Civil Act shall apply mutatis mutandis to the internal relationship of a partnership company.
 Article 196 (Investment Contributions via Credits)
A member who uses a credit for the purpose of his/her investment contribution shall be responsible for such payment, if the obligor fails to pay the credit by the due date. In such cases, the member shall not only pay the interest but also shall be liable for damage sustained thereby.
 Article 197 (Transfer of Equity Interest)
No member shall, without the consent of all the other members, transfer his/her equity interest to other persons in whole or in part.
 Article 198 (Prohibition of Competition by Members)
(1) No member shall, without the consent of all the other members, conduct on his/her own account or on the account of a third party any transaction which is in the same type of business as the company or serve as a general partner or a director of another company the corporate objective of which is the same kind of business as the company.
(2) In cases where any member has effected a transaction in violation of the preceding paragraph, the company may regard such transaction as effected on the account of the company if such transaction was conducted for that member's own account, and the company may request that member to transfer any profit accrued therefrom if such transaction was effected on the account of a third party. <Amended by Act No. 1212, Dec. 12, 1962>
(3) The provisions of the preceding paragraph shall not affect any claim for damages by the company against the relevant member.
(4) The claim rights mentioned in paragraphs (2) and (3) shall be exercised by a resolution adopted by affirmative votes of a majority of other members of the company and shall be extinguished two weeks of the date any of the other members has become aware of such transaction or one year from the date of such transaction.
 Article 199 (Self-Transactions of Members)
A member may enter into a transaction with the company on his/her own account or on the account of a third party only if a resolution approving such has been adopted by affirmative votes of a majority of other members of the company. In such cases, Article 124 of the Civil Act shall not apply.
 Article 200 (Rights and Obligations of Business Management)
(1) Unless otherwise provided for in the articles of incorporation, each member has the rights and obligations to manage the affairs of the company.
(2) If other members raise an objection in respect to the management of affairs by any member, the said member shall immediately suspend such act and follow a decision of a majority of all the members.
 Article 200-2 (Authority of Representatives)
(1) Unless otherwise stipulated in the provisional disposition order, no representative under Article 183-2 shall perform any act that does not constitute the ordinary affairs of the corporation: Provided, That the same shall not apply where a permit has been obtained from the court.
(2) Where the representative has committed an act in contravention of the provisions of paragraph (1), the company shall be liable to bona fide third parties.
[This Article Newly Inserted by Act No. 6545, Dec. 29, 2001]
 Article 201 (Managing Members)
(1) If one or more members have been designated by the articles of incorporation as managing members, those members shall have the rights and obligations to manage the affairs of the company.
(2) If other managing members raise an objection in respect to an act of management by a managing member, that member shall immediately suspend such act and follow the decision of a majority of all the managing members.
 Article 202 (Joint Managing Members)
Where several members have been designated by the articles of incorporation to jointly manage the affairs of the company, act of management shall not be taken without the consent of all such joint managing members: Provided, That this shall not apply where there is a fear of delay.
 Article 203 (Appointment and Dismissal of Managers)
Unless otherwise provided for in the articles of incorporation, the appointment and dismissal of a manager shall be decided by a majority of all the members, even where managing members have been designated.
 Article 204 (Amendment of Articles of Incorporation)
The consent of all the members shall be required in order to amend the articles of incorporation.
 Article 205 (Adjudication on Forfeiture of Power against Managing Members)
(1) If a managing member is clearly unfit to manage the company or he/she has breached material duties, a court may, upon the request of a member, adjudicate the forfeiture of the power against such managing member.
(2) When a judgment under the preceding paragraph has become final and conclusive, such fact shall be registered at the place of the principal office and branch offices of the company.
 Article 206 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 186 shall apply mutatis mutandis to lawsuits under the preceding Article.
SECTION 3 External Relationship of Company
 Article 207 (Representative of Company)
If a company has not designated managing members to be in charge of the management of affairs by the articles of incorporation, each of the members shall represent the company. If several managing members were designated to take charge of the management, each of them shall represent the company: Provided, That the company may designate a particular person to represent the company from among the managing members, by the articles of incorporation or with the unanimous consent of all the members.
 Article 208 (Joint Representatives)
(1) A company may, either by the articles of incorporation or with the unanimous consent of all the members, provide that two or more members shall jointly represent the company.
(2) Even in cases under the preceding paragraph, any declaration of intent made by a third party to the company shall be effective by giving such declaration of the intent to any one of the joint representative members.
 Article 209 (Authority of Representative Members)
(1) A representative member shall be authorized to do all judicial or extra-judicial acts relating to the business of the company.
(2) The effect of any restriction placed on the authority under the preceding paragraph shall not be asserted against a third party acting in good faith.
 Article 210 (Liability for Damage)
Where a representative member has caused damage to another person by his/her act of business administration of the company, the company and such representative member shall be jointly and severally liable for the repayment.
 Article 211 (Representatives in Lawsuits between Company and Members)
If no representative member has been designated in cases of a lawsuit filed by a company against its member or a lawsuit filed by a member of a company against the company, a member to represent the company in such lawsuit shall be selected by a resolution adopted by a majority of all the other members.
 Article 212 (Liability of Members)
(1) If the assets of a company are insufficient to fully repay its all obligations, all the members shall be jointly and severally liable for the repayment of the obligations.
(2) The provisions of the preceding paragraph shall also apply if a compulsory execution on the company's assets has proved ineffective.
(3) The provisions of the preceding paragraph shall not apply if any member proves that the company is capable of performing its obligations and that the execution can easily be effected.
 Article 213 (Liability of New Members)
A member who joined a company after its establishment shall assume the same liability as other members with respect to the obligations owed by the company arising before he/she joined the company.
 Article 214 (Defenses of Members)
(1) In cases where a claim is raised against a member with respect to the obligations of a company, he/she may oppose the claimant by any defense which the company might have asserted.
(2) If a company has a right of set-off, cancellation or rescission against the claimant, members may refuse the performance of obligations in respect of a claim under the preceding paragraph.
 Article 215 (Liability of Members by Estoppel)
Where a non-member of a company has acted in a manner that deceives others into mistaking him/her for a true member, he/she shall assume the same liability as true members against any person who has engaged in a transaction with the company on the basis of such misconception.
 Article 216 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 205 and 206 shall apply mutatis mutandis to the representative member of a company.
SECTION 4 Withdrawal of Members
 Article 217 (Members' Right to Withdraw from Company)
(1) Where the articles of incorporation of a company do not specify the time period for the existence of the company or provide that the company shall continue to exist during the life of a particular member, any member may withdraw at the end of any business year: Provided, That he/she shall give a notice six months prior to the withdrawal.
(2) Where inevitable reasons exist, a member may withdraw at any time.
 Article 218 (Reasons for Withdrawal of Members)
In addition to the cases falling under the preceding Article, a member shall withdraw from the company for any of the following reasons:
1. Occurrence of any event specified in the articles of incorporation;
2. Consent of all members;
3. Death;
4. Incompetency;
5. Bankruptcy;
6. Expulsion.
 Article 219 (Notice of Succession to Rights at Death of Members)
(1) Where the articles of incorporation provide that, if a member dies, his/her successors may succeed to the deceased member's rights and obligations against the company to become a member, the successors shall give a notice of either succession or renunciation to the company within three months from the date he/she has become aware of the commencement of succession.
(2) If three months have elapsed without a successors's notice under the preceding paragraph, the successors shall be deemed to have renounced the right to become a member.
 Article 220 (Adjudication on Expulsion)
(1) Where any of the following reasons exists in respect of a member, the company may, by a resolution adopted by a majority of all the other members, seek an adjudication from the court for expulsion of such member:
1. Where such member failed to perform a duty to contribute;
2. Where such member acted in violation of Article 198 (1);
3. Where such member did an inappropriate act with respect to the management of the affairs or the representation of the company, or where such member managed the affairs of the company or represented the company without authority;
4. Where there is any other important reason.
(2) The provisions of Articles 205 (2) and 206 shall apply mutatis mutandis in cases falling under the preceding paragraph.
 Article 221 (Settlement of Accounts between Expelled Members and Company)
The settlement of accounts between an expelled member and the company shall be calculated based on the status of the company's assets at the time of the filing of the action for expulsion, and legal interest shall accrue therefrom.
 Article 222 (Refund of Equity Interest)
A withdrawn member shall be entitled to a refund of his/her equity interest even where the subject matter of his/her investment was personal services or credibility: Provided, That this shall not apply if it is provided otherwise by the articles of incorporation.
 Article 223 (Seizure on Equity Interest)
A seizure upon the equity interest of a member shall be effective with regard to his/her right to demand a dividend and refund the equity interest for the future.
 Article 224 (Requests for Withdrawal of Members by Creditors who Seized Members' Equity Interest)
(1) A creditor who seized a member's equity interest in the company may cause the member to withdraw at the end of any business year: Provided, That he/she shall give a notice to the company and the relevant member six months prior to the withdrawal.
(2) A prior notice under the proviso to the preceding paragraph shall lose its effect when the relevant member makes repayment or furnishes an adequate security.
 Article 225 (Liability of Withdrawn Members)
(1) A withdrawn member shall be liable, as if he/she continued to be a member, for the obligations of the company arising before the registration of his/her withdrawal at the place of the principal office, for the period of two years subsequent to the above registration.
(2) The provisions of the preceding paragraph shall apply mutatis mutandis to a member who has transferred his/her equity interest in the company to other persons.
 Article 226 (Withdrawn Members' Right to Demand Change in Corporate Name)
Where the name of a withdrawn member has been used in the company's trade name, such member may request the company to terminate use of such name.
SECTION 5 Dissolution of Company
 Article 227 (Reasons for Dissolution)
A company shall be dissolved for any of the following reasons:
1. Expiration of the time of existence of the company or occurrence of any events specified in the articles of incorporation;
2. Consent of all the members;
3. Where there is only one member left;
4. Merger;
5. Bankruptcy;
6. Order or judgment of a court.
 Article 228 (Registration of Dissolution)
In cases of dissolution of a company for reasons other than a merger or the initiation of bankruptcy proceedings, such fact shall be registered within two weeks at the location of the principal office and within three weeks at the location of each branch office, both period starting from the day on which the ground for dissolution arises.
 Article 229 (Continuation of Company)
(1) In cases falling under subparagraphs 1 and 2 of Article 227, the company may continue to exist with the consent of all or some of the members: Provided, That the dissenting members shall be deemed to have withdrawn.
(2) In cases falling under subparagraph 3 of Article 227, the company may continue to exist by admitting a new member.
(3) In cases falling under the preceding two paragraphs, if registration for dissolution was already effected, the continuation of existence of the company shall be registered within two weeks at the place of the principal office and within three weeks at the place of each branch office.
(4) The provisions of Article 213 shall apply mutatis mutandis to the liability of new members pursuant to paragraph (2).
 Article 230 (Resolution for Merger)
The consent of all the members shall be required for a merger of a company.
 Article 231 Deleted. <by Act No. 3724, Apr. 10, 1984>
 Article 232 (Objections by Creditors)
(1) Within two weeks after the date of the resolution for a merger, the company shall make public notice to the effect that the company's creditors with objections to the merger, if any, submit such objections within a specified period of time and shall give peremptory notice to respective creditors known to the company. In such cases, the said period shall not be less than one month. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5591, Dec. 28, 1998>
(2) A creditor who fails to raise an objection within the period set in paragraph (1) shall be deemed to have approved the merger. <Amended by Act No. 3724, Apr. 10, 1984>
(3) If a creditor has raised an objection, the company shall make repayment to the creditor or furnish adequate security, or entrust assets of reasonable value to a trust company for the purpose of repaying the creditor.
 Article 233 (Registration of Merger)
In cases of a merger, the registration of alteration concerning the surviving company, registration of the dissolution of the non-surviving company and the registration of the company newly incorporated as a result of the merger shall be made within two weeks at the place of the principal office and within three weeks at the place of each branch office.
 Article 234 (Effectuation of Merger)
A merger of companies shall take effect upon registration under the preceding Article by the surviving company or the company newly incorporated as a result of the merger at the place of its principal office.
 Article 235 (Legal Effects of Merger)
A surviving company or a company newly incorporated as a result of a merger shall succeed to the rights and obligations of the company which disappeared.
 Article 236 (Filing of Lawsuit for Nullification of Merger)
(1) The nullification of a merger of companies shall be pursued only by a lawsuit, the plaintiff of which is limited to the members, liquidators, or bankruptcy administrators of each company or creditors who do not approve such merger.
(2) The action under the preceding paragraph shall be filed within six months from the date of registration under Article 233.
 Article 237 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 176 (3) and (4) shall apply mutatis mutandis where a creditor of a company has filed a lawsuit under the preceding Article.
 Article 238 (Registration of Nullification of Merger)
When a court judgment confirming the nullification of a merger has become final and conclusive, registration of the alteration concerning the surviving company, registration of restitution by the non-surviving company and registration of dissolution by the company newly incorporated as a result of the merger shall be made at the place of the principal office and each branch office.
 Article 239 (Final Judgment of Nullification and Attribution of Rights and Obligations of Companies)
(1) When a court judgment confirming the nullification of a merger has become final and conclusive, the company executing the merger shall be jointly and severally liable to discharge obligations that the surviving company or the company newly incorporated after the merger has incurred after the merger.
(2) Any property which has been acquired after the merger by the surviving company or the company newly incorporated as a result of the merger shall be jointly owned by the companies executing the merger.
(3) If, in cases falling under the preceding two paragraphs, companies executing a merger have failed to determine the proportions of assuming the liabilities or equity interests, a court shall, upon the request of such companies, determine those proportions, by taking into account the status of the property of each company as at the time of the merger and all other circumstances.
 Article 240 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 186 through 191 shall apply mutatis mutandis to actions for nullification of a merger.
 Article 241 (Requests for Dissolution by Members)
(1) Where unavoidable grounds exist, any member may file a request with court for dissolution of the company.
(2) The provisions of Articles 186 and 191 shall apply mutatis mutandis in cases falling under the preceding paragraph.
 Article 242 (Organizational Change)
(1) With the consent of all the members, a partnership company may be converted to a limited partnership company either by making a particular member become a limited partner or by adding a new limited partner.
(2) The provisions of the preceding paragraph shall apply mutatis mutandis to the continuation of existence of a company under Article 229 (2).
 Article 243 (Registration of Organizational Change)
When a partnership company has been converted to a limited partnership company, registration of dissolution by the partnership company and registration for incorporation by the limited partnership company shall be made within two weeks at the place of the principal office and within three weeks at the place of each branch office.
 Article 244 (Liability of Persons who Have Become Limited Partners as a result of Organizational Change)
No former member of a partnership company who becomes a limited partner in accordance with Article 242 (1) shall be exonerated from unlimited liability with respect to the obligations of the company arising before the registration under the preceding Article at the place of the principal office, for two years subsequent to the said registration.
SECTION 6 Liquidation
 Article 245 (Companies in Process of Liquidation)
To the extent necessary for achieving the objectives of liquidation, a company shall be deemed to continue to exist even after its dissolution.
 Article 246 (In Cases where Several Successors of Equity Interest Exist)
Where there exist two or more successors upon the death of a member after dissolution of a company, they shall designate one person from among themselves to exercise the rights of the member in connection with the liquidation. In the absence of such designation, notice or peremptory notice given by the company to any one of the successors shall be effective as to all the successors.
 Article 247 (Voluntary Liquidation)
(1) Methods for disposing of the assets of a dissolved company may be determined by the articles of incorporation or with the consent of all the members. In such cases, an inventory of assets and balance sheets shall be prepared within two weeks from the date of occurrence of the ground for dissolution.
(2) The provisions of the preceding paragraph shall not apply in cases of dissolution of a company under subparagraph 3 or 6 of Article 227.
(3) The provisions of Article 232 shall apply mutatis mutandis in cases falling under paragraph (1).
(4) In cases falling under paragraph (1), when there exists a person who has seized the equity interest of a member of the company, the consent of such person shall be obtained.
(5) The company under paragraph (1) shall register the completion of liquidation within two weeks at the place of its principal office and within three weeks at the place of its branch office after the disposal of its assets. <Newly Inserted by Act No. 5053, Dec. 29, 1995>
 Article 248 (Voluntary Liquidation and Protection of Creditors)
(1) If a company has harmed any of its creditors by disposing of its assets in violation of paragraph (3) of the preceding Article, such creditor may request the court to nullify such disposal.
(2) The provisions of Article 186 of this Act and the proviso to Article 406 (1), Articles 406 (2) and 407 of the Civil Act shall apply mutatis mutandis to requests for revocation under the preceding paragraph.
 Article 249 (Protection of Creditors who have Seized Equity Interest)
If a company has disposed of its assets in violation of Article 247 (4), a party who has seized the equity interest of a member of the company may demand that the company pay an amount equivalent to the value of such equity interest. In such cases, the preceding Article shall apply mutatis mutandis.
 Article 250 (Statutory Liquidation)
If the method of disposition of the assets of a dissolved company has not been determined pursuant to Article 247 (1), liquidation shall be carried out in accordance with Articles 251 through 265 except for cases of a merger or the initiation of corporate bankruptcy.
 Article 251 (Liquidators)
(1) In cases of dissolution of a company, a liquidator shall be appointed by a majority of all the members.
(2) When no liquidator has been appointed, the managing members shall become liquidators.
 Article 252 (Liquidators Appointed by Court)
In cases of dissolution of a company pursuant to subparagraph 3 or 6 of Article 227, the court shall appoint a liquidator upon request of members, interested persons or a prosecutor or ex officio.
 Article 253 (Registration of Liquidators)
(1) The following matters shall be registered within two weeks at the location of the principal office and within three weeks at the location of each branch office, which shall run from the date of appointment of a liquidator if a liquidator has been appointed or from the date of dissolution if a managing member has become a liquidator: <Amended by Act, No. 5053, Dec. 29, 1995>
1. The name, resident registration number and address of the liquidator: Provided, That if a representative liquidator has been appointed from among several liquidators, addresses of liquidators other than the representative liquidators shall be excluded;
2. The name of the representative liquidator if such has been appointed;
3. Provisions to the effect that two or more liquidators shall jointly represent the company, if so determined.
(2) The provisions of Article 183 shall apply mutatis mutandis to registration under paragraph (1). <Amended by Act No. 5053, Dec. 29, 1995>
 Article 254 (Duties and Powers of Liquidators)
(1) A liquidator shall have the following duties:
1. To wind up pending affairs;
2. To collect debts and to repay obligations;
3. To dispose of assets for realization;
4. To distribute residual property.
(2) Where two or more liquidators exist, acts in connection with the duties of liquidation shall be determined by a resolution adopted by a majority vote of them.
(3) Liquidators who shall represent the company are authorized to do all judicial or extrajudicial acts in connection with duties set forth in paragraph (1).
(4) The provisions of Article 93 of the Civil Act shall apply mutatis mutandis to a partnership company.
 Article 255 (Representation of Company by Liquidators)
(1) Where managing members become liquidators, they shall represent the company as heretofore provided.
(2) Where a court appoints two or more liquidators, it may designate one who is to represent the company or may decide joint representation by several of them.
 Article 256 (Duties of Liquidators)
(1) A liquidator shall, without delay after his/her inauguration, investigate the present condition of the company's assets, prepare an inventory list of assets and a balance sheet and deliver copies thereof to respective members.
(2) A liquidator shall report on the progress made in the liquidation at any time upon the request of a member.
 Article 257 (Transfer of Business)
Where a liquidator intends to transfer, in whole or in part, the business of the company, resolution with a majority vote of all the members shall be required.
 Article 258 (Incapacity to Fully Repay Obligations and Requests for Investment)
(1) If the existing assets of a company are insufficient to fully repay its obligations, a liquidator may request the members to make an investment irrespective of the date of repayment of the obligations.
(2) The amount of investment under the preceding paragraph shall be determined in proportion to the ratio of investment by respective members.
 Article 259 (Repayment of Obligations)
(1) A liquidator may repay the obligations of a company which have not yet come due.
(2) In cases falling under the preceding paragraph, an obligation in respect of which no interest was stipulated, the amount of the obligation deducted by the statutory interest up to the date of repayment shall be paid.
(3) The provisions of the preceding paragraph shall apply mutatis mutandis to an obligation in respect of which the stipulated interest is less than the statutory interest rate.
(4) In cases falling under paragraph (1), conditional obligations, obligations the term of which is undetermined, and any other claims against the company the value of which is undetermined shall be discharged according to the valuation of a court-appointed assessor.
 Article 260 (Distribution of Residual Property)
No liquidator shall distribute the assets of a company to its members until after all the obligations of the company have been repaid completely: Provided, That the liquidator may distribute the residual property reserving the property necessary for the repayment of such obligation in dispute.
 Article 261 (Removal of Liquidators)
A liquidator appointed by the members may be dismissed by a resolution adopted by a majority vote of all the members.
 Article 262 (Idem)
If a liquidator is clearly unfit to perform his/her duties or has breached any of his/her material duties, a court may, upon the request of a member or any interested person, dismiss such liquidator.
 Article 263 (Completion of Duties of Liquidators)
(1) When the duties of a liquidator have been completed, he/she shall prepare a statement of account without delay and deliver a copy thereof to each member for approval.
(2) If a member who received the statement of account in the preceding paragraph has not raised an objection thereto within one month, he/she shall be deemed to have approved it: Provided, That this shall not apply where a liquidator has committed any dishonest act.
 Article 264 (Registration of Completion of Liquidation)
Upon the completion of liquidation, a liquidator shall register such fact within two weeks at the place of the principal office and within three weeks at the place of each branch office from the date of approval of all the members under the preceding Article.
 Article 265 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 183-2, 199, 200-2, 207, 208, 209 (2), 210, 382 (2), 399 and 401 shall apply mutatis mutandis to liquidators.
[This Article Wholly Amended by Act No. 6545, Dec. 29, 2001]
 Article 266 (Preservation of Books and Documents)
(1) Books and records as well as important documents relating to the business and liquidation of a company shall be preserved for ten years after the registration of the completion of liquidation at the location of the principal office: Provided, That the slips or similar documents shall be preserved for five years. <Amended by Act No. 5053, Dec. 29, 1995>
(2) In cases falling under paragraph (1), a custodian and the methods of preservation shall be determined by a resolution adopted by a majority vote of all the members. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 267 (Statute of Limitations for Members' Liability)
(1) The statute of limitations for member's liability under Article 212 shall expire when five years have elapsed from the date of registration of dissolution at the place of the principal office.
(2) Even after the lapse of the period mentioned in the preceding paragraph, if there is residual property that has not been distributed, creditors of a company may request the repayment of obligations in respect of such residual property.
CHAPTER III LIMITED PARTNERSHIP COMPANY
 Article 268 (Organization of Company)
A limited partnership company shall be composed of both general partners and limited partners.
 Article 269 (Provisions Applicable Mutatis Mutandis)
Unless otherwise provided for in this Chapter, provisions governing partnership companies shall apply mutatis mutandis to limited partnership companies.
 Article 270 (Matters Absolutely Required to be Entered in Articles of Incorporation)
The articles of incorporation of a limited partnership company shall state all the matters listed in Article 179 and shall further specify whether the liability of each member is limited or unlimited.
 Article 271 (Matters Requiring Registration)
(1) When filing for registration for the incorporation of a limited partnership, each partner's unlimited or limited liability shall be registered, in addition to the matters listed in the subparagraphs of Article 180.
(2) When a limited partnership company establishes or relocates a branch office, it shall file for registration, at the location of the branch office or at the new branch office, of the matters listed in the main body of subparagraph 1 of Article 180 (excluding the places of other branch offices) and in subparagraphs 3 through 5 of the same Article: Provided, That in cases where a general partner who is to represent the company has been designated, other members shall not be registered.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 272 (Investment by Limited Partners)
No limited partner shall use, as the subject matter for their investments, personal services or credibility.
 Article 273 (Rights and Obligations of Business Management)
Unless otherwise provided for in the articles of incorporation, each of general partners shall have the rights and obligations to manage the business of the company.
 Article 274 (Appointment and Dismissal of Managers)
The appointment and removal of a manager shall be made by a resolution adopted by a majority vote of general partners even where managing members have been specifically designated.
 Article 275 (Freedom of Competition for Limited Partners)
A limited partner may, without the consent of the other members, engage in, on his/her own account or on the account of a third party, any transaction in the same type of business as the company or serve as a general partner or a director of another company the business objective of which is the same type of business as the company.
 Article 276 (Transfer of Equity Interest of Limited Partners)
With the consent of all the general partners, a limited partner may transfer to another party his/her equity interest in whole or in part. The same shall apply even where such transfer requires an amendment to the articles of incorporation.
 Article 277 (Right of Inspection of Limited Partners)
(1) A limited partner may, at the end of each business year but only during its business hours, inspect the books of account, balance sheets and other documents of the company and may investigate its business and the state of its assets. <Amended by Act No. 3724, Apr. 10, 1984>
(2) Where any material ground exists, a limited partner may, with the permission of a court, conduct an inspection and investigation under paragraph (1) at any time. <Amended by Act No. 3724, Apr. 10, 1984>
 Article 278 (Prohibition of Management and Representation by Limited Partners)
No limited partner shall manage the business of the company or represent the company.
 Article 279 (Liability of Limited Partners)
(1) A limited partner shall be liable to repay the obligations of the company to the extent of the amount of his/her investment deducting the amount which he/she has already invested.
(2) If any dividends were distributed regardless of the fact that no profit has accrued to the company, such amount shall be added in determining the liability for repayment.
 Article 280 (Liability in Cases of Capital Investment Reduction)
In cases where a limited partner reduces his/her capital investment, he/she shall not be exonerated from liability under the preceding Article with regard to the obligations of the company arising before the registration of such reduction at the place of the principal office, for two years after such registration.
 Article 281 (Liability of General Partners by Estoppel)
(1) Where a limited partner has acted in a manner to induce others to mistake him/her for an unlimited liability member, he/she shall assume the same liability as a general partner against any person who has made a transaction with the company due to such misconception.
(2) The provisions of the preceding paragraph shall apply mutatis mutandis where a limited partner has acted in a manner to mislead others as to the extent of his/her liability.
 Article 282 (Liability of Members whose Liability Has been Changed)
The provisions of Article 213 shall apply mutatis mutandis where a limited partner becomes an unlimited liability member, and the provisions of Article 225 shall apply mutatis mutandis where a general partner becomes a limited partner.
 Article 283 (Death of Limited Partners)
(1) Upon death of a limited partner, his/her successor shall succeed to the equity interest of the deceased in the company and shall become a member.
(2) Where, in cases falling under the preceding paragraph, there exist two or more successors, such successors shall appoint from among themselves one person who shall exercise the right of the member. If no such appointment is made, notice or peremptory notice of the company given to any one of the successors shall be effective upon all the successors.
 Article 284 (Incompetency of Limited Partners)
No limited partner shall be required to leave the company, even after he/she is declared incompetent.
 Article 285 (Dissolution and Continuation of Company)
(1) A limited partnership company shall be dissolved if all the general partners or all the limited partners leave the company.
(2) The general partners or limited partners remaining in cases falling under the preceding paragraph may, with their unanimous consent, continue the existence of the company by adding new limited partners or general partners.
(3) The provisions of Articles 213 and 229 (3) shall apply mutatis mutandis in cases falling under the preceding paragraph.
 Article 286 (Organizational Change)
(1) With the consent of all the members, a limited partnership company may be converted to a partnership company and continue to exist.
(2) In cases where all the limited partners have withdrawn from the company, the general partners may, with their unanimous consent, convert its organization to a partnership company and continue to exist.
(3) In cases of the preceding two paragraphs, registration of dissolution shall be made by the limited partnership company, and registration for incorporation shall be made by the partnership company, within two weeks at the place of the principal office and within three weeks at the place of each branch office.
 Article 287 (Liquidators)
A liquidator of a limited partnership company shall be appointed by a majority vote of the general partners. If no such appointment is made, the managing member who has been in charge of the management shall become a liquidator.
CHAPTER III-II LIMITED LIABILITY COMPANY
 Article 287-2 (Preparation of Articles of Incorporation)
In order to incorporate a limited liability company, members shall prepare the articles of incorporation.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-3 (Matters Required to be Entered in Articles of Incorporation)
The following matters shall be entered in the articles of incorporation, and each member shall write his/her name and affix his/her seal, or affix his/her signatures, thereon:
1. The matters listed in subparagraphs 1 through 3, 5 and 6 of Article 179;
2. The objective and amount of capital investments of the members;
3. The amount of capital;
4. The names (in cases of a corporation, referring to its business name) and addresses of the managers.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-4 (Investment upon Incorporation)
(1) No member shall use, as the subject matter for their investments, personal services or credibility.
(2) Members shall complete execution of their capital or other property investments no later than the time of registration for incorporation after drawing up the articles of incorporation.
(3) A member who is to make an investment in kind shall deliver to the limited liability company the property which is the subject matter of the investment without delay by the due date and, if registration, records, or a creation or transfer of rights is required, he/she shall prepare and deliver all the documents therefor.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-5 (Registration for Incorporation, etc.)
(1) A limited liability company shall come into existence upon registration of the following matters at the place of its principal office:
1. The matters listed in subparagraphs 1, 2 and 5 of Article 179 and the place of a branch office, if any;
2. The matters listed in subparagraph 3 of Article 180;
3. The amount of capital;
4. The name, address and resident registration number of each manager (in the case of a corporation, referring to its business name, address and corporate registration number): Provided, That where a manager who is to represent the limited liability company has been designated, other members shall be excluded;
5. In cases where a person who is to represent the limited liability company has been designated, the name or business name and address of such person;
6. The method of public notification, if such method has been determined by the articles of incorporation;
7. Provisions pertaining to the joint representation of the limited liability company by two or more managers, if so determined.
(2) Where a limited liability company establishes a branch office, the provisions of Article 181 shall apply mutatis mutandis.
(3) Where a limited liability company transfers its principal or branch offices, the provisions of Article 182 shall apply mutatis mutandis.
(4) Where there have been changes in any of the matters listed in paragraph (1), such changes shall be registered within two weeks at the place of the principal office and within three weeks at the place of each branch office, respectively.
(5) Where there has been a provisional disposition to suspend the management of business by a manager of a limited liability company, or a representative of the manager has been appointed or where there has been any changes in or cancellation of such provisional disposition, the registration shall be made at the registry in the localities where the head and branch offices are located.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-6 (Provisions Applicable Mutatis Mutandis)
With respect to nullification or revocation of incorporation of a limited liability company, the provisions of Articles 184 through 194 shall apply mutandis mutatis. In such cases, "members" in Article 184 shall be construed as "members and managers".
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 2 Internal Relationship of Limited Liability
 Article 287-7 (Liability of Members)
Unless otherwise provided for in this Act, the liability of a member shall be limited to the amount of his/her investment.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-8 (Transfer of Equity Interest)
(1) No member may transfer his/her equity interest, in whole or in part, to a third party without the consent of the other members.
(2) Notwithstanding the provisions of paragraph (1), a member who is not a managing member may transfer to another person his/her equity interest, in whole or in part, with the unanimous consent of all the managing members: Provided, That in the absence of such managing members, the consent of all the members shall be obtained.
(3) Notwithstanding the provisions of paragraphs (1) and (2), the articles of incorporation may determine matters relating thereto otherwise.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-9 (Prohibition of Acquisition by Transfer of Equity Interest by Limited Liability Company)
(1) No limited liability company may acquire by transfer its equity interest in whole or in part.
(2) In cases where a limited liability company acquires equity interest, such equity interest shall extinguish at the time of their acquisition.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-10 (Prohibition of Competition by Managers)
(1) No manager shall, without the consent of all the members, conduct on his/her own account or on the account of a third party any transaction in the same type of business as the limited liability company or serve as a manager, a director or an executive director of another company the business objective of which is the same kind of business as the limited liability company.
(2) In cases where a manager conducts a transaction in violation of paragraph (1), the provisions of Article 198 (2) through (4) shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-11 (Transactions between Managers and Limited Liability Company)
A manager may conduct a transaction with the limited liability company on his/her own account or on the account of a third party only when he/she has obtained resolution by a majority of all the other members. In such cases, the provisions of Article 124 of the Civil Act shall not apply.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-12 (Performance of Business Affairs)
(1) A limited liability company shall appoint, by its articles of incorporation, a manager from among its members or non-members.
(2) Where one or at least two managers have been appointed, each manager shall have the rights and obligations to perform the business affairs of the limited liability company. In such cases, the provisions of Article 201 (2) shall apply mutatis mutandis.
(3) Where at least managers have been appointed as co-managers by the articles of incorporation, no action concerning performance of business affairs shall be done without the consent of all such managers.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-13 (Rights, etc. of Representative of Manager)
The provisions of Article 200-2 shall apply mutatis mutandis to the rights of the representative of a manager appointed pursuant to Article 287-5 (5).
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-14 (Rights to Inspection of Limited Partners)
The provisions of Article 277 shall apply mutatis mutandis to the right to inspection of members who are not managers.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-15 (Special Provisions in Cases Where Manager is Corporation)
(1) In cases where a corporation is a manager, it shall appoint a person to perform duties on behalf of the manager and notify the name and address of such person to the other members.
(2) The provisions of Articles 287-11 and 287-12 shall apply mutatis mutandis to a person who is appointed in accordance with paragraph (1).
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-16 (Amendment to Articles of Incorporation)
In order to amend the articles of incorporation, the consent of all members shall be required, unless otherwise provided for in the articles of incorporation.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-17 (Adjudication on Forfeiture of Power against Manager, etc.)
(1) With respect to the forfeiture of a manager's power to execute affairs, the provisions of Article 205 shall apply mutatis mutandis.
(2) A lawsuit under paragraph (1) shall be placed under the exclusive jurisdiction of the district court having jurisdiction over the location of the principal office of a limited liability company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-18 (Provisions Applicable Mutatis Mutandis)
With respect to the internal relationship of a limited liability company, provisions concerning a partnership company shall apply unless otherwise provided for in the articles of incorporation or in this Act.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 3 External Relationship of Limited Liability Company
 Article 287-19 (Representation of Limited Liability Company)
(1) A manager shall represent a limited liability company.
(2) Where there exist two or more managers, a manager to represent the limited liability company may be appointed by the articles of incorporation or with the consent of all the members.
(3) A limited liability company may decide that, by the articles of incorporation or with the consent of all the members, two or more managers jointly represent the limited liability company.
(4) In cases falling under paragraph (3), any declaration of intent made by a third party to the limited liability company shall be effective by giving such declaration of intent to any of the joint representative managers.
(5) The provisions of Article 209 shall apply mutatis mutandis to the manager who represents a limited liability company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-20 (Liability for Damages)
In cases where the representative manager of a limited liability company has caused damage to another person by his/her executing affairs of the limited liability company, the company and such representative manager shall be jointly and severally liable for damages.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-21 (Lawsuits between Limited Liability Company and Members)
If no representative member has been appointed in a lawsuit filed by a limited liability company against one of its members (including managers who are not members; hereafter the same shall apply in this Article) or a lawsuit filed by a member against the limited liability company, a member to represent the limited liability company in the lawsuit shall be appointed by a resolution adopted by a majority of other members.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-22 (Representative Lawsuits by Members)
(1) A member may request the limited liability company to file a lawsuit against a manager to enforce his/her performance.
(2) With respect to a legal action under paragraph (1), the provisions of Articles 403 (2) through (4), (6), (7), and 404 through 406 shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 4 Admission and Withdrawal of Members
 Article 287-23 (Admission of Members)
(1) A limited liability company may admit new members by amending its articles of incorporation.
(2) The admission of a member under paragraph (1) shall be given validity when the articles of incorporation are amended: Provided, That where a new member fails to make payment for investment or make an investment of his/her property, in whole or in part, at the time of amendment of the articles of incorporation, he/she shall become a member when the payment or investment is completed.
(3) With respect to a member who makes an investment in kind when he/she is admitted to be a member, the provisions of Article 287-4 (3) shall apply mutatis mutandis to such member.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-24 (Members' Right to Withdraw from Company)
The provisions of Article 217 (1) shall apply mutatis mutandis to the withdrawal of members, unless otherwise provided for in the articles of incorporation.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-25 (Reasons for Withdrawal of Members)
With respect to reasons for withdrawal of members, the provisions of Article 218 shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-26 (Notice of Succession to Rights upon Death of Member)
When a member dies, the provisions of Article 219 shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-27 (Adjudication on Expulsion)
The provisions of Article 220 shall apply mutatis mutandis to the expulsion of members: Provided, That a resolution required for the expulsion of members may be determined otherwise by the articles of incorporation.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-28 (Return of Equity Interest of Withdrawn Members)
(1) A withdrawn member may receive a refund of his/her equity interest in money.
(2) The amount of a refund to a withdrawn member shall be determined according to the current status of assets of the limited liability company at the time of withdrawal.
(3) With respect to a refund of equity interest of a withdrawn member, the articles of incorporation may determine otherwise.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-29 (Withdrawal of Members by Creditors who Seized Members' Equity Interest)
In cases where a creditor who seized a member's equity interest causes the member to withdraw from the limited liability company, the provisions of Article 224 shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-30 (Refund of Equity Interest of Withdrawn Members and Creditors' Interests)
(1) In cases where the amount of a refund to a withdrawn member exceeds the surplus under Article 287-37, a creditor of the limited liability company may raise an objection to the company with regard to such refund.
(2) With respect to an objection under paragraph (1), the provisions of Article 232 shall apply mutatis mutandis: Provided, That the provisions of Article 232 (3) shall not apply mutatis mutandis where there is no concern about inflicting loss or damage to the creditor regardless of the refund of equity interest.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-31 (Withdrawn Members' Right to Demand Change in Corporate Name)
In cases where the name of a withdrawn member has been used in the name of a limited liability company, such member may request the company to terminate the use of the name.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 5 Accounting, etc.
 Article 287-32 (Accounting Principles)
Except as otherwise provided for in this Act and Presidential Decree, the accounting of a limited liability company shall be conducted in accordance with generally accepted fair and proper accounting practices.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-33 (Preparation and Retainment of Financial Statements)
Managers shall prepare, in each period for settlement of accounts, balance sheets, income statements, and other documents determined by Presidential Decree, which indicate financial conditions and management performance of a limited liability company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-34 (Retaining and Disclosure of Financial Statements)
(1) Managers shall retain the documents prescribed in Article 287-33 at the principal office for five years and shall retain the copies thereof at the branch offices for three years.
(2) A member or a creditor of the limited liability company may, at any time during the business hours of the company, request inspection and copying of the financial statements prepared in accordance with Article 287-33.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-35 (Capital Amount)
The money invested by members or the amount of value of other assets shall be the capital of a limited liability company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-36 (Reduction of Capital Amount)
(1) A limited liability company may reduce its capital by amendment of its articles of incorporation.
(2) The provisions of Article 232 shall apply mutatis mutandis in cases falling under paragraph (1): Provided, That this shall not apply in cases where the capital amount after the reduction exceeds the amount of net asset value.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-37 (Distribution of Surplus)
(1) A limited liability company may distribute a surplus within the limit of the amount obtained by subtracting the amount of capital from the amount of net asset value on the balance sheet (hereafter referred to as "surplus" in this Article).
(2) In cases where a surplus is distributed in violation of paragraph (1), a creditor of a limited liability company may claim that the person who has received the surplus return it to the limited liability company.
(3) Lawsuits concerning the claim under paragraph (2) shall be subject to the exclusive jurisdiction of the district court governing the place of the principal office of the limited liability company.
(4) A surplus shall be distributed in proportion to the amount of investment made by each member, unless otherwise provided for by the articles of incorporation.
(5) The method for claiming distribution of a surplus or other matters concerning the distribution of surplus may be determined by the articles of incorporation.
(6) A seizure upon equity interest of a member shall be further effective with respect to his/her right to claim for distribution of a surplus.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 6 Dissolution
 Article 287-38 (Grounds for Dissolution)
A limited liability company shall be dissolved on any of the following grounds:
1. In cases falling under matters provided for in subparagraphs 1, 2 and 4 through 6 of Articles 227;
2. In cases where the company no longer has any member.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-39 (Registration of Dissolution)
In cases of dissolution of a limited liability company on the grounds other than merger or bankruptcy, the dissolution shall be registered within two weeks at the place of the principal office and within three weeks at the place of a branch office, from the date on which the ground for dissolution arises.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-40 (Continuation of Limited Liability Company)
Among the grounds for dissolution under Article 287-38, the provisions of Article 229 (1) and (3) shall apply mutatis mutandis in cases falling under subparagraphs 1 and 2 of Articles 227.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-41 (Mergers of Limited Liability Companies)
With respect to merger of a limited liability company, Articles 230, and 232 through 240 shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-42 (Requests for Dissolution)
In cases where a member of a limited liability company file a request for dissolution, the provisions of Article 241 shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 7 Organizational Changes
 Article 287-43 (Organizational Changes)
(1) With the consent of all shareholders at a general meeting, a stock company may be converted to a limited liability company under this Chapter.
(2) A limited liability company may be converted to a stock company upon consent of all members.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 287-44 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 232, 604 through 607 shall apply mutatis mutandis to the organizational change of a limited liability company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 8 Liquidation
 Article 287-45 (Liquidation)
The provisions of Articles 245, 246, 251 through 257, and 259 through 267 shall apply mutatis mutandis to liquidation of a limited liability company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
CHAPTER IV STOCK COMPANY
 Article 288 (Incorporators)
In order to incorporate a stock company, incorporators shall prepare its articles of incorporation.
[This Article Wholly Amended by Act No. 6488, Jul. 24, 2001]
 Article 289 (Preparation of Articles of Incorporation, Matters Absolutely Required to be Entered in Articles of Incorporation)
(1) Incorporators shall prepare the articles of incorporation and enter the following matters in the articles of incorporation, and each of them shall write his/her name and affix his/her seal, or affix his/her signature: <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995; Act No. 6488, Jul. 24, 2001; Act No. 10600, Apr. 14, 2011>
1. Objectives;
2. Trade name;
3. The total number of shares authorized to be issued;
4. Par value per share where par value shares are issued;
5. The total number of shares to be issued at the time of incorporation;
6. The location of a principal office;
7. Method of giving a public notice by the company;
8. The name, resident registration number and address of each incorporator;
9. Deleted. <by Act No. 3724, Apr. 10, 1984>
(2) Deleted. <by Act No. 10600, Apr. 14, 2011>
(3) Public notices of a company shall be made in the Official Gazette or in a daily newspaper carrying current events: Provided, That a company may give a public notice by electronic means as determined by its articles of incorporation. <Amended by Act No. 9746, May 28, 2009>
(4) A company shall continue to give a public notice by the period prescribed by Presidential Decree if such public notice is made by electronic means under paragraph (3), and by the period determined under Article 450 if public notice of financial statements is made by electronic means: Provided, That the company shall make the details thereof available for public inspection even after the expiration of the period of the public notice. <Newly Inserted by Act No. 9746, May 28, 2009>
(5) Where a company gives a public notice by electronic means, it shall prove the period and details of such notice. <Newly Inserted by Act No. 9746, May 28, 2009>
(6) Matters necessary for giving a public notice by a company by electronic means shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 9746, May 28, 2009>
 Article 290 (Particulars of Exceptional Incorporation)
The following shall take effect upon entry in the articles of incorporation:
1. Any special benefits to be received by incorporators and names of such incorporators;
2. The name of a person who is to make an investment in kind, the type, quantity and value of the subject matter of such investment in kind and the class and number of shares to be given in consideration thereof;
3. The class, number and value of the assets agreed to be transferred to the company after its incorporation and the name of the transferor;
4. The expenses for incorporation to be borne by the company and the amount of remunerations for the incorporators.
 Article 291 (Determination of Matters concerning Issuance of Shares at Time of Incorporation)
In connection with shares to be issued at the time of incorporation, unless otherwise provided for in the articles of incorporation, the following matters shall be determined with the consent of all incorporators:
1. Class and number of shares;
2. In cases of par value shares, if the company is to issue shares at the price exceeding the par value, the number of such shares and the price.
3. In cases of issuing no par value shares, the issuance price, and the amount to be included in paid-up capital out of the issuance price.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 292 (Effectuation of Articles of Incorporation)
The articles of incorporation shall take effect upon being notarized by a public notary: Provided, That where a company with total capital of less than one billion won is incorporated by incorporators under Article 295 (1), the articles of incorporation shall take effect after each incorporator writes his/her name and affixes his/her seal, or affix his/her signature, thereon pursuant to Article 289 (1).
[This Article Wholly Amended by Act No. 9746, May 28, 2009]
 Article 293 (Subscription to Shares by Incorporator)
Each incorporator shall subscribe to shares in writing.
 Article 294 Deleted. <by Act No. 5053, Dec. 29, 1995>
 Article 295 (Payment of Subscription Price and Performance of Investment in Kind in Incorporation by Incorporators)
(1) Where incorporators subscribe to the total number of shares to be issued at the time of incorporation, they shall without delay make full payment of the subscription price. In such cases, they shall designate a bank or other financial institutions at which the subscription price is to be paid as well as the place for payment. <Amended by Act No. 5053, Dec. 29, 1995>
(2) An incorporator who is to make an investment in kind shall, without delay, provide all of the asset which is the subject matter of the investment on the date designated for the payment of the subscription price, and if registration, records, or the creation or transfer of rights is required, he/she shall prepare completely the relevant documents and deliver them to the company.
 Article 296 (Appointment of Executive Officers in Incorporation by Incorporators)
(1) When the payment of a subscription price and the investment in kind are completed in accordance with the preceding Article, incorporators shall without delay appoint directors and auditors by a majority vote.
(2) Incorporators shall have one vote for each share to which they have subscribed.
 Article 297 (Preparation of Minutes by Incorporators)
Incorporators shall prepare and write their names and affix their seals, or affix their signatures, on the minutes of meetings, in which the proceedings of deliberation and the outcomes thereof shall be entered. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 298 (Investigations and Reporting by Directors and Auditors, and Requests for Appointment of Inspectors)
(1) Directors and auditors shall, without delay after their appointment, investigate whether or not all matters concerning the incorporation of the company were done in compliance with statutes and the articles of incorporation, and report the outcomes thereof to incorporators.
(2) Neither director nor auditor who was an incorporator, investor in kind or party to a contract whereby the company is to take over assets after its incorporation shall participate in the investigations and reporting under paragraph (1).
(3) If all directors and auditors fall under paragraph (2), the directors shall require a notary public to perform the investigation and reporting under paragraph (1).
(4) In cases where the articles of incorporation provide for the matters listed in the subparagraphs of Article 290, the directors shall request a court to appoint an inspector for the purpose of investigating such matter: Provided, That this shall not apply to cases falling under Article 299-2.
[This Article Wholly Amended by Act No. 5053, Dec. 29, 1995]
 Article 299 (Investigation and Reporting by Inspectors)
(1) An inspector shall investigate the matters listed in the subparagraphs of Article 290 and whether or not the investment in kind pursuant to Article 295 has been made and shall report the outcomes thereof to the court.
(2) The provisions of paragraph (1) shall not apply in cases falling under any of the following subparagraphs:
1. In cases where the total amount of assets under subparagarph 2 or 3 of Article 290 does not exceed both one fifth of the amount of capital and the amount determined by Presidential Decree;
2. In cases where the assets under subparagarph 2 or 3 of Article 290 constitute securities for which there is an exchange based market, and the price stated in the articles of incorporation does not exceed the price calculated by the method determined by Presidential Decree;
3. Other cases determined by Presidential Decree as equivalent to those under subparagarph 1 or 2.
(3) An inspector shall, without delay after he/she has prepared a report of investigation under paragraph (1), deliver a copy thereof to each incorporator.
(4) Where any statement in the report of investigation is contrary to the facts, incorporators may submit an explanatory document thereon to the court.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 299-2 (Certification of Investments in Kind, etc.)
With respect to matters listed in subparagraphs 1 and 4 of Article 290, investigations and reporting by a notary public may replace the investigation of an inspector under Article 299 (1) and with respect to matters listed in subparagraphs 2 and 3 of Article 290 and the investments in kind pursuant to Article 295, appraisal by a certified appraiser may replace the investigation of an inspector under Article 299 (1). In such cases, the notary public or appraiser shall report on the outcomes of the investigation or appraisal to a court. <Amended by Act No. 5591, Dec. 28, 1998>
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 300 (Disposition of Alteration by Court)
(1) If a court finds any of the matters listed in Article 290 to be unreasonable after examining reports on investigation by an inspector or notary public or the outcomes of appraisal by an appraiser and an explanatory note of the incorporators, it may alter them and notify it to each incorporator. <Amended by Act No. 5591, Dec. 28, 1998>
(2) An incorporator who has objection to the alteration under paragraph (1) may cancel subscription to his/her shares. In such cases, the incorporation procedures may be continued after amending the articles of incorporation. <Amended by Act No. 5591, Dec. 28, 1998>
(3) If no incorporator cancels subscription to his/her shares within two weeks after the receipt of notification from the court, the articles of incorporation shall be deemed to have been amended in accordance with the notification. <Amended by Act No. 5591, Dec. 28, 1998>
 Article 301 (Invitation to Subscription in Cases of Incorporation by Subscription)
Where incorporators do not subscribe to the total number of shares issued at the time of incorporation, they shall invite subscribers.
 Article 302 (Application for Share Subscription and Matters Required to be Entered in Share Subscription Form)
(1) A person who intends to subscribe to shares shall complete a share subscription form in duplicate, in which the class and number of shares to which he/she is to subscribe and his/her address are stated, and shall write his/her name and affix his/her seal or shall affix his/her signature, thereon. <Amended by Act No. 5053, Dec. 29, 1995>
(2) Incorporators shall prepare a share subscription form in which the following matters are entered: <Amended by Act No. 1212, Dec. 12, 1962; Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
1. The date of notarization of the articles of incorporation, and the name of the notary public;
2. The matters listed in Articles 289 (1) and 290;
3. The period of existence or reasons for dissolution of the company, if determined;
4. The class and number of shares subscribed to by incorporators;
5. The matters listed in Article 291;
5-2. Provisions that transfer of shares requires the approval of the board of directors, if so determined;
6. Deleted; <by Act No. 10600, Apr. 14, 2011>
7. Retirement of shares out of profits to be distributed to shareholders, if so determined;
8. A statement to the effect that the subscription of shares may be cancelled if the inaugural general meeting is not closed by a fixed date;
9. The bank and any other financial institution in charge of the payment of the subscription price and the place for payment;
10. The name, address and business office of a transfer agent, if any.
(3) The proviso to Article 107 (1) of the Civil Act shall not apply to application for share subscription. <Amended by Act No. 1212, Dec. 12, 1962>
 Article 303 (Duties of Subscribers)
A person who has subscribed to shares is obliged to pay the subscription price in accordance with the number of shares allotted to him/her by the incorporators.
 Article 304 (Notice or Peremptory Notice to Subscribers, etc.)
(1) Any notice or peremptory notice to a person who has subscribed to shares or who has applied for subscription to shares shall be delivered to his/her address stated in the certificate of share subscription or the share subscription form or to the address notified to the company by such person.
(2) The notice or peremptory notice under the preceding paragraph shall be deemed delivered at the time it would normally have arrived.
 Article 305 (Payment of Subscription Price for Shares)
(1) When the total number of shares to be issued at the time of incorporation have been subscribed to, incorporators shall, without delay, cause the subscription price to be paid fully by the subscribers.
(2) Payment under the preceding paragraph shall be made at the place specified in the share subscription form.
(3) The provisions of Article 295 (2) shall apply mutatis mutandis in cases falling under paragraph (1).
 Article 306 (Change of Depository, etc. of Payment)
Permission of a court is required to change the depository holding subscription price or the place for payment.
 Article 307 (Procedures for Forfeiture of Subscriber's Rights)
(1) In cases where a person who has subscribed to shares fails to make the payment under Article 305, incorporators shall determine a date and shall, before two weeks prior to such date, notify such person to the effect that his/her rights shall be forfeited if he/she fails to make the payment by such date.
(2) If a person who has received notification under the preceding paragraph fails to make the payment by such date, his/her rights shall be forfeited. In such cases, incorporators may invite subscribers again.
(3) The provisions of the preceding two paragraphs shall not affect any claim for damages against the relevant share subscriber.
 Article 308 (Inaugural General Meetings)
(1) Where the payment and the making of investment in kind under Article 305 have been completed, incorporators shall, without delay, convene an inaugural general meeting.
(2) The provisions of Articles 363 (1) and (2), 364, 368 (2) and (3), 368-2, 369 (1), 371 (2), 372, 373, 376 through 381, and 435 shall apply mutatis mutandis to inaugural general meetings. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 12591, May 20, 2014>
 Article 309 (Resolutions of Inaugural General Meetings)
Resolutions of an inaugural general meeting shall be adopted by affirmative votes of at least two-thirds of the total votes of attending subscribers and also by affirmative votes representing a majority of the total number of shares which have been subscribed to.
 Article 310 (Inspection in Cases of Exceptional Incorporation)
(1) If the matters prescribed in Article 290 have been determined by the articles of incorporation, incorporators shall request the court to appoint an inspector to investigate such matters.
(2) A report of an inspector under the preceding paragraph shall be submitted to an inaugural general meeting.
(3) The proviso to Article 298 (4) and Article 299-2 shall apply mutatis mutandis to investigation under paragraph (1). <Newly Inserted by Act No. 5053, Dec. 29, 1995>
 Article 311 (Reporting by Incorporators)
(1) Incorporators shall report in writing on matters relating to the incorporation of the company, at the inaugural general meeting.
(2) A report under the preceding paragraph shall expressly specify the following:
1. General circumstances concerning subscription of shares and payment of subscription price;
2. Actual conditions regarding the matters listed in Article 290.
 Article 312 (Appointment of Executive Officers)
At an inaugural general meeting, directors and auditors shall be appointed.
 Article 313 (Inspection and Reporting by Directors and Auditors)
(1) Directors and auditors shall, without delay after taking office, inspect whether all matters concerning the incorporation of the company were done in compliance with statutes and the article of incorporation, and shall report the outcomes thereof to the inaugural general meeting. <Amended by Act No.1212, Dec. 12, 1962; Act No. 5053, Dec. 29, 1995>
(2) The provisions of Article 298 (2) and (3) shall apply mutatis mutandis to the inspection and reporting under paragraph (1). <Amended by Act No. 5053, Dec. 29, 1995>
(3) Deleted. <by Act No. 5053, Dec. 29, 1995>
 Article 314 (Changes in Matters concerning Exceptional Incorporation)
(1) If an inaugural general meeting finds any of the matters listed in Article 290 to be improper, it may make changes thereof.
(2) The provisions of Article 300 (2) and (3) shall apply mutatis mutandis in cases falling under the preceding paragraph.
 Article 315 (Claims for Damages against Incorporators)
The provisions of the preceding Article shall not affect any claim for damages against incorporators.
 Article 316 (Resolutions for Amending Articles of Incorporation and Discontinuing Incorporation)
(1) At an inaugural general meeting, a resolution for amending the Articles of incorporation or discontinuing the incorporation of the company may be adopted.
(2) A resolution under the preceding paragraph may be adopted even where such matter has not been stated in the convocation notice for the meeting.
 Article 317 (Registration for Incorporation)
(1) Registration for incorporation of a stock company shall be made within two weeks from the date of completion of the procedures under Articles 299 and 300 in cases where the incorporators subscribed to the total number of shares issued at the time of incorporation, and within two weeks from the date of closing of the inaugural general meeting or from the date of completion of the procedures under Article 314 in cases where the incorporators have offered shares for subscription.
(2) For the registration under paragraph (1), the following matters shall be registered: <Amended by Act No.1212, Dec. 12, 1962; Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995; Act No. 6086, Dec. 31, 1999; Act No. 9362, Jan. 30, 2009; Act No. 10600, Apr. 14, 2011>
1. The matters listed in Article 289 (1) 1 through 4, 6 and 7;
2. The amount of the capital;
3. The total number and class of shares issued and outstanding, and the details and number of each class of shares;
3-2. Provisions that the transfer of shares requires the approval of the board of directors, if so determined;
3-3. Provisions under which stock options are granted, if so decided;
3-4. The place of each branch office;
4. The period of existence or reasons for dissolution of the company, if determined;
5. Deleted; <by Act No. 10600, Apr. 14, 2011>
6. Retirement of shares out of profits to be distributed to shareholders, if so determined;
7. The matters listed in Article 347, if convertible shares are issued;
8. The names and resident registration numbers of inside directors, outside directors, other directors who are not engaged in regular business, auditors and executive directors;
9. The name, resident registration number and address of the representative director or executive directors;
10. Provisions that two or more representing directors or representative executive directors shall jointly represent the company, if so determined;
11. The trade name and the principal office of a transfer agent, if any;
12. The name and resident registration number of each auditor of the audit committee, if such committee has been set up.
(3) The matters prescribed in Article 289 (1) 1, 2, 6, 7 and (2) 4, 9 and 10 shall be registered for the registration in cases of establishing or relocating a new branch office at the place of such established or relocated branch office, as the case may be. <Amended by Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
(4) The provisions of Articles 181 through 183 shall apply mutatis mutandis to the registration of a stock company.
 Article 318 (Certification and Liability by Depository for Subscription Price Paid)
(1) A bank or any other financial institution to which the subscription price paid is deposited shall issue a certificate as to the deposited amount, upon the request of incorporators or directors.
(2) No bank or financial institution under paragraph (1) may, in respect of the deposited amount duly certified, assert against the company that such payment was not fully made or there is a restriction on the return of such amount.
(3) Where a company with total capital of less than one billion won is incorporated by incorporators pursuant to Article 295 (1), the certificate under paragraph (1) may be substituted by a balance certificate issued by a bank or other financial institutions.
[This Article Wholly Amended by Act No. 9746, May 28, 2009]
 Article 319 (Transfer of Potential Shares)
The transfer of rights based on subscription of shares shall not be effective against the company.
 Article 320 (Restrictions on Asserting Invalidation or Cancellation of Share Subscription)
(1) Once a company comes into existence, no subscriber may assert the invalidation of his/her subscription by reason of deficiency in the requirements for the share subscription form, nor may cancel his/her subscription on the ground of fraud, duress or mistake.
(2) Provisions of the preceding paragraph shall also apply before a company comes into existence, if the subscriber has attended, and has exercised his/her rights at, the inaugural general meeting.
 Article 321 (Liability of Incorporators for Subscription and Security for Payment)
(1) Where, after a company comes into existence, any shares issued at the time of incorporation of the company are found to have not been subscribed to or the subscription for certain shares has been cancelled, incorporators shall be deemed to have jointly subscribed to such shares.
(2) Where, after a company comes into existence, shares for which payment of the subscription price under Article 295 (1) or 305 (1) has not been completed, incorporators shall make such payment jointly and severally.
(3) The provisions of Article 315 shall apply mutatis mutandis to cases falling under the preceding two paragraphs.
 Article 322 (Liability of Incorporators for Damages)
(1) If an incorporator has neglected his/her duties in connection with the incorporation of the company, he/she shall be jointly and severally liable for damages suffered by the company.
(2) If an incorporator has neglected his/her duties in bad faith or by gross negligence, he/she shall be jointly and severally liable for damage to a third party.
 Article 323 (Joint and Several Liability of Incorporators and Executive Officers)
If directors or auditors have neglected their duties under Article 313 (1) and are thereby liable for damages suffered by the company or third parties and if incorporators are also liable therefor, the directors, auditors and incorporators shall be liable for such damages jointly and severally.
 Article 324 (Release of Incorporators from Liability and Representative Suits by Shareholders)
The provisions of Articles 400, and 403 through 406 shall apply mutatis mutandis to incorporators.
 Article 325 (Liability of Inspectors for Damages)
If an inspector appointed by a court has, in bad faith or by gross negligence, neglected his/her duties, he/she shall be liable for damages suffered by the company or third parties.
 Article 326 (Liability of Incorporators where Company Fails to Come into Existence)
(1) If a company does not come into existence, incorporators shall be jointly and severally liable for all acts conducted in connection with the incorporation of the company.
(2) In cases falling under the preceding paragraph, incorporators shall bear expenses incurred in connection with the incorporation of the company.
 Article 327 (Liability of Promoters)
A person who has written his/her name and his/her intent to cooperate for the incorporation of the company in the share subscription form and/or in other documents related to the offering of shares for subscription shall assume the same liability as that of an incorporator.
 Article 328 (Lawsuit for Invalidation of Incorporation)
(1) Invalidation of the incorporation of a company may be pursued only by its shareholders, directors or auditors and only by means of a lawsuit filed within two years from the date on which the company comes into existence. <Amended by Act No. 3724, Apr. 10, 1984>
(2) The provisions of Articles 186 through 193 shall apply mutatis mutandis to lawsuits under paragraph (1). <Amended by Act No. 3724, Apr. 10, 1984>
SECTION 2 Shares
 Article 329 (Formation of Capital)
(1) Where provided for in the articles of incorporation, a company may issue all of its shares with no par value: Provided, That in cases of issuing no par value shares, par value shares may not be issued.
(2) The value of par value shares shall be equal.
(3) The par value per share shall be at least 100 won.
(4) A company may convert its outstanding par value shares into no par value shares, or no par value shares into par value shares, as determined by the articles of incorporation.
(5) In cases falling under paragraph (4), the provisions of Article 440, the main body of Article 441, and Article 442 shall apply mutatis mutandis.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 329-2 (Share Split)
(1) A company may split shares by a resolution of a general meeting of shareholders under Article 434.
(2) In cases falling under paragraph (1), the par value per share after a split shall not be less than the amount under Article 329 (3). <Amended by Act No. 10600, Apr. 14, 2011>
(3) The provisions of Articles 440 through 443 shall apply mutatis mutandis to a share split under paragraph (1). <Amended by Act No. 12591, May 20, 2014>
[This Article Newly Inserted by Act No. 5591, Dec. 28, 1998]
 Article 330 (Restrictions on Issuance of Shares below Par)
Shares may not be issued at a price below the par value: Provided, That this shall not apply to cases falling under Article 417. <Amended by Act No. 1212, Dec. 12, 1962>
 Article 331 (Liability of Shareholders)
The liability of a shareholder shall be limited to the subscription price that he/she has paid for his/her shares.
 Article 332 (Liability of Persons who Subscribed to Shares Using False Name or Another Person's Name)
(1) A person who has subscribed to shares using a false name or another person's name without his/her consent shall assume the same liability as a subscriber to shares.
(2) A person who has subscribed to shares by using another person's name with his/her consent shall have a joint and several liability with him/her for the payment of subscription price for shares.
 Article 333 (Co-ownership of Shares)
(1) Persons who have subscribed to shares jointly shall be jointly and severally liable for the payment of the subscription price.
(2) Where a share belongs jointly to two or more persons, they shall designate one from among themselves who is to exercise the rights of a shareholder.
(3) Where no one is designated to exercise the rights of a shareholder, notice or peremptory notice required to be given to the co-owners may be given to any one of them.
 Article 334 Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 335 (Transferability of Shares)
(1) Shares may be transferred to other persons: Provided, That a company may subject the transfer of shares to the approval of the board of directors, as determined by the articles of incorporation. <Amended by Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
(2) Any transfer of shares that is not approved by the board of directors in contravention of the proviso to paragraph (1) shall not be effective against the company. <Newly Inserted by Act No. 5053, Dec. 29, 1995>
(3) Any transfer of shares made before the issuance of share certificates shall not be effective against the company: Provided, That this shall not apply where six months have passed from the date of the establishment of the company or the date of the payment of the subscription price for new shares. <Amended by Act No. 3724, Apr. 10, 1984>
 Article 335-2 (Requests for Approval of Transfers)
(1) In cases where the transfer of shares requires the approval of the board of directors, a shareholder intending to transfer his/her shares may request in writing the company to approve the transfer, by specifying the intended transferee and the class and number of the shares to be transferred.
(2) A company shall give a written notice to a shareholder of whether or not it approves the transfer of shares, within one month of the request under paragraph (1).
(3) If a company fails to notify the shareholder of its refusal within the period set in paragraph (2), the board of directors shall be deemed to have approved the transfer of shares.
(4) A shareholder who receives a notice of the refusal to approve the transfer as referred to in paragraph (2) may request the company to designate the alternative transferee or to purchase the shares, within 20 days of receipt of the notice.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 335-3 (Requests for Designation of Alternative Transferee)
(1) If a shareholder requests the company to designate an alternative transferee, the board of directors shall designate the alternative transferee and give a written notice thereof to the shareholder and the designated person, within two weeks of the request.
(2) If the board of directors fails to notify the shareholder of the designation of the alternative transferee within the period set in paragraph (1), the board of directors shall be deemed to have approved the transfer of shares.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 335-4 (Requests for Sale by Designated Transferee)
(1) Any person designated as an alternative transferee under Article 335-3 (1) may make a written request to the shareholder who made the request for such designation to sell the shares to him/her within ten days of receipt of the notification of such designation.
(2) The provisions of Article 335-3 (2) shall apply mutatis mutandis where a person designated as an alternative transferee fails to make a request for sale within the period set in paragraph (1).
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 335-5 (Determination of Sale Price)
(1) In cases falling under Article 335-4, the sale price of the relevant shares shall be determined through a negotiation between the shareholder and the person who requests sale. <Amended by Act No. 6488, Jul. 24, 2001>
(2) In cases where a negotiation under paragraph (1) is not made within 30 days from the date of receipt of the request under Article 335-4 (1), the provisions of Article 374-2 (4) and (5) shall apply mutatis mutandis. <Amended by Act No. 6488, Jul. 24, 2001>
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 335-6 (Request for Purchase by Shareholders)
The provisions of Article 374-2 (2) through (5) shall apply mutatis mutandis where a shareholder requests a company to purchase his/her shares under Article 335-2 (4). <Amended by Act No. 6488, Jul. 24, 2001>
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 335-7 (Request for Approval by Transferee of Shares)
(1) In cases where the transfer of shares is subject to the approval of the board of directors, any person who has acquired the shares may make a written request to the company to approve such acquisition, by specifying the class and number of the acquired shares.
(2) The provisions of Articles 335-2 (2) through (4), and 335-3 through 335-6 shall apply mutatis mutandis in cases falling under paragraph (1).
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 336 (Methods of Transfer of Shares)
(1) In the transfer of shares, share certificates shall be delivered
(2) The possessor of a share certificate shall be presumed to be the legal holder thereof.
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 337 (Requirements to Assert Effect of Transfer of Shares)
(1) The effect of transfer of shares shall not be asserted against the company, unless the name and address of the transferee have been entered in the register of shareholders. <Amended by Act No. 12591, May 20, 2014>
(2) A company may designate a transfer agent in accordance with the articles of incorporation. In such cases, if the transfer agent has entered the name and address of the transferee in part of a set of the register of shareholders, the entry of changes in holders under paragraph (1) shall be deemed duly effected. <Newly Inserted by Act No. 3724, Apr. 10, 1984>
 Article 338 (Pledging of Shares)
(1) To pledge shares, the share certificates shall be delivered to the pledgee. <Amended by Act No. 12591, May 20, 2014>
(2) No pledgee shall assert his/her pledge against a third party unless he/she continues to hold the share certificates.
 Article 339 (Subrogation of Pledge)
Where there has been retirement, consolidation, split or conversion of shares, the pledge rights over the original shares may continue to exist as against the cash or shares which the original shareholder is to receive based thereon. <Amended by Act No. 5591, Dec. 28, 1998>
 Article 340 (Registered Pledge of Shares)
(1) In cases where the subject of pledge rights is a share and the company has, at the request of the pledgee, entered the name and address of the pledgee in the register of shareholders and entered his/her name in the share certificate, the pledgee may receive from the company the profit dividends, distribution of residual assets or money mentioned in Article 339, and may apply the sum toward repayment of the obligations owed to him/her in preference to other creditors. <Amended by Act No. 10600, Apr. 14, 2011; Act No. 12591, May 20, 2014>
(2) The provisions of Article 353 (3) of the Civil Act shall apply mutatis mutandis in cases falling under the preceding paragraph.
(3) A pledgee of paragraph (1) may request the company to deliver the share certificate of the shares mentioned in the preceding Article.
 Article 340-2 (Stock Option)
(1) A company may, as prescribed by its articles of incorporation, grant by a resolution of a general meeting of shareholders as provided for in Article 434 an option for purchasing new shares or its own shares (hereinafter referred to as "stock option") at a fixed price established in advance (hereinafter referred to as "exercising price for stock option") to its directors, executive directors, auditors or other employees who will, or will be able to contribute to its incorporation and management, technological innovation, etc.: in cases where the exercising price for stock option is lower than the actual price of the relevant stock, the company may compensate for the relevant difference by cash or transfer its own shares equivalent to the relevant difference. In such cases, the actual stock price shall be appraised as of the date of exercising the stock option.
(2) The stock option referred to in paragraph (1) shall not be granted to any of the following persons:
1. A stockholder who holds 10 percent or more of the total outstanding shares of the company excluding non-voting shares;
2. A person who actually exercises influence over major management matters of the company, such as appointment or dismissal of directors, executive directors, and auditors;
3. The spouse and lineal ascendents or descendents of a person falling under subparagraph 1 or 2.
(3) The number of new shares to be issued or the company's own shares to be transferred under paragraph (1) shall not exceed 10 percent of the total outstanding shares of the company.
(4) The price for exercising a stock option as referred to in paragraph (1) shall exceed a price falling under any of the following subparagraphs:
1. In cases of issuing new shares, the higher amount between their substantial price as of the date of granting the stock option and their face value: Provided, That in cases where no par value shares are issued, the amount of one share, out of the amount to be included in paid-up capital, shall be deemed the face value;
2. In cases of transferring the company's own shares, their substantial price as of the date of granting the stock option.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 340-3 (Granting Stock Option)
(1) The following matters shall be stated in the articles of incorporation concerning a stock option as referred to in Article 340-2 (1):
1. An intent that a stock option may be granted in particular cases;
2. Classes and the number of shares to be issued or transferred in cases of exercising the stock option;
3. Qualifications of a person to whom the stock option is to be granted;
4. Exercising period of the stock option;
5. An intent that the granting of the stock option may be cancelled by a resolution of the board of directors in specified cases.
(2) In adopting, at the general meetings of shareholders, a resolution concerning the granting of a stock option as referred to in Article 340-2 (1), the following matters shall be determined:
1. The names of persons who are to be granted the stock option;
2. The methods of granting the stock option;
3. Matters concerning the price for exercising the stock option and an assessment thereof;
4. The period for exercising the stock option;
5. Classes and the number of shares to be issued or transferred, in cases of exercising the stock option, to each of the persons to be granted the stock option.
(3) A company shall enter into a contract with an optionee who has been granted a stock option by a resolution of a general meeting of shareholders as referred to in paragraph (2) and shall prepare a contract thereon within a reasonable period of time.
(4) A company shall retain the contracts under paragraph (3) at its principal office until the expiration of the period for exercising the stock option and make them available to the shareholders for perusal during its business hours.
[This Article Newly Inserted by Act No. 6086, Dec. 31, 1999]
 Article 340-4 (Exercise of Stock Option)
(1) A stock option under Article 340-2 (1) may be exercised only when the stock optionee holds office or post in the company for more than two years from the date when the matters listed in the subparagraphs of Article 340-3 (2) are determined by a resolution of a general meeting of shareholders.
(2) A stock option referred to in Article 340-2 (1) shall not be transferable: in the case of death of the optionee entitled to exercise the stock option, his/her heir thereto may exercise it.
[This Article Newly Inserted by Act No. 6086, Dec. 31, 1999]
 Article 340-5 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 350 (2), the latter part of Article 350 (3), Articles 351 and 516-9 (1), (3) and (4), and the former part of Article 516-10 shall apply mutatis mutandis in cases of issuing new shares upon exercising a stock option. <Amended by Act No. 10600, Apr. 14, 2011>
[This Article Newly Inserted by Act No. 6086, Dec. 31, 1999]
 Article 341 (Acquisition of Treasury Shares)
(1) A company may acquire treasury shares under its own name and on its own account, in accordance with the following methods: Provided, That the total acquisition price shall not exceed the amount obtained by subtracting the amounts prescribed in the subparagraphs of Article 462 (1) from the net assets value on the balance sheet for the immediately preceding period for the settlement of accounts:
1. In cases of shares having market values on the stock exchange, the method of acquisition at the exchange;
2. The methods of acquisition under equal conditions in proportion to the number of shares owned by each shareholder as determined by Presidential Decree, except for the different classes of shares concerning the redemption of shares under Article 345 (1).
(2) A company seeking to acquire its own shares in accordance with paragraph (1) shall determine the following matters in advance by a resolution of a general meeting of shareholders: Provided, That in cases where the articles of incorporation provide that distribution of profits can be made with a resolution of the board of directors, such resolution of the board of directors may substitute for that of the general meeting of shareholders:
1. The class and number of the shares that can be acquired;
2. Limit on the total acquisition price;
3. The period of not exceeding one year for acquisition of its own shares.
(3) No company shall acquire shares pursuant to paragraph (1) in cases where it is likely that the net assets value on the balance sheet for the period for the settlement of accounts in the relevant business year is less than the sum of the amounts prescribed in the subparagraphs of Article 462 (1).
(4) In cases where a company acquires shares pursuant to paragraph (1) although the net assets value on the balance sheet for the period for the settlement of accounts in the relevant business year is less than the sum of the amounts prescribed in the subparagraphs of Article 462 (1), directors are jointly and severally liable to compensate the company for the relevant insufficient amount: Provided, That this shall not apply where the directors determined that there was no likelihood mentioned in paragraph (3) and proved that he/she had not neglected his/her duty of care in making such decision.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 341-2 (Acquisition of Treasury Shares for Particular Purposes)
In cases falling under any of the following subparagraphs, a company may acquire treasury shares, notwithstanding the provisions of Article 341:
1. In the case of merger of the company or acquisition of the entire business of another company;
2. In cases where it is necessary to achieve the objective in the course of exercising the rights of the company;
3. In cases where it is necessary to deal with fractional shares;
4. In cases where a shareholder exercises his/her appraisal rights.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 341-3 (Creation of Pledges on Treasury Shares)
A company may not create a pledge on treasury shares in excess of a twentieth of the total number of shares issued and outstanding: Provided, That such ceiling shall not apply in cases falling under subparagraphs 1 and 2 of Article 341-2.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 342 (Disposal of Treasury Shares)
In cases where a company disposes of treasury shares that it holds, the following matters shall be determined by the board of directors unless the articles of incorporation provide otherwise:
1. The class and number of the shares to be disposed of;
2. The price of the shares to be disposed of and date of payment;
3. Persons to whom the shares are to be transferred and the method of the disposition.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 342-2 (Acquisition of Parent Company's Shares by Subsidiary Company)
(1) Where a company (hereafter referred to as "parent company") holds more than half of the total number of issued and outstanding shares in another company (hereafter referred to as "subsidiary company"), the subsidiary company may not acquire shares in the parent company, except in the following cases: <Amended by Act No. 6488, Jul. 24, 2001>
1. In cases of an all-inclusive exchange and all-inclusive transfer of shares, the merger of companies or the acquisition of the entire business of another company;
2. Where it is necessary to do so to achieve the objective in the course of exercising the rights of the company.
(2) In cases falling under paragraph (1), the subsidiary company shall dispose of the shares of the parent company within six months of the acquisition thereof.
(3) If a parent company and its subsidiary company in aggregate hold, or a subsidiary company by itself holds, more than half of the total number of issued and outstanding shares in another company, such another company shall be deemed a subsidiary company of the parent company for the purpose of this Act. <Amended by Act No. 6488, Jul. 24, 2001>
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 342-3 (Acquisition of Another Company's Shares)
If a company acquires more than 10 percent of the total number of issued and outstanding shares in another company, it shall without delay notify the company of such acquisition.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 343 (Retirement of Shares)
(1) Shares may be retired only in accordance with the provisions on reduction of capital: Provided, That this shall not apply to the retirement of shares held by the company in accordance with a resolution of the board of directors.
(2) The provisions of Articles 440 and 441 shall apply mutatis mutandis to the retirement of shares in accordance with the provisions on reduction of capital.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 343-2 Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 344 (Different Classes of Shares)
(1) A company may issue different classes of shares which are different in respect of their particulars (hereinafter referred to as "different classes of shares") as to the profit dividends, distribution of the surplus assets, exercise of voting rights at a general meeting of shareholders, repayment, conversion, etc.
(2) In cases falling under paragraph (1), the articles of incorporation shall provide for the particulars and number of each class of shares.
(3) If a company issues different classes of shares, special provisions may be made for each class of shares with respect to the subscription to new shares, the consolidation, split, or retirement of shares or the allotment of shares as a result of a merger or split of the company, even where no such matters have been provided for in the articles of incorporation.
(4) With respect to a resolution of the general meeting of shareholders of certain classes of shares, the provisions of Article 435 (2) shall apply mutatis mutandis.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 344-2 (Different Classes of Shares concerning Profit Dividends, Distribution of Surplus Assets)
(1) Where a company issues different classes of shares in connection with profit dividends, it shall determine in the articles of incorporation particulars concerning the dividends of profits, such as the types of assets to be distributed for shareholders of different classes of shares, methods of determining the value of such assets, conditions for the distribution of profits, etc.
(2) Where a company issues different classes of shares in connection with the distribution of surplus assets, it shall determine in the articles of incorporation particulars concerning the distribution of surplus assets, such as the types of surplus assets, methods of determining the value of such surplus assets, and other matters regarding the distribution of surplus assets.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 344-3 (Different Classes of Shares concerning Exclusion/Limit of Voting Rights)
(1) Where a company issues different classes of shares having no, or limited voting rights, it shall determine in the articles of incorporation matters concerning no exercise of voting rights and particulars, such as the conditions for exercise or revival of voting rights, if any.
(2) The total number of different classes of shares pursuant to paragraph (1) shall not exceed a quarter of the total number of issued and outstanding shares. In such cases, if the different classes of shares having no, or limited voting rights are issued and exceed a quarter of the total number of issued and outstanding shares, the company shall, without delay, take measures necessary to keep the said number of different classes of shares not exceeding the limitation.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 345 (Different Classes of Shares concerning Redemption of Shares)
(1) A company may issue different classes of shares that may be retired out of profits in accordance with the articles of incorporation. In such cases, the price, period, and methods of the redemption of shares, and the number of redeemable shares shall be stated in the articles of incorporation.
(2) In cases falling under paragraph (1), no later than two weeks prior to the date of acquisition of the redeemable shares, a company shall separately notify the particulars of the said redemption to the shareholders of the redeemable shares and to the interest-holders stated in the register of shareholders, in accordance with the articles of incorporation: Provided, That the said notification may be substituted by public notification.
(3) A company may, as prescribed in its articles of incorporation, issue different classes of shares with which the shareholders may demand redemption of shares against the company. In such cases, the company shall determine in the articles of incorporation the rights of shareholders to demand redemption against the company, and the price, period, and methods of the redemption of shares.
(4) In cases falling under paragraphs (1) and (3), as a consideration for acquisition of shares, a company may provide securities or assets other than cash (excluding other different classes of shares): Provided, That in such cases, the book value of the assets shall not exceed the distributable profits pursuant to Article 462.
(5) The shares provided for in paragraphs (1) and (3) may be issued with a limit to different classes of shares (excluding those concerning redemption and conversion).
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 346 (Different Classes of Shares concerning Conversion of Shares)
(1) If a company issues different classes of shares, the articles of incorporation may provide that a shareholder may request that shares subscribed to by the shareholder shall be converted into shares of another class. In such cases, the conditions for conversion, the period within which the conversion may be requested, and the number and particulars as to the shares to be issued as a result of the conversion shall be prescribed.
(2) In cases where a company issues different classes of shares, the company may determine in the articles of incorporation that it may convert the shares subscribed to by the shareholder into shares of another class upon occurrence of certain event. In such cases, the reason of conversion, conditions for conversion, the period within which the conversion may be requested, and the number and particulars as to the shares to be issued as a result of the conversion shall be prescribed.
(3) In cases falling under paragraph (2), the board of directors shall separately notify the following matters to the shareholders of the relevant shares and to the interest-holders stated in the register of shareholders: Provided, That the said notification may be substituted by public notification:
1. The shares to be converted;
2. A statement to the effect that the share certificates should be submitted to the company within a prescribed period of no less than two weeks;
3. A statement to the effect that the share certificates will become invalidated if they are not submitted to the company within the said period.
(4) Out of the number of shares of different classes under Article 344 (2), the number of shares to be newly issued shall be reserved, with respect to their issuance, during the period for requesting the conversion or the period of conversion.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 347 (Procedures for Issuance of Convertible Shares)
In cases falling under Article 346, the following matters shall be stated in share subscription forms or certificates of preemptive rights to new shares: <Amended by Act No. 3724, Apr. 10, 1984; Act No. 10600, Apr. 4, 2011>
1. A statement to the effect that the relevant shares may be converted into shares of another class;
2. Conditions of conversion;
3. Particulars of the shares to be issued as a result of the conversion;
4. The period for requesting the conversion, or the period for conversion.
 Article 348 (Issuance Price of Shares to be Issued as a result of Conversion)
If shares are to be issued as a result of the conversion, the issuance price of such new shares shall be that of the shares which existed before the conversion.
 Article 349 (Request for Conversion)
(1) A person requesting conversion of shares shall submit to the company two copies of the written request form together with the share certificates.
(2) The written request form mentioned in paragraph (1) shall state the classes and number of shares to be converted and the date of the demand and the shareholder demanding the conversion shall write his/her name and affix his/her seal, or affix his/her signature, thereon. <Amended by Act No. 5053, Dec. 29, 1995>
(3) Deleted. <by Act No. 5053, Dec. 29, 1995>
 Article 350 (Effectuation of Conversion)
(1) Conversion of shares shall take effect at the time it is requested in cases where a shareholder requests the conversion, and at the time the period of Article 346 (3) 2 elapses in cases where the company has completed the conversion. <Amended by Act No. 10600, Apr. 14, 2011>
(2) The holders of shares converted during the period mentioned in Article 354 (1) may not exercise their voting rights at the general meeting of shareholders held during such period.
(3) With regard to dividends of profits accruing from the shares issued as a result of conversion, the conversion shall be deemed to have been made when the shareholder requests the conversion or at the end of the business year in which the period mentioned in Article 346 (3) 2 elapses. In such cases, the articles of incorporation may provide that with respect to dividends of profits as to the new shares, the conversion shall be deemed to have been made when the shareholder demands the conversion or at the end of the business year immediately before the business year in which the period mentioned in Article 346 (3) 2 elapses. <Amended by Act No. 10600, Apr. 14, 2011>
[This Article Wholly Amended by Act No. 5053, Dec. 29, 1995]
 Article 351 (Registration of Conversion)
The registration of changes arising from the conversion of shares shall be made at the place of the principal office, within two weeks from the last day of the month in which the conversion is demanded or the period mentioned in Article 346 (3) 2 elapses.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 352 (Matters to Be Entered in Register of Shareholders)
(1) Where shares are issued, the following matters shall be entered in the register of shareholders: <Amended by Act No. 3724, Apr. 10, 1984; Act No. 12591, May 20, 2014>
1. The name and address of each shareholder;
2. The classes and number of shares held by each shareholder;
2-2. The serial number of share certificates when such share certificates have been issued for shares held by each shareholder;
3. The date of acquisition of each share.
(2) If, in cases falling under paragraph (1), convertible shares are issued, the register of shareholders shall also state the matters listed in Article 347. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 12591, May 20, 2014>
 Article 352-2 (Electronic Register of Shareholders)
(1) A company may prepare a register of shareholders in electronic form (hereinafter referred to as "electronic register of shareholders"), as determined by the articles of incorporation.
(2) Electronic registers of shareholders shall contain e-mail addresses, in addition to matters to be entered under Article 352 (1).
(3) Matters necessary for the methods for keeping, disclosing and perusing electronic registers of shareholders shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9746, May 28, 2009]
 Article 353 (Legal Effects of Register of Shareholders)
(1) Any notice or peremptory notice to a shareholder or a pledgee may be effective if sent to the address entered in the register of shareholders or other address notified to the company by such person.
(2) The provisions of Article 304 (2) shall apply mutatis mutandis to a notice or peremptory notice under the preceding paragraph.
 Article 354 (Closure of Register of Shareholders and Record Date)
(1) In order to designate the person who shall exercise the voting right, receive dividends or exercise other rights as a shareholder or a pledgee, the company may suspend changes of the entries in the register of shareholders for a specified period or it may deem any shareholder or pledgee whose name appears in the register of shareholders on a specified date to be the shareholder or pledgee who shall be entitled to exercise such rights. <Amended by Act No. 3724, Apr. 10, 1984>
(2) The period mentioned in paragraph (1) shall not exceed three months. <Amended by Act No. 3724, Apr. 10, 1984>
(3) The date mentioned in paragraph (1) shall be determined as a day within three months before the date the person may exercise the rights as a shareholder or pledgee. <Amended by Act No. 3724, Apr. 10, 1984>
(4) If a company has determined the period or the date mentioned in paragraph (1), it shall give a public notice two weeks prior to such period or date: Provided, That this shall not apply where such period or date has been designated by the articles of incorporation.
 Article 355 (Timing for Issuing Share Certificates)
(1) A company shall issue share certificates without delay after its incorporation or after the date of payment for new shares.
(2) No share certificate may be issued before the incorporation of the company or the subscription date for new shares.
(3) Share certificates issued in contravention of the preceding paragraph shall be null and void: Provided, That this shall not affect any claim for damages against the parties who have issued them.
 Article 356 (Matters Required to Be Entered in Share Certificates)
Each share certificate shall state the following matters and the serial number, and the representative director shall write his/her name and affix his/her seal, or affix his/her signature, thereon: <Amended by Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
1. Trade name of the company;
2. Date of incorporation of the company;
3. Total number of shares authorized to be issued by the company;
4. Par value per share where par value shares are issued;
5. Date of issuance of such certificates, if the shares are issued after the incorporation of the company;
6. Particulars and classes of shares, if different classes of shares are issued;
6-2. Provisions that the transfer of shares shall be subject to the approval of the board of directors, if so determined;
7. Deleted; <by Act No. 10600, Apr. 14, 2011>
8. Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 356-2 (Electronic Registration of Shares)
(1) A company may register shares with the electronic registration ledger of an electronic registration authority (referring to the authority designated for handling the affairs of electronic registration of securities, etc.; hereinafter the same shall apply) instead of issuing share certificates, as prescribed by the articles of incorporation.
(2) Transfer or pledge of shares registered with the electronic registration ledger shall become effective when the transfer or pledge is registered with the electronic registration ledger.
(3) A person who has registered shares with the electronic registration ledger shall be deemed to legitimately have the right to the registered shares, and the person who has relied on such electronic registration ledger in good faith and without gross negligence and thereby acquired the right pursuant to registration under paragraph (2) shall validly acquire such right.
(4) Matters necessary for the procedures, methods and effects of electronic registration, designation and supervision of an electronic registration authority, and other matters on electronic registration of shares shall be determined by Presidential Decree.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Articles 357 and 358 Deleted. <by Act No. 12591, May 20, 2014>
 Article 358-2 (Non-Possession of Share Certificates)
(1) Unless otherwise provided for in the articles of incorporation, a shareholder may notify the company of his/her intent not to have share certificates of his/her shares. <Amended by Act No. 12591, May 20, 2014>
(2) Upon receipt of the notification mentioned in paragraph (1), the company shall without delay enter in the register of shareholders and part of a set thereof its intent not to issue the share certificates and notify the shareholder accordingly. In such cases, the company may not issue the relevant share certificates.
(3) In cases falling under paragraph (1), any share certificates issued previously shall be submitted to the company and the company shall invalidate them or deposit them with a transfer agent.
(4) Notwithstanding the provisions of paragraphs (1) through (3), a shareholder may request at any time that the company issue or return the share certificates.
[This Article Wholly Amended by Act No. 5053, Dec. 29, 1995]
 Article 359 (Bona Fide Acquisition of Share Certificates)
The provisions of Article 21 of the Check Act shall apply mutatis mutandis to share certificates.
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 360 (Judgment of Nullification and Re-issuance of Share Certificates)
(1) A share certificate may be invalidated through process of a public summons.
(2) No person who has lost his/her share certificate shall request its re-issuance to the company, unless he/she has obtained a judgment of nullification with respect thereto.
Sub-Section 2 All-Inclusive Share Swap
 Article 360-2 (Incorporation of Wholly Owning Parent Company by All-inclusive Share Swap)
(1) A company may become a company that owns the total number of issued and outstanding shares of another company (hereinafter referred to as "wholly owning parent company") by an all-inclusive share swap under the provisions of this Sub-Section. In such cases, the said another company shall be called "wholly owned subsidiary".
(2) Shares owned by the shareholders of a company becoming a wholly owned subsidiary by an all-inclusive share swap (hereafter in this Sub-Section, referred to as "share swap") shall be transferred to a company becoming a wholly owning parent company by the share swap on the day of the share swap; and the shareholders of the company becoming the said wholly owned subsidiary shall become the shareholders of the company becoming the said wholly owning parent company by receiving the allotment of new shares to be issued by the company becoming the said wholly owning parent company for the share swap or by acquiring treasury shares of the company by transfer. <Amended by Act No. 13523, Dec. 1, 2015>
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-3 (Preparation of Contracts for Share Swap and Approval from General Meeting of Shareholders, and Special Rules in Cases Where Consideration for Share Swap is Shares of Parent Company)
(1) A company that intends to make a share swap shall prepare a contract for share swap and obtain approval therefor from a general meeting of shareholders.
(2) A resolution for an approval under paragraph (1) shall be governed by the provisions of Article 434.
(3) The following matters shall be provided for in the share swap contract: <Amended by Act No. 10600, Apr. 14, 2011; Act No. 13523, Dec. 1, 2015>
1. Where the company becoming a wholly owning parent company amends the articles of incorporation due to the share swap, the relevant provisions;
2. Matters concerning the total number and classes of new shares to be issued or treasury shares to be transferred by the company becoming a wholly owning parent company, and the number of such shares by class, and the allotment of new shares or the transfer of treasury shares to the shareholders of the company becoming a wholly owned subsidiary, where the company becoming the wholly owning parent company issues new shares or transfers treasury shares for share swap;
3. Matters concerning the amount of capital or reserves to be increased, where the amount of capital or reserves of the company becoming a wholly owning parent company is to be increased;
4. Where money or any other asset is provided to the shareholders of the company becoming a wholly owned subsidiary as all or part of the consideration notwithstanding subparagraph 2, matters concerning the details and allotment thereof;
5. Date of the general meeting of shareholders of each company to adopt a resolution under paragraph (1);
6. Date of share swap;
7. Where profits dividends are distributed by each company by the date of share swap, the maxim amount thereof;
8. Deleted; <by Act No. 13523, Dec. 1, 2015>
9. Where the directors, auditors or members of the audit committee to be appointed by the company becoming a wholly owning parent company have been determined, their names and resident registration numbers.
(4) A company shall state the following matters in a notice under Article 363: <Amended by Act No. 12591, May 20, 2014>
1. The major details of a share swap agreement;
2. The details of and methods for exercising the appraisal right under Article 360-5 (1);
3. Where one company has provisions in its articles of incorporation to the effect that a share transfer requires an approval of the board of directors, and the articles of incorporation of the other company do not have such provisions, the purport thereof.
(5) If the shareholders of each company involved in the share swap bear increased liabilities as a result of a share swap, consent of all shareholders shall be required in addition to the resolution under paragraph (1) and Article 436. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
(6) Notwithstanding Article 342-2 (1), where the assets provided to the shareholders of the company becoming a wholly owned subsidiary pursuant to paragraph (3) 4 include shares of the parent company of the company becoming a wholly owning parent company, the company becoming the wholly owning parent company may acquire the shares of such parent company for the provision. <Newly Inserted by Act No. 13523, Dec. 1, 2015>
(7) Where the company becoming a wholly owning parent company continues to own shares of the parent company of such company that it has acquired pursuant to paragraph (6) after the share swap, it shall dispose of such shares within six months from the date on which the share swap takes effect. <Newly Inserted by Act No. 13523, Dec. 1, 2015>
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-4 (Disclosure of Share Swap Agreements)
(1) Directors shall keep the following documents at the head office from two weeks prior to the date of a general meeting of shareholders under Article 360-3 (1) to the date on which six months elapse from the date of share swap: <Amended by Act No. 13523, Dec. 1, 2015>
1. Contracts for share swap;
2. Where the company becoming a wholly owning parent company issues new shares or transfers treasury shares for a share swap, documents stating the grounds for the allocation of new shares or the transfer of treasury shares to the shareholders of the company becoming a wholly owned subsidiary;
3. Final balance sheets and profit and loss statements of each company making a share swap prepared on a certain date within six months prior to the date of a general meeting of shareholders under Article 360-3 (1) (in cases of a simplified share swap under Article 360-9, the date of public notice or notification under paragraph (2) of the same Article).
(2) The provisions of Article 391-3 (3) shall apply mutatis mutandis to the documents listed in paragraph (1).
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-5 (Appraisal Rights of Dissenting Shareholders)
(1) Shareholders (including shareholders with no or limited voting rights; hereafter the same shall apply in this Article) dissenting from a resolution of the board of directors on a matter requiring approval under Article 360-3 (1) may, if they informed in writing the company of their dissent to the said resolution prior to a general meeting of shareholders, make a written request to the company for the purchase of the shares they own, stating the classes and number of such shares, within 20 days from the date of the resolution by such general meeting. <Amended by Act No. 13523, Dec. 1, 2015>
(2) Shareholders who have given a written notice to the company of their intents to oppose to the share swap within two weeks from the date of public notice or notification under Article 360-9 (2) may make a written request to the company for the purchase of shares owned by themselves, indicating the classes and number of such shares, within 20 days of the expiration of such period.
(3) The provisions of Article 374-2 (2) through (5) shall apply mutatis mutandis to requests for purchase under paragraphs (1) and (2).
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-6 Deleted. <by Act No. 13523, Dec. 1, 2015>
 Article 360-7 (Limit of Capital Increase by Wholly Owning Parent Company)
(1) No capital of a company becoming a wholly owning parent company shall be increased in excess of the amount obtained by subtracting the following amounts from the amount of current net assets of the company becoming a wholly owned subsidiary on the date of share swap: <Amended by Act No. 10600, Apr. 14, 2011; Act No. 13523, Dec. 1, 2015>
1. The value of money or other assets to be provided to the shareholders of the company becoming a wholly owned subsidiary;
2. The total amount of the book value of the company's treasury shares to be transferred to the shareholders of the company becoming a wholly owned subsidiary pursuant to Article 360-3 (3) 2.
(2) In cases where a company becoming a wholly owning parent company already owns the shares of a company becoming a wholly owned subsidiary prior to share swap, the capital of the company becoming the wholly owning parent company shall not be increased in excess of the limit of amount obtained by subtracting the amounts falling under the subparagraphs of paragraph (1) from the amount derived from multiplying the amount of current net assets of the company becoming the wholly owned subsidiary on the date of share swap by the rate of the number of shares to be transferred to the company becoming the wholly owning parent company due to the share swap with the total number of shares issued by the relevant company. <Amended by Act No. 10600, Apr. 14, 2011>
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-8 (Procedures for Invalidation of Share Certificates)
(1) A company becoming a wholly owned subsidiary due to a share swap shall, where its general meeting of shareholders has made an approval under Article 360-3 (1), give a public notice on the following matters one month before the date of share swap, and notify the shareholders listed in the register of shareholders and the pledgees, respectively:
1. The purport of an approval under Article 360-3 (1);
2. The purport that the share certificates shall be submitted to the company by the day preceding the date of share swap;
3. The purport that the share certificates shall become invalidated on the date of share swap.
(2) The provisions of Article 442 shall apply mutatis mutandis to cases where approval under Article 360-3 (1) has been granted. <Amended by Act No. 12591, May 20, 2014>
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-9 (Simplified Share Swaps)
(1) In cases where all the shareholders of a company becoming a wholly owned subsidiary give their consent or where a company becoming a wholly owning parent company owns at least 90 percent of the total number of issued and outstanding shares of the company becoming the wholly owned subsidiary, the approval of a general meeting of shareholders of the company becoming the wholly owned subsidiary may substitute for the approval of the board of directors.
(2) A company becoming a wholly owned subsidiary shall, in cases falling under paragraph (1), give a public notice to the effect that a share swap is to be made without the approval of a general meeting of shareholders within two weeks of the preparation of a share swap contract, or notify the shareholders thereof: Provided, That this shall not apply where all the shareholders give their consent thereto.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-10 (Small-Scale Share Swaps)
(1) Where the total number of new shares issued and treasury shares transferred for a share swap by a company becoming a wholly owning parent company does not exceed ten percent of the total number of issued and outstanding shares of the relevant company, the approval of a general meeting of shareholders under the provision of Article 360-3 (1) of the relevant company may be substituted by the approval of the board of directors: Provided, That the foregoing shall not apply where the money or other assets to be provided to the shareholders of the company becoming a wholly owned subsidiary has been determined and the value thereof exceeds five percent of the value of the current net assets of the company becoming a wholly owning parent company on its final balance sheet provided for in Article 360-4 (1) 3. <Amended by Act No. 13523, Dec. 1, 2015>
(2) Deleted. <by Act No. 13523, Dec. 1, 2015>
(3) In cases falling under the main body of paragraph (1), a share swap agreement shall state the purport that the company becoming a wholly owning parent company may make a share swap without obtaining the approval of a general meeting of shareholders provided for in Article 360-3 (1), and shall not state the matters listed in paragraph (3) 1 of the said Article.
(4) A company becoming a wholly owning parent company shall give a public notice on the business title and the head office of the company becoming a wholly owned subsidiary, the date of share swap and the purport that a share swap is to be made without obtaining an approval under Article 360-3 (1), or notify it to the shareholders, within two weeks of the preparation of a share swap agreement.
(5) In cases where a holder of shares equivalent to at least 20 percent of the total number of issued and outstanding shares of a company becoming a wholly owning parent company notifies the company in writing of his/her intent to oppose to the share swap under the main body of paragraph (1) within two weeks from the date of a public notice or notice under paragraph (4), the share swap under this Article shall not be made. <Amended by Act No. 10600, Apr. 14, 2011>
(6) In cases falling under the main body of paragraph (1), where Article 360-4 (1) is applicable to a company becoming a wholly owning parent company, the expression "two weeks prior to the date of a general meeting of shareholders under Article 360-3 (1)" in the part other than the subparagraphs of the same paragraph of the same Article, and "the date of a general meeting of shareholders under Article 360-3 (1)" in subparagraph 3 of the same paragraph of the same Article shall be "the date of a public notice or notice under paragraph (4) of this Article", respectively.
(7) In cases falling under the main body of paragraph (1), the provisions of Article 360-5 shall not apply.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-11 (Mutatis Mutandis Application of Regulations for Fractional Shares, etc.)
(1) The provisions of Article 443 shall apply mutatis mutandis to the share swaps of a company.
(2) The provisions of Articles 339 and 340 (3) shall apply mutatis mutandis to a pledge for shares of a company becoming a wholly owned subsidiary in cases of a share swap.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-12 (Disclosure of Documents Stating Matters on Share Swap after Share Swap)
(1) Directors shall keep the documents stating the following matters at the head office for six weeks from the date of share swap:
1. The date of share swap;
2. The value of current net assets of the company becoming a wholly owned subsidiary on the date of share swap;
3. The number of shares of a wholly owned subsidiary transferred to a wholly owning parent company due to the share swap;
4. Other matters on the share swap.
(2) The provisions of Article 391-3 (3) shall apply mutatis mutandis to the documents listed in paragraph (1).
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-13 (Term of Office of Directors and Auditors of Wholly Owning Parent Companies)
Directors and auditors of a company becoming a wholly owning parent company based on a share swap, who have taken office before the share swap, shall retire from office on the closing date of a general meeting of shareholders in a period for the settlement of accounts, which comes first after the date of the share swap.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-14 (Lawsuit for Invalidation of Share Swap)
(1) Any shareholder, director, auditor, member of the audit committee or liquidator of each company may claim invalidation of a share swap only by a lawsuit within six months of the date of such share swap.
(2) A lawsuit under paragraph (1) shall be under the exclusive jurisdiction of the district court having jurisdiction over the location of the head office of the company becoming a wholly owning parent company.
(3) When a judgment invalidating a share swap becomes final and conclusive, the company that has become a wholly owning parent company shall transfer its shares in the company that has become a wholly owned subsidiary to the shareholders of the new shares issued or treasury shares transferred for the share swap. <Amended by Act No. 13523, Dec. 1, 2015>
(4) The provisions of Articles 187 through 189, 190 (text), 191, 192, 377 and 431 shall apply mutatis mutandis to litigations under paragraph (1), and those of Articles 339 and 340 (3) to cases under paragraph (3), respectively.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
Sub-Section 3 All-Inclusive Transfer of Shares
 Article 360-15 (Establishment of Wholly Owning Parent Company Based on All-inclusive Share Transfer)
(1) A company may establish a wholly owning parent company based on an all-inclusive share transfer under this Sub-Section (hereafter in this Sub-Section, referred to as "share transfer"), and become a wholly owned subsidiary.
(2) Shares of a company becoming a wholly owned subsidiary based on a share transfer, which are owned by its shareholders, shall be transferred to a wholly owning parent company established based on the share transfer, and the shareholders of the relevant wholly owned subsidiary shall become the shareholders of the relevant wholly owning parent company by receiving allotment of shares issued by the relevant wholly owning parent company for the share transfer.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-16 (Approval for Share Transfer by General Meeting of Shareholders)
(1) A company seeking to transfer shares shall prepare a plan for share transfer stating the following matters, and obtain approval thereof from a general meeting of shareholders: <Amended by Act No. 10600, Apr. 14, 2011; Act No. 13523, Dec. 1, 2015>
1. Provisions of the articles of incorporation of the wholly owning parent company to be established;
2. The classes and number of shares issued for the share transfer by the wholly owning parent company to be established, and matters on the allotment of shares to the shareholders of the company becoming a wholly owned subsidiary;
3. The amount of capital and capital reserves of the wholly owning parent company to be established;
4. Where money or any other asset is provided to the shareholders of the company becoming a wholly owned subsidiary notwithstanding subparagraph 2, matters concerning the details and allotment thereof;
5. The timing for the share transfer;
6. Where profits dividends are distributed by the company becoming a wholly owned subsidiary by the date of share transfer, the maxim amount thereof;
7. The names and resident registration numbers of the directors, auditors or the members of the audit committee of the wholly owning parent company to be established;
8. Where the companies jointly incorporate a wholly owning parent company based on the share transfer, the purport thereof.
(2) A resolution for an approval under paragraph (1) shall be governed by Article 434.
(3) The provisions of Article 360-3 (4) shall apply mutatis mutandis to the approval of a general meeting of shareholders in cases falling under paragraph (1).
(4) In cases where the shareholders of each company involved in the share transfer bear increased liabilities as a result of a share transfer, the consent of all shareholders shall be required in addition to the resolution under paragraph (1) and Article 436. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-17 (Disclosure of Documents Such as Plans for Share Transfer, etc.)
(1) Directors shall retain the following documents at the head office from two weeks prior to the date of a general meeting of shareholders under Article 360-16 (1) to the date on which six months have elapsed from the date of share transfer:
1. A plan for share transfer under Article 360-16 (1);
2. Documents stating the grounds for the allotment of shares to the shareholders of the company becoming a wholly owned subsidiary;
3. The final balance sheet and profit and loss statement of the company becoming a wholly owned subsidiary which are prepared on a certain date within six months prior to the date of a general meeting of shareholders under Article 360-16 (1).
(2) The provisions of Article 391-3 (3) shall apply mutatis mutandis to the documents listed in paragraph (1).
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-18 (Maximum Amount of Equity Capital of Wholly Owning Parent Company)
The equity capital of a wholly owning parent company to be established shall not exceed the value of the current net asset of the company becoming a wholly owned subsidiary as of the date of the share transfer, less the value of the money and other assets to be provided to the shareholders of the company. <Amended by Act No. 10600, Apr. 14, 2011; Act No. 13523, Dec. 1, 2015>
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-19 (Procedures for Invalidation of Share Certificates)
(1) A company becoming a wholly owned subsidiary based on a share transfer shall, where it has made a resolution under Article 360-16 (1), publicly notify the following matters, and notify the shareholders listed in the register of shareholders and pledgees, respectively:
1. The purport that a resolution has been made under Article 360-16 (1);
2. The purport that the share certificates must be submitted to the company within a specified period of no less than one month;
3. The purport that the shares shall become invalidated on the date of share transfer.
(2) The provisions of Article 442 shall apply mutatis mutandis to cases where a resolution under Article 360-16 (1) has been adopted. <Amended by Act No. 12591, May 20, 2014>
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-20 (Registration after Share Transfer)
Where a share transfer is completed, the matters provided for in Article 317 (2) shall be registered within two weeks at the location of head office of the wholly owning parent company established, and within three weeks at the location of its branch offices.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-21 (Effective Date of Share Transfer)
A transfer of shares shall become effective upon registration under Article 360-20 by the wholly owning parent company established based on such transfer at the location of its head office.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-22 (Mutatis Mutandis Application of Provisions on Share Transfer)
The provisions of Articles 360-5, 360-11, and 360-12 shall apply mutatis mutandis in the case of share transfer.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 360-23 (Lawsuit for Invalidation of Share Transfer)
(1) Any shareholder, director, auditor, member of the audit committee or liquidator of each company may claim invalidation of a share transfer only by a lawsuit within six months from the date of share transfer.
(2) A litigation under paragraph (1) shall be under the exclusive jurisdiction of the district court having jurisdiction over the location of head office of the company becoming a wholly owning parent company.
(3) When a judgment invalidating a share transfer becomes final and conclusive, the company becoming a wholly owning parent company shall transfer the shares of the company becoming a wholly owned subsidiary, which have been owned by it, to the shareholders of new shares issued for the share transfer.
(4) The provisions of Articles 187 through 193 and 377 shall apply mutatis mutandis to lawsuits under paragraph (1), and Articles 339 and 340 (3) to cases falling under paragraph (3), respectively.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
Sub-Section 4 Controlling Shareholders' Acquisition of All Shares Owned by Minority Shareholders
 Article 360-24 (Controlling Shareholders' Rights to Request Sale)
(1) In cases where it is necessary to achieve managerial objectives of a company, a shareholder who owns, on his/her own account, 95 percent or more of the total number of issued and outstanding shares of the company (hereinafter referred to as "controlling shareholder") may request other shareholders of the company (hereafter referred to as "minority shareholder" in this Sub-Section) to sell the shares held by them.
(2) In calculating the number of shares held under paragraph (1), the shares held by parent and subsidiary companies shall be aggregated. In such cases, the shares held by a company having shares in excess of half of the total number of issued and outstanding shares held by a shareholder who is not a company shall be aggregated to the shares held by the said shareholder.
(3) When a request for sale under paragraph (1) is made, the prior approval of a general meeting of shareholders shall be obtained.
(4) When the convocation of a general meeting of shareholders under paragraph (3) is notified, the following matters shall be stated in the notification, and the controlling shareholder requesting the sale of shares shall explain thereon at the general meeting of shareholders:
1. The status of share-ownership of the controlling shareholder;
2. The objective of requesting the sale of shares;
3. Publicly certified appraiser's evaluation of the ground and adequacy of calculation of the sales price;
4. Payment guarantee for the sales price.
(5) A controlling shareholder shall publicly notify the following matters by no later than one month prior to the date of request for the sale of shares, and shall separately notify the same to the shareholders listed in the register of shareholders and the pledgees, respectively:
1. The purport that minority shareholders shall submit the share certificates to the controlling shareholder simultaneously with the minority shareholders' receipt of the sales price;
2. The purport that, if minority shareholders fail to submit the share certificates, the share certificates shall become invalidated on the date the minority shareholders receive the sales price or when the controlling shareholder publicly deposits the sales price.
(6) Minority shareholders who receive a request for sale under paragraph (1) shall sell their shares to the controlling shareholder within two months from the date of receipt of the request for sale.
(7) In cases falling under paragraph (6), the sales price shall be determined through a negotiation between the minority shareholders who received the request for the sale of shares and the controlling shareholder who requested the sale.
(8) In cases where negotiation regarding the sales price under paragraph (7) is not conducted within 30 days of the date of receipt of the request for sale, the minority shareholders who received the request for the sale of shares or the controlling shareholder who requested the sale may request the court to make a determination of the sales price.
(9) In cases where the court determines the sales price of shares in accordance with paragraph (8), the court shall compute a fair and reasonable value of the shares based on the status of the company's assets and other circumstances.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 360-25 (Appraisal Rights of Minority Shareholders)
(1) A minority shareholder of a company which has a controlling shareholder may, at any time, request the controlling shareholder to purchase the shares held by the minority shareholder.
(2) The controlling shareholder who receives the request for purchase under paragraph (1) shall purchase the shares, within two months of the date of the request for purchase, from the shareholder who requested such purchase.
(3) In cases falling under paragraph (2), the sales price shall be determined through a negotiation between the shareholder who requested the purchase of shares and the controlling shareholder who received the request for purchase.
(4) In cases where negotiation regarding the sales price under paragraph (3) is not conducted within 30 days of the date of receipt of the request for purchase, the controlling shareholder who received the request for purchase of shares or the minority shareholder who requested the purchase may request the court to make a determination of the sales price.
(5) In cases where the court determines the sales price of shares in accordance with paragraph (4), the court shall compute a fair and reasonable value of the shares based on the status of the company's assets and other circumstances.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 360-26 (Transfer of Shares, etc.)
(1) When a controlling shareholder who acquires shares pursuant to Articles 360-24 and 360-25 pays to a minority shareholder the sales price, transfer of the shares shall be deemed to have been made.
(2) In cases where the minority shareholder, to whom the sales price mentioned in paragraph (1) is to be paid, is unknown or the minority shareholder refuses to receive the sales price, the controlling shareholder may publicly deposit the sales price. In such cases, transfer of the shares shall be deemed to have been made to the controlling shareholder on the date of the public deposit.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
SECTION 3 Organs of Company
Sub-Section 1 General Meeting of Shareholders
 Article 361 (Authority of General Meeting of Shareholders)
A general meeting of shareholders may adopt resolutions on matters provided for by this Act or the articles of incorporation.
 Article 362 (Decision of Convocation)
A decision to convene a general meeting of shareholders shall be made by the board of directors, unless otherwise prescribed by this Act.
 Article 363 (Notice of Convocation)
(1) When a company convenes a general meeting of shareholders, it shall give a written notice or notice in an electronic form to each shareholder by obtaining the consent of each shareholder, at least two weeks prior to the date set for such general meeting: Provided, That if such notice has not arrived at the address of a shareholder entered on the register of shareholders for three consecutive years, the company may choose not to give such notice to that shareholder.
(2) Written notices under paragraph (1) shall state the agenda for the meeting.
(3) Notwithstanding the provisions of paragraph (1), when a company with total capital of less than one billion won, convenes a general meeting of shareholders, it may give each shareholder a notice in writing, or in an electronic form, in which case after obtaining consent from each shareholder, at least ten days prior to the date of the general meeting of shareholders. <Amended by Act No. 12591, May 20, 2014>
(4) A company with total capital of less than one billion won may hold a general meeting of shareholders without undergoing a convocation procedure if there is consent of all shareholders, and a resolution of a general meeting of shareholders may be replaced by a written resolution. If all shareholders consent to the subject matter of a resolution in writing, a written resolution shall be deemed adopted. <Amended by Act No. 12591, May 20, 2014>
(5) A written resolution under paragraph (4) shall have the same effect as a resolution by a general meeting of shareholders. <Amended by Act No. 12591, May 20, 2014>
(6) Provisions concerning a general meeting of shareholders shall apply mutatis mutandis to a written resolution. <Amended by Act No. 12591, May 20, 2014>
(7) The provisions of paragraphs (1) through (4) shall not apply to the holders of non-voting shares: Provided, That the foregoing shall not apply where the agenda of the general meeting stated in a notice under paragraph (1) includes matters triggering appraisal rights of dissenting shareholders pursuant to Article 360-5, 360-22, 374-2, 522-3 or 530-11. <Amended by Act No. 12591, May 20, 2014; Act No. 13523, Dec. 1, 2015>
[This Article Wholly Amended by Act No. 9746, May 28, 2009]
 Article 363-2 (Shareholders' Rights to Make Proposals)
(1) Shareholders who hold no less than 3 percent of the total number of issued and outstanding shares excluding nonvoting shares may make a proposal to directors in writing or by an electronic document that certain matters be raised as agenda items for a general meeting of shareholders (hereinafter referred to as "shareholders' proposal") at least six weeks prior to the date set for the general meeting of shareholders (in cases of an ordinary general meeting of shareholders, the date of the year corresponding to the date of the ordinary general meeting of shareholders of the preceding year; hereafter the same shall apply in this Article). <Amended by Act No. 9362, Jan. 30, 2009>
(2) Shareholders under paragraph (1) may request that directors enter or record a summary of the proposals submitted by the shareholders in writing or by an electronic document in a notice under Article 363, in addition to the agenda for the meeting, at least six weeks prior to the date set for a general meeting of shareholders. <Amended by Act No. 9362, Jan. 30, 2009; Act No. 12591, May 20, 2014>
(3) Where a shareholders' proposal has been made under paragraph (1), directors shall report to the board of directors, which shall accept the proposal as an agenda item of a general meeting of shareholders, except where such proposal is in violation of statutes or the articles of incorporation, and in other cases as prescribed by Presidential Decree. In such cases, the shareholder who made the proposal shall, on his/her request, be given an opportunity to explain the proposal at a general meeting of shareholders. <Amended by Act No. 9362, Jan. 30, 2009>
[This Article Newly Inserted by Act No. 5591, Dec. 28, 1998]
 Article 364 (Place for Convocation)
Unless otherwise provided for in the articles of incorporation, a general meeting of shareholders shall be convened at the place of the principal office or at some place adjacent thereto.
 Article 365 (Convocation of General Meetings)
(1) An ordinary general meeting of shareholders shall be convened at least once a year at a fixed date.
(2) Where a company has determined that the settlement of accounts shall take place more than twice a year, a general meeting of shareholders shall be convened with respect to each of such period for the settlement of accounts.
(3) An extraordinary general meeting of shareholders shall be convened from time to time whenever necessary.
 Article 366 (Requests for Convocation by Minority Shareholders)
(1) Shareholders who hold no less than 3 percent of the total number of issued and outstanding shares may request convocation of an extraordinary general meeting of shareholders, by submitting to the board of directors a document or an electronic document stating the subject matter of and the reasons for the convocation of the meeting. <Amended by Act No. 5591, Dec. 28, 1998; Act No. 9746, May 28, 2009>
(2) If procedures for the convocation of a general meeting of shareholders are not taken promptly after the demand mentioned in paragraph (1), the shareholder who has made such demand may convene such meeting with the permission of the court. In such cases, the chairperson of the general meeting of shareholders may be appointed by the court upon request of any interested person or ex officio. <Amended by Act No. 5591, Dec. 28, 1998; Act No. 10600, Apr. 14, 2011>
(3) An inspector may be appointed at a general meeting held in accordance with paragraphs (1) and (2) to investigate the affairs of the company and the current condition of its assets. <Amended by Act No. 5591, Dec. 28, 1998>
 Article 366-2 (Maintenance of Order at General Meetings of Shareholders)
(1) The chairperson of a general meeting of shareholders shall be elected at the general meeting unless otherwise provided for by the articles of incorporation.
(2) The chairperson of a general meeting of shareholders shall exercise control over maintaining order and proceedings at the general meeting.
(3) The chairperson of a general meeting of shareholders may order anyone who notably disturbs the order by intentionally speaking or acting for a filibuster, to stop speaking or to leave the meeting room.
[This Article Newly Inserted by Act No. 6086, Dec. 31, 1999]
 Article 367 (Appointment of Inspectors)
(1) At a general meeting of shareholders, an inspector may be appointed to examine documents submitted by the directors and auditors' reports.
(2) A company or shareholder who owns one percent or more of the total number of issued and outstanding shares of the company may request a court, before convocation of a general meeting of shareholders, to appoint an inspector in order to examine the legitimacy of procedures for convening the general meeting or the methods of resolutions thereof.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 368 (Methods of Adopting Resolutions and Exercise of Voting Rights)
(1) Unless otherwise provided for by this Act or the articles of incorporation, resolutions shall be adopted at a general meeting of shareholders by affirmative votes of a majority of the voting rights of shareholders present thereat and representing at least a quarter of the total number of issued and outstanding shares. <Amended by Act No. 5053, Dec. 29, 1995>
(2) A shareholder may cause a proxy to exercise his/her voting rights. In such cases, the proxy shall submit a document proving his/her power of representation at a general meeting of shareholders. <Amended by Act No. 12591, May 20, 2014>
(3) No person who has special interests in a resolution by a general meeting of shareholders shall exercise his/her voting rights. <Amended by Act No. 12591, May 20, 2014>
 Article 368-2 (Exercise of Voting Rights in Disunity)
(1) If a shareholder has at least two votes, he/she may exercise them in disunity. In such cases, he/she shall notify the company, in writing or by an electronic document, of his/her intent to do so and the grounds therefor three days prior to the date set for a general meeting of shareholders. <Amended by Act No. 9746, May 28, 2009>
(2) A company may reject the exercise of vote in disunity by a shareholder, unless he/she has accepted a trust of shares or he/she holds the shares on behalf of another person.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 368-3 (Exercise of Voting Rights in Writing)
(1) Shareholders may exercise their voting rights in writing, without attending a general meeting of shareholders, pursuant to the articles of incorporation.
(2) Any notice of convocation of a general meeting of shareholders shall be accompanied by documents and reference materials necessary for shareholders to exercise their voting rights pursuant to paragraph (1).
[This Article Newly Inserted by Act No. 6086, Dec. 31, 1999]
 Article 368-4 (Exercise of Voting Rights by Electronic Means)
(1) A company may determine that a shareholder may exercise an absentee vote by electronic means, through a resolution of the board of directors.
(2) Where a company gives a notice of convocation pursuant to Article 363, it shall notify that each shareholder may exercise his/her voting rights by such means as referred to in paragraph (1). <Amended by Act No. 12591, May 20, 2014>
(3) Where a company has determined the exercise of voting rights by electronic means under paragraph (1), each shareholder shall exercise their voting rights, as prescribed by Presidential Decree, including procedures for identifying the shareholders. In such cases, the company shall provide each shareholder with documents and reference materials necessary to exercise their voting rights by electronic means.
(4) Where a shareholder exercises his/her voting right in the same share under paragraph (1) or Article 368-3 (1), he/she shall choose to do so either in writing or by electronic means.
(5) A company shall retain electronic records on the exercise of voting rights for public inspection at the head office for three months from the closing of a general meeting of shareholders and shall preserve the same records for five years from the closing of a general meeting of shareholders.
(6) Procedures for exercising voting rights by electronic means, including procedures for identifying the shareholders, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9746, May 28, 2009]
 Article 369 (Voting Rights)
(1) Every shareholder shall have one vote for each share.
(2) No company shall be entitled to vote in respect of treasury shares.
(3) Where a company, its parent company and its subsidiary company together, or its subsidiary company alone holds more than one tenth of the total number of issued shares of another company, such another company shall have no voting rights for shares it holds of the company or the parent company. <Newly Inserted by Act No. 3724, Apr. 10, 1984>
 Article 370 Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 371 (Computation of Quorum and Number of Votes)
(1) In computations with respect to resolutions by a general meeting of shareholders, the number of non-voting shares under Articles 344-3 (1), 369 (2) and (3) shall be excluded from the total number of issued and outstanding shares.
(2) With respect to a resolution by a general meeting of shareholders, the number of shares for which voting rights cannot be exercised in accordance with Article 368 (3) and the number of shares for which voting rights cannot be exercised pursuant to Articles 409 (2) and (3), 542-12 (3) and (4) as shares exceeding the ratio prescribed therein shall not be counted as the number of voting rights of the shareholders present at the meeting. <Amended by Act No. 12591, May 20, 2014>
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 372 (Resolution to Adjourn or Continue General Meeting of Shareholders)
(1) A general meeting of shareholders may adopt a resolution for adjournment or continuation of the meeting.
(2) In cases falling under the preceding paragraph, the provisions of Article 363 shall not apply.
 Article 373 (Minutes of General Meeting)
(1) Minutes shall be prepared for the proceedings of a general meeting of shareholders.
(2) Minutes shall record a summary of proceedings of the meeting and the outcomes thereof and the chairperson as well as the directors present at the meeting shall write their names and affix their seals, or shall affix their signatures, thereon. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 374 (Transfer, Takeover or Lease of Business)
(1) A resolution provided for in Article 434 shall be required for a company to engage in any of the following activities: <Amended by Act No. 10600, Apr. 14, 2011>
1. A transfer of the whole or a substantial part of the business of the company;
2. The conclusion, alteration or rescission of a contract for lease of the whole business, entrusting the operations thereof, or for sharing with another person the entire profits and losses from the business or of a similar contract;
3. The acquisition of the whole or any part of business of another company which significantly affects the business of the company;
4. The acquisition of any part of business of another company which significantly affects the business of the company.
(2) When a company gives a notice of convocation of a general meeting of shareholders in relation to an activity prescribed in paragraph (1), it shall specify the details and the methods of exercising appraisal rights under the provisions of Article 374-2 (1) and (2) in the notice. <Newly Inserted Act No. 5053, Dec. 29, 1995; Act No. 12591, May 20, 2014>
 Article 374-2 (Appraisal Rights of Dissenting Shareholders)
(1) Where a shareholder (including a shareholder with no or limited voting right; hereafter the same shall apply in this Article), dissenting from a resolution under Article 374, has notified the company of his/her dissent to such resolution in writing before a general meeting of shareholders, he/she may request the company to purchase his/her shares in writing, specifying the classes and number of such shares, within 20 days from the date of the resolution at the general meeting. <Amended by Act No. 13523, Dec. 1, 2015>
(2) Where the company receives a request under paragraph (1), the relevant company shall purchase the shares within two months from the expiration of a period during which a request for purchase can be made (hereafter in this Article referred to as "period during which a request for purchase can be made") under the aforesaid paragraph. <Amended by Act No. 13523, Dec. 1, 2015>
(3) The purchase price of shares under paragraph (2) shall be determined through consultation between the shareholder and the company. <Amended by Act No. 6488, Jul. 24, 2001>
(4) Where the consultation under paragraph (3) fails to produce an agreement within 30 days from the expiration of the period during which a request for purchase can be made, the company or the shareholder who has requested the purchase of shares may request the court to determine the purchase price. <Amended by Act No. 6488, Jul. 24, 2001; Act No. 13523, Dec. 1, 2015>
(5) Where the court makes a ruling on the purchase price of shares under paragraph (4), it shall compute it by a fair price in view of the current status of assets of the company and other situations. <Newly Inserted by Act No. 6488, Jul. 24, 2001>
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 374-3 (Simplified Transfer, Acquisition, Lease, etc. of Business)
(1) Where all shareholders of a company engaging in an act falling under any subparagraphs of Article 374 (1) give their consent, or the other party of the relevant act owns at least 90 percent of the total number of the issued and outstanding shares of such company, approval of the board of directors of the company may be given in lieu of the approval of the general meeting of the shareholders.
(2) In cases falling under paragraph (1), the company shall make a public notification, or give a notice to its shareholders, that it intends to transfer, acquire or lease business without obtaining approval from the general meeting of shareholders, within two weeks from the preparation of an agreement therefor: Provided, That the foregoing shall not apply where all shareholders give their consent.
(3) A shareholder who has expressed dissent to the transfer, acquisition, lease, etc. of business in writing to the company within two weeks from the date of the public notification or notice under paragraph (2) may request the company to purchase his/her shares in writing, specifying the classes and number of such shares, within 20 days from the expiration of the aforesaid period. In such cases, the provisions of Article 374-2 (2) through (5) shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 13523, Dec. 1, 2015]
 Article 375 (Post-Formation Acquisition)
The provisions of Article 374 shall apply mutatis mutandis to an agreement whereby a company acquires, within two years from its existence, certain assets that existed prior to its incorporation and are to be continuously used for its business purposes, for a value of no less than five percent of the capital.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 376 (Lawsuit for Revocation of Resolutions)
(1) Where the procedures for convocation of a general meeting of shareholders or methods for adopting a resolution are in violation of any statute, or the articles of incorporation, or are substantially unfair or the details of a resolution are contrary to the articles of incorporation, a shareholder, director or auditor may file a lawsuit to revoke such resolution, within two months of the date of such resolution. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995>
(2) The provisions of Articles 186 through 188, the main body of Article 190 and Article 191 shall apply mutatis mutandis to lawsuits filed under paragraph (1). <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995>
 Article 377 (Duty to Provide Security of Shareholder Filing Lawsuit)
(1) In cases of a shareholder filing a lawsuit for revocation of a resolution, the court may, upon request of the company, order him/her to provide an appropriate amount of security, unless he/she is a director or auditor of the company. <Amended by Act No. 3724, Apr. 10, 1984>
(2) The provisions of Article 176 (4) shall apply mutatis mutandis to requests made under paragraph (1). <Amended by Act No. 3724, Apr. 10, 1984>
 Article 378 (Registration of Revocation of Resolutions)
When the subject matter of a resolution has been registered and a judgment revoking such resolution has become final and conclusive, registration thereof shall be made at the location of the principal office and each branch office.
 Article 379 (Court’s Dismissal of Claims at Discretion)
Where a lawsuit for revocation of a resolution has been filed, the court may dismiss the claims, if it deems the revocation is improper, taking into consideration the details of the resolution, the current status of the company, and other circumstances.
 Article 380 (Lawsuit Seeking Confirmation of Non-validity or Non-existence of Resolution)
The provisions of Articles 186 through 188, 190 (the main body), 191, 377, and 378 shall apply mutatis mutandis to a lawsuit seeking confirmation of the non-validity of a resolution on the ground that the details of the resolution adopted at a general meeting of shareholders are contrary to a statute and to a lawsuit seeking confirmation of the non-existence of a resolution on the ground that material defects exist in the procedures for the convocation of a general meeting of shareholders or in the method of adopting a resolution that no resolution of the general meeting of shareholders is deemed to have existed. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995>
 Article 381 (Lawsuit Seeking Revocation or Alteration of Improper Resolution)
(1) In cases where a considerably improper resolution is adopted at a general meeting of shareholders where a certain shareholder is unable to exercise his/her voting rights in accordance with Article 368 (3) and the adoption of such resolution could have been avoided if he/she had exercised his/her voting rights, that shareholder may file a lawsuit seeking revocation or alteration of the resolution within two months from the date of the resolution. <Amended by Act No. 12591, May 20, 2014>
(2) The provisions of Articles 186 through 188, 190 (the main body), 191, 377 and 378 shall apply mutatis mutandis to lawsuits filed under paragraph (1). <Amended by Act No. 5591, Dec. 28, 1998>
Sub-Section 2 Directors and Board of Directors
 Article 382 (Appointment of Directors, Relationship with Company and Outside Directors)
(1) Directors shall be appointed at a general meeting of shareholders.
(2) The provisions of the Civil Act regarding delegation shall apply mutatis mutandis to the relationship between the company and the directors.
(3) Outside directors are directors who are not engaged in the regular business of the relevant company, and do not correspond to any of the following subparagraphs. Where any outside director falls under any of the following subparagraphs, he/she shall be removed from office: <Amended by Act No. 10600, Apr. 14, 2011>
1. Directors, executive directors and employees who are engaged in the regular business of the relevant company, or directors, auditors, executive directors and employees who have engaged in the regular business of the relevant company within the latest two years;
2. The principal, his/her spouse, lineal ascendants, and lineal descendants, in cases where the largest shareholder is a natural person;
3. Directors, auditors, executive directors and employees of the corporation, in cases where the largest shareholder is a corporation;
4. The spouses, lineal ascendants, and lineal descendants of directors, auditors and executive directors;
5. The directors, auditors, executive directors and employees of a parent company or a subsidiary company of the relevant company;
6. Directors, auditors, executive directors and employees of a corporation which has a significant interest in the relevant company, such as business relations with the company;
7. Directors, auditors, executive directors and employees of another company for which directors, executive directors and employees of the relevant company serve as directors and executive directors.
[This Article Wholly Amended by Act No. 9362, Jan. 30, 2009]
 Article 382-2 (Cumulative Voting)
(1) Where a general meeting of shareholders of a company is convened to appoint two or more directors, shareholders who hold no less than three percent of the total number of issued and outstanding shares excluding nonvoting shares may request the company to appoint directors based on cumulative voting, except as otherwise provided for by the articles of incorporation.
(2) A request under paragraph (1) shall be made in writing or by an electronic document at least seven days prior to the date set for a general meeting of shareholders. <Amended by Act No. 9746, May 28, 2009>
(3) Where a request under paragraph (1) has been made, each shareholder shall have the same number of voting rights per share as directors to be elected, with respect to the resolutions for election of directors, and the voting rights may be exercised based on cumulative voting for one or several candidates for directors.
(4) Where directors are to be elected by a vote under paragraph (3), the directors shall be elected in order of candidates who obtain the most votes.
(5) Where a request under paragraph (1) has been made, the chairperson of the meeting shall inform the members, ahead of adopting a resolution, of the existence of such request.
(6) A written statement under paragraph (2) shall be retained at the principal office until the closing of a general meeting of shareholders and offered for inspection by the shareholders during its business hours.
[This Article Newly Inserted by Act No. 5591, Dec. 28, 1998]
 Article 382-3 (Duty of Loyalty by Directors)
Directors shall perform their duties in good faith for the interest of the company in accordance with statutes, and the articles of incorporation.
[This Article Newly Inserted by Act No. 5591, Dec. 28, 1998]
 Article 382-4 (Directors’ Duty of Confidentiality)
No director shall divulge any business secret of the company, which has come to his/her knowledge in the course of performing his/her duty, not only while in the office but also after the retirement.
[This Article Newly Inserted by Act No. 6488, Jul. 24, 2001]
 Article 383 (Number, Term of Office)
(1) The number of directors shall be three or more: Provided, That in cases of a company with total capital of less than one billion won, the number of directors may be one or two. <Amended by Act No. 9746, May 28, 2009>
(2) The term of office of directors shall not exceed three years. <Amended by Act No. 3724, Apr. 10, 1984>
(3) The term of office under paragraph (2) may be extended by the articles of incorporation until the closing of an ordinary general meeting of shareholders convened in respect of the last period for the settlement of accounts within the said term of office. <Amended by Act No. 3724, Apr. 10, 1984>
(4) In cases falling under the proviso to paragraph (1), "board of directors" shall be construed as "general meeting of shareholders" in Articles 302 (2) 5-2, 317 (2) 3-2, 335 (1) (proviso) and (2), 335-2 (1) and (3), 335-3 (1) and (2), 335-7 (1), and Article 340-3 (1) 5, subparagraph 6-2 of Article 356, and Articles 397 (1) and (2), 397-2 (1), 398, 416 (main body), 451 (2), 461 (1) (main body) and (3), 462-3 (1), 464-2 (1), 469, 513 (2) (main body), and 516-2 (2) (main body) (including where this provision shall apply mutatis mutandis), respectively, and "where the board of directors has adopted a resolution" in Articles 360-5 (1) and 522-3 (1) shall be construed as "where notice of convocation for a general meeting has been given under Article 363 (1)". <Amended by Act No. 9746, May 28, 2009; Act No. 10600, Apr. 14, 2011>
(5) In cases falling under the proviso to paragraph (1), the proviso to Article 341 (2), Articles 390, 391, 391-2, 391-3, 392, 393 (2) through (4), 399 (2), 408-2 (3) and (4), 408-3 (2), subparagraph 2 of Article 408-4, 408-5 (1), 408-6, 408-7, 412-4, 449-2, the proviso to Article 462 (2), 526 (3), 527 (4), 527-2, 527-3 (1), and 527-5 (2) shall not apply. <Amended by Act No. 9746, May 28, 2009; Act No. 10600, Apr. 14, 2011>
(6) In cases falling under the proviso to paragraph (1), each director (referring to the representative director if the said director has been determined according to the articles of incorporation) shall represent the company and perform the functions of the board of directors under the proviso to Article 343 (1), Articles 346 (3), 362, 363-2 (3), 366 (1), 368-4 (1), 393 (1), 412-3 (1) and 462-3 (1). <Amended by Act No. 9746, May 28, 2009; Act No. 10600, Apr. 14, 2011>
 Article 384 Deleted. <by Act No. 5053, Dec. 29, 1995>
 Article 385 (Removal)
(1) A director may be removed from office at any time by a resolution adopted at a general meeting of shareholders under Article 434: Provided, That where the term of office of a director has been determined and his/her removal is made without good cause before the expiration of his/her term of office, he/she may file a claim for damages caused thereby against the company.
(2) If the removal of a director is rejected at a general meeting of shareholders, despite the director having engaged in inappropriate activities or any grave fact in violation of any statute or the articles of incorporation in relation to the performance of his/her duties, a shareholder who holds no less than three percent of the total number of issued and outstanding shares may request the court to remove the director, within one month from the date of adoption of the above resolution by the general meeting of shareholders. <Amended by Act No. 5591, Dec. 28, 1998>
(3) The provisions of Article 186 shall apply mutatis mutandis in cases falling under the preceding paragraph.
 Article 386 (Vacancies)
(1) A director retiring from office due to the expiration of his/her term of office or due to resignation shall continue to have the rights and obligations of a director until a newly elected director takes office, if the number of directors remaining in office would otherwise become fewer than the minimum number prescribed by Acts or by the articles of incorporation.
(2) A court may, if it deems necessary in cases falling under paragraph (1), appoint a person who is to temporarily perform the duties of a director, upon request of a director, auditor or any other interested person. In such cases, registration thereof shall be made at the place of the principal office. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 387 (Qualification Shares)
If the articles of incorporation provide that a director shall have a certain number of shares, the directors shall deposit such number of share certificates with the auditors, unless otherwise provided for by the articles of incorporation.
 Article 388 (Remuneration for Directors)
If the amount of remuneration to be received by directors has not been determined by the articles of incorporation, such amount shall be determined by a resolution of a general meeting of shareholders.
 Article 389 (Representative Director)
(1) A company shall appoint, by a resolution of the board of directors, a director who shall represent the company: Provided, That the articles of incorporation may provide that such representative director shall be appointed at a general meeting of shareholders.
(2) In cases falling under the preceding paragraph (1), it may be provided that two or more representative directors shall jointly represent the company.
(3) The provisions of Articles 208 (2), 209, 210 and 386 shall apply mutatis mutandis to representative directors. <Amended by Act No. 1212, Dec. 12, 1962>
 Article 390 (Convocation of Board of Directors' Meetings)
(1) A board of directors’ meeting shall be convened by each director: Provided, That this shall not apply where a director with the power to convene such meetings has been designated by a resolution of the board of directors.
(2) Any director who has not been designated as the director with the power to convene a board of directors' meeting under the proviso to paragraph (1) may request the director so designated to convene such meeting. Where the director so designated refuses to convene the meeting without good cause, other directors may convene a board of directors’ meeting. <Newly Inserted by Act No. 6488, Jul. 24, 2001>
(3) In convening a board of directors' meeting, the date of such meeting shall be fixed and a notice of convocation shall be sent to each director and auditor at least one week prior to such date: Provided, That the said period may be shortened by the articles of incorporation. <Amended by Act No. 3724, Apr. 10, 1984>
(4) When there is consent of all the directors and auditors, a board of directors’ meeting may be held at any time without undergoing the procedures set forth in paragraph (3). <Amended by Act No. 3724, Apr. 10, 1984; Act No. 6488, Jul. 24, 2001>
 Article 391 (Methods of Resolution by Board of Directors)
(1) A resolution of the board of directors shall be adopted in the presence of a majority of directors in office by the affirmative votes of a majority of directors present at the meeting: Provided, That the voting requirement may be increased by the articles of incorporation.
(2) The board of directors may, unless otherwise provided for in the articles of incorporation, allow all or some of the directors to take part in the adoption of a resolution without presence in person at the meeting by means of a remote communications system that enables all directors' simultaneous transmission and receipt of sounds. In such cases, the relevant directors shall be deemed present at the meeting. <Newly Inserted by Act No. 6086, Dec. 31, 1999; Act No. 10600, Apr. 14, 2011>
(3) The provisions of Articles 368 (3) and 371 (2) shall apply mutatis mutandis in cases falling under paragraph (1). <Amended by Act No. 12591, May 20, 2014>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 391-2 (Auditor's Power to Attend Board of Directors’ Meeting and State Opinions)
(1) Auditors may attend board of directors’ meetings and state their opinions.
(2) When any auditor deems that a director acts or is likely to act in contravention of statutes or the articles of incorporation, the auditor shall report it to the board of directors.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 391-3 (Minutes of Board of Directors' Meeting)
(1) Minutes shall be prepared with regard to the proceedings of a board of directors’ meeting.
(2) The agenda items, summary of the proceedings and the outcomes thereof, and the objectors and grounds for their objection shall be entered in the minutes, and the directors and auditors present at the meeting shall write their names and affix seals, or affix their signatures, thereon. <Amended by Act No. 5053, Dec. 29, 1995; Act No. 6086, Dec. 31, 1999>
(3) Shareholders may, during business hours, request to either inspect the minutes of the board of directors' meeting, or to copy them. <Newly Inserted by Act No. 6086, Dec. 31, 1999>
(4) A company may reject a request made under paragraph (3) with an explanation of grounds therefor. In such cases, shareholders may inspect or copy the minutes of the board of directors’ meeting after obtaining permission from the court. <Newly Inserted by Act No. 6086, Dec. 31, 1999>
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 392 (Postponement and Continuation of Board of Directors’ Meeting)
The provisions of Article 373 shall apply mutatis mutandis to the board of directors’ meetings.
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 393 (Authority of Board of Directors)
(1) A resolution of the board of directors shall be required for disposal or transfer of major assets, borrowing of large scale assets, appointment or dismissal of managers, and management of affairs such as establishment, transfer or abolition of branch offices. <Amended by Act No. 6488, Jul. 24, 2001>
(2) The board of directors shall supervise the performance of duties by directors.
(3) Directors may request that the representative director report on the affairs of other directors or employees to the board of directors. <Newly Inserted by Act No. 6488, Jul. 24, 2001>
(4) Directors shall report on the progress of his/her duties to the board of directors more than once every three months. <Newly Inserted by Act No. 6488, Jul. 24, 2001>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 393-2 (Committees within Board of Directors)
(1) The board of directors may establish committees within the board, as prescribed by the articles of incorporation.
(2) The board of directors may delegate to the committees its power other than the following matters:
1. Proposal of matters subject to approval at a general meeting of shareholders;
2. Appointment or dismissal of the representative director;
3. Establishment of committees and appointment or dismissal of their members;
4. Other matters as prescribed by the articles of incorporation.
(3) The committee shall be composed of two or more directors.
(4) The committee shall notify each director of the resolutions it has adopted. In such cases, any of the directors may, upon receipt of the notification, request the convocation of a meeting of the board of directors, and the board of directors may adopt, once again, the resolutions of the committee.
(5) The provisions of Articles 386 (1), 390, 391, 391-3, and 392 shall apply mutatis mutandis with respect to committees.
[This Article Newly Inserted by Act No. 6086, Dec. 31, 1999]
 Article 394 (Representatives in Lawsuits between Company and Directors)
(1) When a company has filed a lawsuit against a director and vice versa, auditors shall serve as representatives of the company with respect to the lawsuit. The same shall apply where the company receives a request under Article 403 (1).
(2) In cases where a member of the audit committee under Article 415-2 is a party to a lawsuit, the audit committee or a director shall request the court to appoint a person to serve as a representative of the company. <Newly Inserted by Act No. 6086, Dec. 31, 1999>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 395 (Acts of Apparent Representative Directors and Liability of Company)
A company shall be liable to a third party acting in good faith for any act done by a director who has used titles that can be understood as having authority to represent the company even where the said person has no such authority, such as president, vice president, executive director, or managing director.
 Article 396 (Obligation to Retain and Disclose Articles of Incorporation, etc.)
(1) Directors shall retain the articles of incorporation and the minutes of the general meeting of shareholders at the principal office and each branch office, and shall retain the register of shareholders and the bond register at the principal office. In such cases, if there is a transfer agent, the register of shareholders or the bond register or duplicates thereof may be retained at the business office of the transfer agent. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 6086, Dec. 31, 1999>
(2) Any shareholder or creditor of a company may request, at any time during its business hours, the company to inspect or copy documents prescribed in paragraph (1). <Amended by Act No. 3724, Apr. 10, 1984>
 Article 397 (Prohibition of Competition)
(1) No director shall, without the approval of the board of directors, engage in, on his/her own account or on the account of a third party, any transaction in the same type of business of the company or become a general partner or a director of any other company, the business purposes of which are the same as those of the company. <Amended by Act No. 5053, Dec. 29, 1995>
(2) If any director has engaged in a transaction on his/her own account in contravention of paragraph (1), the company may, by a resolution of the board of directors, deem such transaction to be made on the account of the company and if he/she has made a transaction on the account of a third party, the company may request the pertinent director to transfer any gains accrued therefrom. <Amended by Act No. 1212, Dec. 12, 1962; Act No. 5053, Dec. 29, 1995>
(3) Rights under paragraph (2) shall be extinct upon the lapse of one year after the date such transaction has been made. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 397-2 (Prohibition of Appropriation of Company's Opportunities and Assets)
(1) No director shall use business opportunities of the company falling under any of the following subparagraphs and likely to be of present or future benefit to the company, on his/her own account or on the account of a third party, without the approval of the board of directors. In such cases, the approval of the board of directors shall be granted with two thirds or more of the total number of directors:
1. A business opportunity that has become known to the director in the course of performing his/her duty, or a business opportunity taking advantage of information of the company;
2. A business opportunity closely related to the business that is being currently conducted or is to be conducted by the company.
(2) A director who has violated paragraph (1) and thereby incurred damage to the company and the director who approved the same shall be jointly and severally liable for the damage; and the benefits earned by the director or a third party from the violation shall be presumed to be the damage suffered by the company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 398 (Transactions between Directors, etc. and Company)
When any of the following persons intends to engage in a transaction with the company on his/her own account or on the account of a third party, he/she shall in advance disclose material facts about the relevant transaction at the board of directors and shall obtain approval therefrom. In such cases, the approval of the board of directors shall be granted with two thirds or more of the total number of the directors, and the relevant transaction shall be fair in terms of its particulars and procedures:
1. A director or a major shareholder under Article 542-8 (2) 6;
2. The spouse and lineal ascendents or descendents of a person falling under subparagraph 1;
3. Lineal ascendents or descendents of the spouse of a person falling under subparagraph 1;
4. A company in which half or more of the total number of issued and outstanding shares with voting rights are held by a person falling under any of subparagraphs 1 through 3, solely or jointly with others, or its subsidiary company;
5. A company in which at least half the total number of issued and outstanding shares with voting rights are held by a person falling under any of subparagraphs 1 through 3, together with a company falling under subparagraph 4.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 399 (Liability to Company)
(1) If a director has intentionally or negligently acted in violation of any statute or of the articles of incorporation or has neglected his/her duties, he/she shall be jointly and severally liable for damage against the company. <Amended by Act No. 10600, Apr. 14, 2011>
(2) If any act under the preceding paragraph has been done in accordance with a resolution of the board of directors, the directors who have consented to such resolution shall take the same liability.
(3) Directors who have participated in the resolution mentioned in the preceding paragraph and whose dissenting opinion has not been entered in the minutes shall be presumed to have consented to such resolution.
 Article 400 (Release of Liability to Company)
(1) Consent of all shareholders may absolve a director from liability under Article 399.
(2) A company may, in accordance with its articles of incorporation, absolve a director under Article 399 from liability with respect to the amount exceeding six times (in cases of outside directors, three times) his/her remuneration (including bonuses and the profit from exercise of stock option) for the last one year prior to the date of the act or misconduct by the director: Provided, That this shall not apply where the director has incurred any loss or damage by intention or gross negligence and he/she falls under Article 397, 397-2 or 398.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 401 (Liability to Third Parties)
(1) If a director has neglected his/her duties by intention or gross negligence, he/she shall be jointly and severally liable for damages suffered by a third party. <Amended by Act No. 10600, Apr. 14, 2011>
(2) The provisions of Article 399 (2) and (3) shall apply mutatis mutandis in cases falling under the preceding paragraph.
 Article 401-2 (Liability of Person who Instructs Another Person to Conduct Business, etc.)
(1) Any of the following persons shall be a director for the purposes of Articles 399, 401, and 403 regarding the duties he/she instructs or performs:
1. A person who instructs a director to conduct business by using his/her influence over the company;
2. A person who conducts business in person under the name of a director;
3. A person other than a director who conducts the business of the company by using a title which may give the impression he/she is authorized to conduct the business of the company, such as honorary chairman, chairman, president, vice-president, executive director, managing director, director, or others.
(2) In cases falling under paragraph (1), a director who is liable for damage against the company or third party shall be jointly and severally liable therefor with a person under paragraph (1).
[This Article Newly Inserted by Act No. 5591, Dec. 28, 1998]
 Article 402 (Rights to Injunction)
If a director commits an act in contravention of any statute or the articles of incorporation, and such act is likely to cause irreparable damage to the company, the auditor or a shareholder who holds no less than one percent of the total number of issued and outstanding shares may demand on behalf of the company that the relevant director stop such act. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5591, Dec. 28, 1998>
 Article 403 (Representative Suits by Shareholders)
(1) Any shareholder who holds no less than one percent of the total number of issued and outstanding shares may request that the company file a lawsuit against directors to compel them to perform their obligations. <Amended by Act No. 5591, Dec. 28, 1998>
(2) A request under the preceding paragraph shall be made in writing, stating the grounds therefor. <Amended by Act No. 5591, Dec. 28, 1998>
(3) If a company fails to file a lawsuit within 30 days from the date of receiving the request under the preceding paragraph, the shareholder mentioned in paragraph (1) may immediately file such action on behalf of the company.
(4) If irreparable damage is likely to be caused to the company upon the lapse of the period set forth in paragraph (3), a shareholder mentioned in paragraph (1) may immediately file such action, notwithstanding the provisions of the preceding paragraph. <Amended by Act No. 5591, Dec. 28, 1998>
(5) The effect of filing a lawsuit shall not be affected even where the number of shares held by a shareholder who files an action under paragraphs (3) and (4) falls below one percent of the total number of issued and outstanding shares after the lawsuit is filed (excluding where the shareholder no longer holds the issued and outstanding shares). <Newly Inserted by Act No. 5591, Dec. 28, 1998>
(6) Where a company files a lawsuit pursuant to a request under paragraph (1) or a shareholder files a lawsuit under paragraphs (3) and (4), no relevant party shall dismiss the suit, renunciate or admit the claim, or come to a compromise, without permission from the court. <Newly Inserted Act No. 5591, Dec. 28, 1998; Act No. 10600, Apr. 14, 2011>
(7) The provisions of Articles 176 (3) and (4), and 186 shall apply mutatis mutandis to lawsuits under this Article.
 Article 404 (Representative Suits and Intervention, and Notice of Lawsuits)
(1) The company may intervene in a lawsuit under paragraphs (3) and (4) of the preceding Article.
(2) A shareholder who has filed a lawsuit under paragraphs (3) and (4) of the preceding Article shall immediately give a notice of the lawsuit to the company.
 Article 405 (Rights and Obligations of Shareholders Filing Lawsuits)
(1) If a shareholder who has filed a lawsuit pursuant to Article 403 (3) and (4) wins the case, he/she may demand reimbursement from the company for the cost incurred in relation to the action and a reasonable amount of other expenses disbursed for the action. In such cases, the company which has paid the expenses incurred in relation to the legal action shall have a right of recourse against the directors or auditors. <Amended by Act No. 1212, Dec. 12, 1962; Act No. 6488, Jul. 24, 2001>
(2) If a shareholder who has filed a lawsuit pursuant to Article 403 (3) and (4) loses the case, he/she shall not be liable for damage suffered by the company, except for damage attributable to malicious intent.
 Article 406 (Representative Suits and Lawsuits for Retrial)
(1) In cases where the plaintiff and defendant in a lawsuit under Article 403 have procured a judgment to be rendered by their collusion for the purpose of fraudulently injuring the rights of the company, which is the subject matter of the case, the company or shareholders may file a lawsuit seeking retrial against the final and conclusive judgment.
(2) The provisions of the preceding Article shall apply mutatis mutandis to lawsuits under the preceding paragraph.
 Article 407 (Suspension of Performance of Duties and Appointment of Acting Directors)
(1) In cases where a lawsuit to nullify or revoke a resolution to appoint a director or for removing a director is filed, the court may, upon request of the relevant parties, render a provisional disposition suspending the performance of duties of such director or appointing an acting director. Such disposition may be taken even before the institution of merits, in urgent circumstances.
(2) A court may, upon requests by the relevant parties, alter or revoke a provisional disposition prescribed in the preceding paragraph.
(3) If any disposition under the preceding two paragraphs has been made, registration thereof shall be made at the place of the principal office and each branch office.
 Article 408 (Powers of Acting Directors)
(1) No acting director under the preceding Article shall do any act outside the company’s ordinary course of business, unless otherwise provided for in the order of provisional disposition: Provided, That this shall not apply where permission has been obtained from the court.
(2) The company shall be liable to a third party acting in good faith, even if an acting director has committed an act violating the preceding paragraph.
 Article 408-2 (Companies with Executive Directors, Relationships between Executive Directors and Companies)
(1) A company may have an executive director. In such cases, no company which has an executive director (hereinafter referred to as "company with executive directors") shall have a representative director.
(2) The provisions of the Civil Act regarding delegation shall apply mutatis mutandis to the relationship between a company with executive directors and its executive directors.
(3) The board of directors of a company with executive directors shall have the following authority:
1. Appointing or removing an executive director and the representative executive director;
2. Supervising the executive directors' performance of duties;
3. Appointing a person who is to represent the company with executive directors in a lawsuit between the company with executive directors and any of its executive directors;
4. Delegating the decision-making affairs concerning performance of duties to executive directors (excluding where such is prescribed as the matter of authority of the board of directors);
5. Where there exist more than one executive director, decision-making on allocation of duties, chain of supervision/command, and other matters concerning interrelationship between executive directors;
6. Decision-making on remuneration for executive directors, in cases not provided for in the articles of incorporation or approval thereon has not been made in a general meeting of shareholders.
(4) A company with executive directors shall have a chairperson of the board of directors to preside over meetings of the board of directors. In such cases, the chairperson of the board of directors shall be appointed by a resolution of the board of directors, unless otherwise provided for in the articles of incorporation.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 408-3 (Term of Office of Executive Directors)
(1) The term of office of an executive director may not exceed two years, unless otherwise provided for in the articles of incorporation.
(2) The term of office mentioned in paragraph (1) may be extended by the articles of incorporation until the closing of an ordinary general meeting of shareholders convened in respect of the last period for the settlement of accounts within the said term of office.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 408-4 (Powers of Executive Directors)
The powers of an executive director shall be as follows:
1. Execution of affairs of the company with executive directors;
2. Decision-making on the execution of the affairs delegated in accordance with the articles of incorporation or by a resolution of the board of directors.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 408-5 (Representative Executive Directors)
(1) Where at least two executive directors have been appointed, a representative executive director who is to represent the company with executive directors shall be appointed by a resolution of the board of directors: Provided, That where there is one executive director, he/she shall be the representative executive director.
(2) With respect to a representative executive director, the provisions concerning the representative director of a stock company shall apply mutatis mutandis, unless otherwise provided for in this Act.
(3) The provisions of Article 395 shall apply mutatis mutandis to a company with executive directors.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 408-6 (Executive Directors' Reports to Board of Directors)
(1) An executive director shall report the status of performance of duties to the board of directors at least once every three months.
(2) In addition to cases falling under paragraph (1), an executive director shall attend the board of directors any time upon request of the board of directors and shall report the matters if requested by the board.
(3) A director may request the representative executive director to report to the board of directors on the duties of other executive directors or employees.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 408-7 (Executive Directors' Request for Convening of Meetings of Board of Directors)
(1) An executive director may, if necessary, demand convocation of a meeting of the board of directors by filing with directors (in cases where there is a person eligible to convene the board, referring to such person; hereafter the same apply in this Article) a written request which states the subject matter of the meeting and the reasons for which it is to be convened.
(2) After making a demand under paragraph (1), if the directors fail to take procedures without delay to convene a meeting of the board of directors, the executive director who has requested the convocation may convene such meeting with the permission of the court. In such cases, the chairperson of the board of directors may be appointed by the court upon request of any interested person or ex officio.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 408-8 (Liability of Executive Directors)
(1) In cases where an executive director has acted intentionally or with gross negligence in violation of any statute or of the articles of incorporation or has neglected his/her duties, he/she shall be liable for damage against the company with executive directors.
(2) In cases where an executive director has neglected his/her duties by intention or gross negligence, he/she shall be liable for damage suffered by a third party, if any.
(3) In cases where an executive director is liable for damage against the company with executive directors or a third party, if other executive director, director or auditor is also responsible therefor, the executive director shall be jointly and severally liable for damage with such other executive director, director or auditor.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 408-9 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 382-3, 382-4, 396, 397, 397-2, 398, 400, 401-2, 402 through 408, 412 and 412-2 shall apply mutatis mutandis to executive directors.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
Sub-Section 3 Auditors and Audit Committee
 Article 409 (Appointment)
(1) Auditors shall be appointed at a general meeting of shareholders.
(2) No shareholder who holds more than three percent of the total number of issued and outstanding shares, exclusive of non-voting shares, shall exercise his/her voting rights in respect of such excess shares beyond the above limit, in the appointment of auditors under paragraph (1). <Amended by Act No. 3724, Apr. 10, 1984>
(3) The articles of incorporation may provide for a lower ratio than that referred to in paragraph (2). <Newly Inserted by Act No. 3724, Apr. 10, 1984>
(4) A company with total capital of less than one billion won may choose not to appoint auditors, notwithstanding the provisions of paragraph (1), Articles 296 (1) and 312. <Newly Inserted by Act No. 9746, May 28, 2009>
(5) Where a company which has not appointed auditors under paragraph (4) files a lawsuit against a director or a director files a lawsuit against the company, the company, director or any interested person shall request a court to appoint a person to represent the company. <Newly Inserted by Act No. 9746, May 28, 2009>
(6) Where no auditor has been appointed under paragraph (4), "auditor" in Articles 412, 412-2, and 412-5 (1) and (2) shall be construed as "general meeting of shareholders". <Newly Inserted by Act No. 9746, May 28, 2009>
 Article 409-2 (Right to State Opinions in Removal of Auditors)
Auditors may state their opinions on the removal of an auditor at a general meeting of shareholders.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 410 (Term of Office)
The term of office of an auditor shall expire upon the closing of an ordinary general meeting of shareholders convened in respect of the last period for the settlement of accounts within three years after his/her inauguration. <Amended by Act No. 5053, Dec. 29, 1995>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 411 (Prohibition of Concurrent Holding of Offices)
No auditor may concurrently hold the office of a director, a manager or an employee of the company or its subsidiary company. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 412 (Auditors' Duties and Power to Demand Reporting and to Inspect)
(1) Auditors shall audit directors' performance of duties.
(2) Auditors may, at any time, request a director to report on the relevant business and may inspect the business affairs and financial conditions of a company.
(3) Auditors may seek assistance from professionals at the expense of the company. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 412-2 (Directors' Duty of Reporting)
If a director finds any fact that is likely to inflict a substantial loss on the company, he/she shall immediately report such fact to its auditors.
[This Article Newly Inserted Act No. 5053, Dec. 29, 1995]
 Article 412-3 (Requests for Convening General Meetings)
(1) An auditor may request the board of directors to convene an extraordinary general meeting of shareholders by presenting a written statement specifying the agenda of the meeting and the grounds for the convocation.
(2) The provisions of Article 336 (2) shall apply mutatis mutandis where an auditor convenes a general meeting of shareholders.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 412-4 (Auditors' Request for Convening Board of Directors' Meetings)
(1) An auditor may, if necessary, request convocation of a meeting of the board of directors by filing with directors (in cases where there is a person eligible to convene the board, referring to such person; hereafter the same apply in this Article) a written request stating the agenda of the meeting and the reasons for which it is to be convened.
(2) After making a request under paragraph (1), if the directors fail to convene a meeting of the board of directors without delay, the auditor who has requested the convocation may convene such meeting.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 412-5 (Power to Inspect Subsidiary Company)
(1) An auditor of a parent company may request its subsidiary company to report on its business, if it is necessary, for performing his/her duties.
(2) If, in cases falling under paragraph (1), a subsidiary company fails to make a report without delay or it is required to verify the contents of such reports, an auditor of the parent company may inspect the business affairs of the subsidiary company and the status of its property.
(3) A subsidiary company may not refuse reporting under paragraph (1) or inspection under paragraph (2), unless there exist good cause to the contrary.
[This Article Newly Inserted by Act No. 5053, Dec. 29, 1995]
 Article 413 (Duty to Examine and Report)
Auditors shall examine the agenda items and documents to be submitted by directors to a general meeting of shareholders and, at the general meeting shareholders, shall state their opinions as to whether such agenda items or documents include any matter contrary to any statute or the articles of incorporation or any considerably unreasonable matter.
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 413-2 (Preparation of Audit Records)
(1) Auditors shall prepare a record pertaining to the audit.
(2) A summary of audit process and the outcomes thereof shall be recorded in the audit record and auditors who have conducted the audit shall write their names and affix their seals, or shall affix their signatures, thereon. <Amended by Act No. 5053, Dec. 29, 1995>
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 414 (Liability of Auditors)
(1) If an auditor has neglected any of his/her duties, he/she shall be jointly and severally liable for damages suffered by the company.
(2) If an auditor has neglected his/her duties in bad faith or by gross negligence, he/she shall be jointly and severally liable for damages suffered by a third party.
(3) In cases where an auditor is liable for damages suffered either by the company or a third party, if a director is likewise liable therefor, the auditor and the director shall be jointly and severally liable for the damages.
 Article 415 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 382 (2), 382-4, 385, 386, 388, 400, 401, and 403 through 407 shall apply mutatis mutandis to auditors. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 6488, Jul. 24, 2001>
 Article 415-2 (Audit Committee)
(1) A company may establish an audit committee constituted by a committee under Article 393-2, in lieu of auditors, as prescribed by the articles of incorporation. Once an audit committee has been established, there shall not be an auditor.
(2) Notwithstanding the provisions of Article 393-2 (3), the audit committee shall consist of at least three directors: Provided, That the ratio of outside directors shall exceed two thirds of the total number of members. <Amended by Act No. 9362, Jan. 30, 2009>
(3) A resolution of the board of directors on the dismissal of a member of the audit committee shall require the concurrent vote of at least two thirds of the total number of directors.
(4) The audit committee shall, from among its members, elect a member to represent the committee. In such cases, more than one member may be elected to jointly represent the committee.
(5) The audit committee may obtain professional assistance at the expense of the company.
(6) The latter part of Article 393-2 (4) shall not apply to the audit committee. <Newly Inserted by Act No. 9362, Jan. 30, 2009>
(7) The provisions of Articles 296, 312, 367, 387, 391-2 (2), 394 (1), 400, 402 through 407, 412 through 414, 447-3, 447-4, 450, 527-4, 530-5 (1) 9, 530-6 (1) 10, and 534 shall apply mutatis mutandis to the audit committee. In such cases, "auditor" in Articles 530-5 (1) 9 and 530-6 (1) 10 shall be construed as "member of the audit committee".
[This Article Newly Inserted by Act No. 6086, Dec. 31, 1999]
SECTION 4 Issuance of New Shares
 Article 416 (Determination of Particulars for Issuance)
In cases where a company issues shares after its incorporation, the following matters, which are not provided for in the articles of incorporation, shall be determined by the board of directors: Provided, That this shall not apply where it is otherwise provided for by this Act, or the articles of incorporation provide that they shall be determined at a general meeting of shareholders: <Amended by Act No. 3724, Apr. 10, 1984; Act No. 10600, Apr. 14, 2011>
1. The classes and number of new shares;
2. The issuance price of new shares and the date set for the payment thereof;
2-2. In cases of no par value shares, the amount to be included in the paid-up capital out of the issuance price of new shares;
3. The method of subscribing to new shares;
4. The name of a person who is to make an investment in kind and the class, quantity, and value of such property, and the class and number of shares to be given therefor;
5. Matters related to transferability of the shareholder's preemptive right to new shares;
6. An intent that a certificate for preemptive right to new shares is to be issued only upon request of the shareholder and the period within which such request may be made.
 Article 417 (Issuance of Shares at Price below Par)
(1) In cases where a company issues shares after two years have elapsed since its incorporation, the company may issue shares at a price below the par value by a resolution adopted at a general meeting of shareholders under Article 434 and with the authorization of the court. <Amended by Act No. 1212, Dec. 12, 1962>
(2) The minimum issue price of shares shall be determined by a resolution adopted at a general meeting of shareholders under the preceding paragraph.
(3) The court may grant authorization after altering the minimum issue price by taking into account the present conditions of the company and all the other circumstances. In such cases, the court may appoint an inspector to investigate the status of the company's assets and any other necessary matters.
(4) Shares mentioned in paragraph (1) shall be issued within one month from the date of obtaining the authorization of the court. The court may extend the above period in its authorization.
 Article 418 (Terms of Preemptive Rights, Designation and Public Notice of Record Date for Allotment)
(1) Each shareholder shall be entitled to the allotment of new shares in proportion to the number of shares which he/she holds. <Amended by Act No. 6488, Jul. 24, 2001>
(2) A company may make an allotment of new shares to other persons than shareholders, as provided for in the articles of incorporation, notwithstanding the provisions of paragraph (1): Provided, That in such cases, it shall be limited to cases necessary for the achievement of the company's operational objectives, such as introduction of new technology, improvement of financial structures, etc. <Newly Inserted by Act No. 6488, Jul. 24, 2001>
(3) A company shall fix a record date and shall, at least two weeks before such record date, give a public notice to the effect that shareholders entered in the register of shareholders as of such record date shall be entitled to the rights mentioned in paragraph (1) and that such preemptive rights are transferable, if applicable: Provided, That if the above record date is within the period set forth in Article 354 (1), the public notice shall be given at least two weeks before the first day of such period. <Newly Inserted by Act No. 3724, Apr. 10, 1984>
(4) In cases where a company makes an allotment of new shares to other persons than its shareholders pursuant to paragraph (2), the company shall notify the shareholders of the matters set forth in subparagraphs 1, 2, 2-2, 3, and 4 of Article 416 by no later than two weeks before the date of payment of the subscription price, or shall publicly notify the same. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
 Article 419 (Peremptory Notice to Holders of Preemptive Rights)
(1) A company shall notify the holders of preemptive rights of the classes and number of shares subject to such preemptive rights and that their rights shall be forfeited if they fail to apply for subscription to new shares on or before a fixed date. In such cases, if the matters set forth in subparagraphs 5 and 6 of Article 416 have been determined, the details thereof shall also be notified.
(2) A notice under paragraph (1) shall be given at least two weeks before the date set forth in paragraph (1). <Amended by Act No. 12591, May 20, 2014>
(3) In cases where a holder of preemptive rights fails to apply for subscription to new shares on or before the specified date after a notice under paragraph (1) is given, his/her rights shall be forfeited. <Amended by Act No. 12591, May 20, 2014>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 420 (Share Subscription Forms)
Directors shall prepare a share subscription form containing the following matters: <Amended by Act No. 3724, Apr. 10, 1984; Act No. 10600, Apr. 14, 2011>
1. Matters set forth in Article 289 (1) 2 through 4;
2. Matters set forth in Article 302 (2) 7, 9 and 10;
3. Matters set forth in subparagraphs 1 through 4 of Article 416;
4. Where the company issues shares in accordance with Article 417, the conditions of such issuance and the amount yet to be amortized;
5. Restrictions on the preemptive rights of shareholders or a provision that the preemptive rights are to be given to a particular third party, if applicable;
6. Date of the resolution on the issuance of shares.
 Article 420-2 (Issuance of Certificates of Preemptive Rights)
(1) In cases where a company has provided for matters set forth in subparagraph 5 of Article 416, the company shall issue certificates of preemptive rights in accordance with subparagraph 6 of Article 416, if applicable, or issue them at least two weeks prior to the date under Article 419 (1), as the case may be.
(2) Each certificate of preemptive right shall contain a serial number in addition to the following and directors shall write their names and affix their seals, or shall affix their signatures, thereon: <Amended by Act No. 5053, Dec. 29, 1995>
1. A statement to the effect that it is a preemptive right;
2. Matters set forth in Article 420;
3. The class and number of shares subject to the preemptive right;
4. A statement to the effect that the right shall be forfeited if subscription to shares is not applied for on or before the specified date.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 420-3 (Transfer of Preemptive Rights)
(1) A preemptive right shall be transferred only by the delivery of the certificate thereof.
(2) The provisions of Article 336 (2) of this Act and Article 21 of the Check Act shall apply mutatis mutandis to certificates of preemptive rights.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 420-4 (Electronic Registration of Preemptive Rights)
As prescribed in the articles of incorporation, a company may register preemptive rights with the electronic registration ledger of an electronic registration agency, in lieu of issuing certificates of preemptive rights. In such cases, the provisions of Article 356-2 (2) through (4) shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 420-5 (Applications for Subscription by Certificates of Preemptive Rights)
(1) If a certificate of preemptive right has been issued, subscription to shares shall be applied for by the certificate. In such cases, the provisions of Article 302 (1) shall apply mutatis mutandis.
(2) A person who has lost a certificate of preemptive right may apply for subscription to shares by the share subscription form: Provided, That such offer shall become ineffective if the application for subscription to shares is made by a certificate of preemptive right.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 421 (Payment for New Shares)
(1) Directors shall cause persons who have subscribed to new shares to pay the full subscription price with respect to each share allotted to them on or before the date set for such payment.
(2) No person who has subscribed to new shares shall, without the consent of the company, offset his/her liability for payment described in paragraph (1) with his/her creditor's rights against the stock company.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 422 (Inspection of Investment in Kind)
(1) In cases of an investment in kind, directors shall request the court to appoint an inspector who is to inspect the particulars prescribed in subparagraph 4 of Article 416. In such cases, an appraisal by a certified appraiser may be conducted in lieu of the inspection by an inspector. <Amended by Act No. 5591, Dec. 28, 1998>
(2) In any of the following cases, the provisions of paragraph (1) shall not apply: <Newly Inserted by Act No. 10600, Apr. 14, 2011>
1. If the value of assets subject to an investment in kind under subparagraph 4 of Article 416 does not exceed one fifth of the capital and not exceed the amount determined by Presidential Decree;
2. If assets subject to an investment in kind under subparagraph 4 of Article 416 are securities having exchange quotation, in which case the price determined in accordance with the main body of Article 416 does not exceed the market value calculated by the method determined by Presidential Decree;
3. When a pecuniary claim which has become due against the company is to be contributed, in which case the value of the pecuniary claim does not exceed the value stated in the company's ledger;
4. Other cases determined by Presidential Decree, which are equivalent to those described in subparagarphs 1 through 3.
(3) If the court acknowledges the particulars mentioned in paragraph (1) to be improper after examining a report on investigation prepared by an inspector or the outcomes of appraisal conducted by an appraiser, it may make a necessary modification and inform directors and the person who has made the investment in kind, of such modification. <Amended by Act No. 5591, Dec. 28, 1998; Act No. 10600, Apr. 14, 2011>
(4) If a person who has made an investment in kind objects to the modification mentioned in the preceding paragraph, he/she may cancel his/her subscription to shares. <Amended by Act No. 10600, Apr. 14, 2011>
(5) If a person who has made an investment in kind does not cancel his/her subscription to shares within two weeks after the court informed him/her of alteration, the particulars mentioned in paragraph (1) shall be deemed to have been modified accordingly. <Amended by Act No. 5591, Dec. 28, 1998; Act No. 10600, Apr. 14, 2011>
 Article 423 (Date of Becoming Shareholders and Effects of Failing to Make Payment)
(1) If a person who has subscribed to new shares pays the subscription price or makes an investment in kind, he/she shall have the rights and obligations of a shareholder from the day immediately after the date set for the payment. In such cases, the latter part of Article 350 (3) shall apply mutatis mutandis. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995>
(2) If a person who has subscribed to new shares fails to pay the subscription price or makes an investment in kind on or before the date set for the payment, his/her right shall be forfeited.
(3) The provisions of paragraph (2) shall not affect any claim for damages against a person who has subscribed to new shares. <Amended by Act No. 3724, Apr. 10, 1984>
 Article 424 (Rights to Injunction)
If a company issues shares in violation of a statute or the articles of incorporation or in a substantially unfair manner and shareholders are likely to suffer disadvantages thereby, the shareholders may request the company to cease such issuance.
 Article 424-2 (Liability of Persons who have Subscribed to Shares at Unfair Prices)
(1) A person who has subscribed to shares at a substantially unfair issuance price in collusion with directors shall be liable to pay to the company the amount equivalent to the difference between such issuance price and the fair issuance price.
(2) The provisions of Article 403 through 406 shall apply mutatis mutandis to a lawsuit seeking payment prescribed in paragraph (1).
(3) The provisions of paragraphs (1) and (2) shall not affect the directors' liability to compensate for damages incurred by the company or shareholders.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 425 (Provisions Applicable Mutatis Mutandis)
(1) The provisions of Article 302 (1) and (3), 303, 305 (2) and (3), 306, 318, and 319 shall apply mutatis mutandis to the issuance of new shares.
(2) The provisions of Article 305 (2) shall apply mutatis mutandis where certificates of preemptive rights are issued. <Newly Inserted by Act No. 3724, Apr. 10, 1984>
 Article 426 (Registration of Unamortized Amounts)
If shares are issued in accordance with Article 417, the registration of an alteration resulting therefrom shall contain the amount unamortized.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 427 (Limitation on Assertion of Nullification or Revocation of Subscriptions)
After one year has elapsed from the date of registration of an alteration due to the issuance of new shares, no person who has subscribed to the new shares may assert the nullification of his/her subscription by reason of defects in the requirements as to the share subscription form or certificate of preemptive right, or cancel his/her subscription on the ground of fraud, duress or mistake. The same shall apply where he/she has exercised his/her rights in respect to such shares. <Amended by Act No. 1212, Dec. 12, 1962; Act No. 3724, Apr. 10, 1984>
 Article 428 (Directors' Liability to Secure Subscription)
(1) In cases where shares have yet to be subscribed to or the subscription of shares has been cancelled after the registration of alteration due to the issuance of new shares was made, directors shall be deemed to have jointly subscribed to such shares.
(2) The provisions of the preceding paragraph shall not affect any claim for damages against directors.
 Article 429 (Lawsuits for Nullification of Issuance of New Shares)
Nullification of the issuance of new shares can be asserted only by a lawsuit filed by a shareholder, a director, or an auditor within six months from the date of the issuance of such new shares. <Amended by Act No. 3724, Apr. 10, 1984>
 Article 430 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 186 through 198, the main body of Article 190, Articles 191, 192 and 377 shall apply mutatis mutandis to lawsuits under Article 429.
[This Article Wholly Amended by Act No. 5053, Dec, 29, 1995]
 Article 431 (Effects of Judgments Nullifying Issuance of New Shares)
(1) When a judgment nullifying issuance of new shares becomes final and conclusive, such new shares shall be invalidated in the future.
(2) In cases falling under the preceding paragraph, the company shall without delay give a public notice to the effect that certificates of new shares must be submitted to the company within a fixed period and shall separately notify each shareholder and pledgee recorded in the register of shareholders of the same: Provided, That such period shall exceed three months.
 Article 432 (Judgments of Nullification and Refunds to Shareholders)
(1) When a judgment nullifying issuance of new shares becomes final and conclusive, the company shall refund to each shareholder the amount paid by him/her for new shares.
(2) If an amount mentioned in the preceding paragraph is considerably unreasonable in view of the status of the company's assets as at the time a judgment mentioned in paragraph (1) of the preceding Article becomes final and conclusive, the court may order either an increase or decrease in such amount, upon request of the company or of such shareholder mentioned in the preceding paragraph.
(3) The provisions of Articles 339 and 340 (1) and (3) shall apply mutatis mutandis in cases falling under paragraph (1).
SECTION 5 Amendments to Articles of Incorporation
 Article 433 (Method of Amending Articles of Incorporation)
(1) Articles of incorporation shall be amended by a resolution at a general meeting of shareholders.
(2) A summary of agenda relating to amendments to the articles of incorporation shall be stated in a notice under Article 363. <Amended by Act No. 12591, May 20, 2014>
 Article 434 (Special Resolutions for Amending Articles of Incorporation)
A resolution under Article 433 (1) shall be adopted by the affirmative votes of at least two thirds of the voting rights of the shareholders present at a general meeting of shareholders and of at least one third of the total number of issued and outstanding shares.
[This Article Wholly Amended by Act No. 5053, Dec. 29, 1995]
 Article 435 (General Meeting of Shareholders of Certain Classes of Shares)
(1) If a company has issued different classes of shares, and an amendment to the articles of incorporation will injure the shareholders of a certain different class of shares, a resolution adopted by a general meeting of such specific class of shareholders shall be required for effecting such amendment in addition to that of a general meeting of shareholders. <Amended by Act No. 10600, Apr. 14, 2011>
(2) A resolution under paragraph (1) shall be adopted by the affirmative votes of at least two thirds of the voting rights of the shareholders present at a general meeting of shareholders and of at least one third of the total number of issued and outstanding shares of such class. <Amended by Act No. 5053, Dec. 29, 1995>
(3) Provisions relating to a general meeting of shareholders shall apply mutatis mutandis to a general meeting of shareholders under paragraph (1), except for the provisions relating to non-voting shares.
 Article 436 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 435 shall apply mutatis mutandis in cases where specifically provided for with regard to the classes of shares in accordance with Article 344 (3) and where the shareholders of certain classes of shares are to suffer losses due to a division or merger after division of the company, swap or transfer of shares, or a merger of the company.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 437 Deleted. <by Act No. 5053, Dec. 29, 1995>
SECTION 6 Reduction of Capital
 Article 438 (Resolutions for Reduction of Capital)
(1) In order to reduce capital, a resolution passed in accordance with Article 434 shall be required.
(2) Notwithstanding the provisions of paragraph (1), any reduction of capital for recovery from deficit shall be made by a resolution under Article 368 (1).
(3) Major details of the agenda concerning reduction of capital shall be stated in a notice under Article 363. <Amended by Act No. 12591, May 20, 2014>
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 439 (Methods of Reduction of Capital, and Procedures therefor)
(1) In a resolution to reduce capital, methods of making such reduction shall be determined.
(2) The provisions of Article 232 shall apply mutatis mutandis to the reduction of capital: Provided, That this shall not apply where the reduction of capital is made for deficit recovery. <Amended by Act No. 3724, Apr. 10, 1984>
(3) A bondholder may raise an objection subject to a resolution passed by a meeting of bondholders. In such cases, upon request by any interested person, the court may extend in favor of the bondholder the period for raising such objection.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 440 (Procedures for Consolidation of Shares)
If shares are to be consolidated, a company shall determine a period of not less than one month and shall give a public notice to the effect that shares shall be consolidated and that share certificates must be submitted to the company within such period and shall separately give a notice to such effect to each of the shareholders and the pledgees recorded in the register of shareholders. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 441 (Idem-Procedures for Consolidation of Shares)
A consolidation of shares shall take effect upon the expiration of the period mentioned in the preceding Article: Provided, That if the procedures set forth in Article 232 have yet to be completed, it shall take effect upon the completion of such procedures.
 Article 442 (Issuance of New Share Certificates)
(1) If, in cases of a consolidation of shares, no person can submit his/her old share certificates, the company may, upon a request by such person, determine a period of no less than three months and give a public notice to the effect that any interested person shall raise an objection, if any, on such certificates within such period and may deliver new share certificates to such person after the lapse of such period.
(2) Expenses incurred in giving a public notice mentioned in the preceding paragraph shall be borne by the requester.
 Article 443 (Disposal of Fractional Shares)
(1) If shares, the number of which is unfit for a consolidation, exist, new shares issued for such portion unfit for the consolidation shall be sold by means of auction and the proceeds from which shall be delivered to the former shareholders in proportion to the number of shares they formerly held: Provided, That shares for which there is an exchange based market may be sold through such exchange and shares without an exchange quotation may be sold in a manner other than auction with the permission of the court. <Amended by Act No. 3724, Apr. 10, 1984>
(2) The provisions of Article 442 shall apply mutatis mutandis to cases falling under paragraph (1). <Amended Act No. 3724, Apr. 10, 1984>
 Article 444 Deleted. <by Act No. 12591, May 20, 2014>
 Article 445 (Lawsuits to Nullify Reduction of Capital)
Nullification of reduction of capital can be asserted only by a lawsuit filed only by a shareholder, director, auditor, liquidator, bankruptcy trustee or creditor disapproving such reduction of capital, within six months from the date the registration of alteration due to such reduction of capital has been made.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 446 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 186 through 189, the main sentence of Article 190, Articles 191, 192, and 377 shall apply mutatis mutandis to lawsuits under Article 445.
[This Article Wholly Amended by Act No. 5053, Dec. 29, 1995]
SECTION 7 Accounting of Company
 Article 446-2 (Accounting Principles)
The accounting of a company, other than that provided for in this Act and Presidential Decree, shall be conducted in accordance with generally accepted fair and proper accounting practices.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 447 (Preparation of Financial Statements)
(1) In each period for the settlement of accounts, directors shall prepare the following documents and the supplementary schedules and obtain approval therefor from the board of directors:
1. Balance sheets;
2. Income statements;
3. Other documents prescribed by Presidential Decree, indicating the financial status and management performance of the company.
(2) Directors of the company determined by Presidential Decree shall prepare the consolidated financial statements and obtain approval therefor from the board of directors.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 447-2 (Preparation of Business Reports)
(1) In each settlement period, directors shall prepare a business report and shall obtain approval therefor from the board of directors.
(2) A business report shall include important matters concerning business prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 447-3 (Submission of Financial Statements)
Directors shall submit to auditors the documents listed in Articles 447 and 447-2 six weeks prior to the date of an ordinary general meeting of shareholders.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 447-4 (Audit Reports)
(1) Auditors shall submit to directors an audit report within four weeks of receipt of the documents listed in Article 447-3.
(2) An audit report under paragraph (1) shall include the following:
1. Outline of auditing methods;
2. If matters to be entered in books of account are not recorded or are recorded wrongly or entries in balance sheets or income statements do not coincide with those in the books of account, a statement to such effect;
3. If balance sheets and income statements adequately reflect the status of the company's financial conditions and managerial performance according to statutes and the articles of incorporation, a statement to such effect;
4. If balance sheets and income statements fail to adequately reflect the status of the company's financial conditions and managerial performance, in contravention of a statute, or the articles of incorporation, a statement to such effect and the grounds therefor;
5. Whether it is proper to change the accounting method relating to the preparation of balance sheets and income statements and, if so, the grounds therefor;
6. Whether a business report adequately reflects the status of the company in accordance with statutes and the articles of incorporation;
7. Whether appropriation of retained earnings or disposition of deficits has been made in conformity with statutes or with the articles of incorporation;
8. If appropriation of retained earnings or disposition of deficits is obviously improper in the light of the company's financial conditions and other circumstances, a statement to such effect;
9. If supplementary statements mentioned in Article 447 do not include entries to be stated therein or include incorrect records, or include entries that do not conform with books of account, balance sheets, income statements, or business reports, a statement to such effect;
10. If a dishonest act or an act which is in material contravention of a statute, or the articles of incorporation is found with regard to the performance of duties of a director, a statement to such effect.
(3) In cases where an auditor is unable to conduct an investigation necessary for an audit, the audit report shall include a statement to that effect and the grounds therefor.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 448 (Retaining and Disclosure of Financial Statements, etc.)
(1) Directors shall retain the documents listed in Articles 447 and 447-2 as well as an audit report at the principal office of the company for five years and shall retain the copies thereof at the branch offices for three years, from one week prior to the date of an ordinary general meeting of shareholders. <Amended by Act No. 3724, Apr. 10, 1984>
(2) Any shareholder or creditor of a company may, at any time during its business hours, inspect the documents listed in paragraph (1) and request the copying of such documents or an extract thereof, with payment of fees determined by the company. <Amended by Act No. 3724, Apr. 10, 1984>
 Article 449 (Approval for and Public Notice of Financial Statements, etc.)
(1) Directors shall submit the documents listed in Article 447 to an ordinary general meeting of shareholders and shall obtain approval therefor. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 10600, Apr. 14, 2011>
(2) Directors shall submit the documents listed in Article 447-2 to an ordinary general meeting of shareholders and shall report the details thereof. <Newly Inserted by Act No. 3724, Apr. 10, 1984>
(3) If directors have obtained approval from a general meeting of shareholders for the documents mentioned in paragraph (1), they shall give, without delay, public notice of the balance sheets. <Amended by Act No. 3724, Apr. 10, 1984>
 Article 449-2 (Special Provisions Concerning Approval for Financial Statements, etc.)
(1) Notwithstanding the provisions of Article 449, a company may approve the documents listed in Article 447 by a resolution of the board of directors as determined by its articles of incorporation: Provided, That in such cases, all of the following requirements shall be satisfied:
1. That an external auditor presents an opinion that each of the documents listed in Article 447 appropriately represents the company's financial conditions and performance of management in accordance with statutes and the articles of incorporation;
2. That all the auditors (in cases of a company which has established an audit committee, referring to the members of the audit committee) give consent thereto.
(2) In cases where a board of directors gives approval pursuant to paragraph (1), directors shall report the details of each document listed in Article 447 to a general meeting of shareholders.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 450 (Discharge of Directors and Auditors from Liability)
If no contrary resolution has been adopted within two years after an ordinary general meeting of shareholders, during which an approval under paragraph (1) of the preceding Article was given, the company shall be deemed to have discharged the directors and auditors from liability: Provided, That this shall not apply to any illegal act committed by a director or an auditor.
 Article 451 (Capital)
(1) Unless otherwise provided for in this Act, the capital of a company shall be equal to the total sum of par values of all issued and outstanding shares.
(2) Where a company issues no par value shares, the capital of the company shall be the amount equal to or higher than half of the share issuance price, and shall be the total amount which the board of directors (in cases of issuance of stock as determined by the proviso to Article 416, referring to a general meeting of shareholders) agrees to include in the capital. In such cases, the amount not to be included in capital out of the issuance price shall be included in the capital reserve.
(3) No capital of a company may be changed by transferring par value shares into no par value shares or by transferring no par value shares into par value shares.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Articles 452 through 457-2 Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 458 (Earned Surplus Reserves)
A company shall accumulate, as its earned surplus reserve, at least 10 percent of the cash dividend in each period for the settlement of accounts until its reserve reaches half of the company's capital: Provided, That this shall not apply in cases of stock dividends.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 459 (Capital Reserves)
(1) A company shall accumulate as its capital reserve, the surplus amount which arises from capital transactions, as determined by Presidential Decree.
(2) In cases of a merger, or a division or merger after division as provided for in Article 530-2, the earned surplus reserve and other legal reserves of the non-surviving or divided company may be succeeded by the surviving company or the newly incorporated company as a result of the merger, division, or merger after division.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 460 (Use of Statutory Reserves)
No statutory reserve under Articles 458 and 459 shall be disposed of, except in recovery of a deficit in capital.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 461 (Capitalization of Reserves)
(1) A company may capitalize its reserve, in whole or in part, by a resolution of the board of directors: Provided, That this shall not apply where the articles of incorporation provide that such shall be determined at a general meeting of shareholders. <Amended by Act No. 10600, Apr. 14, 2011>
(2) In cases falling under paragraph (1), the company shall issue shares to the shareholders in proportion to the number of shares which they hold. In such cases, Article 443 (1) shall apply mutatis mutandis to fractional shares.
(3) When a resolution is adopted by the board of directors in accordance with paragraph (1), the company shall fix a date and give a public notice two weeks prior to such date to the effect that new shares under paragraph (2) shall be alloted to the shareholders entered on the register of shareholders on that date: Provided, That if the above date falls within the period mentioned in Article 354 (1), such public notice shall be given two weeks prior to the first day of such period.
(4) In cases falling under the proviso to paragraph (1), shareholders shall become those of new shares under paragraph (2) on the date of the resolution of a general meeting of shareholders.
(5) When shareholders become holders of new shares pursuant to paragraph (3) or (4), directors shall immediately notify the shareholders to whom the new shares have been allocated and the pledgees entered on the register of shareholders, of the classes and number of the shares allocated to the shareholders. <Amended by Act No. 12591, May 20, 2014>
(6) The latter part of Article 350 (3) shall apply mutatis mutandis in cases falling under paragraph (1). <Newly Inserted by Act No. 5053, Dec. 29, 1995>
(7) The provisions of Article 339 shall apply mutatis mutandis to the issuance of shares prescribed in paragraph (2).
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 461-2 (Decrease of Reserves)
Where the total sum of the capital reserve and the earned surplus reserve accumulated exceeds one and a half times the capital of a company, the capital reserve and the earned surplus reserve may be decreased by a resolution adopted at a general meeting of shareholders to that effect within the limit of such excess.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 462 (Dividends)
(1) A company may pay dividends within the limit of the value of net assets stated on the balance sheets after deducting the following:
1. The amount of capital;
2. The total amount of the capital reserve and the earned surplus reserve accumulated until the pertinent period for the settlement of accounts of the company;
3. The amount to be accumulated for the pertinent period for the settlement of accounts of the company;
4. Unrealized profits determined by Presidential Decree.
(2) Each payment of dividends shall be determined by resolution of a general meeting of shareholders: Provided, That the same shall be determined by resolution of the board of directors in cases where the board of directors approves financial statements pursuant to Article 449-2 (1).
(3) In cases where dividends have been paid in violation of paragraph (1), any creditor of the company may claim a refund of such dividends to the company.
(4) The provisions of Article 186 shall apply mutatis mutandis to a lawsuit relating to a claim under paragraph (3).
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 462-2 (Stock Dividends)
(1) A company may pay dividends by issuing new shares by a resolution adopted at a general meeting of shareholders: Provided, That such stock dividends may not exceed the amount equivalent to half of the total amount of dividends.
(2) Dividends under paragraph (1) shall be paid based on the par value of shares and if the company have issued different classes of shares, dividends may be paid in the same classes of shares, respectively. <Amended by Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
(3) The provisions of Article 443 (1) shall apply mutatis mutandis where, out of profits to be distributed as stock dividends, a fraction remains which is less than the par value of a share. <Amended by Act No. 5053, Dec. 29, 1995>
(4) A shareholder who has received stock dividends shall become a shareholder of new shares from the time of closing of the general meeting of shareholders at which a resolution mentioned in paragraph (1) is adopted. In such cases, the latter part of Article 350 (3) shall apply mutatis mutandis. <Amended by Act No. 5053, Dec. 29, 1995>
(5) Where a resolution under paragraph (1) has been adopted, directors shall notify, without delay, the shareholders entitled to receive the stock dividends and the pledgees entered on the register of shareholders, of the classes and number of shares to be allocated to the shareholders. <Amended by Act No. 12591, May 20, 2014>
(6) The right of a pledgee under Article 340 (1) shall extend to shares to be distributed to a shareholder pursuant to paragraph (1). In such cases, the provisions of Article 340 (3) shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 462-3 (Interim Dividends)
(1) A company which has a period for the settlement of accounts once per year may determine in its articles of incorporation that the company may pay dividends (hereafter in this Article referred to as "interim dividend") on a specified date set by a resolution of the board of directors to the shareholders on such date only one time during a business year. <Amended by Act No. 10600, Apr. 14, 2011>
(2) Interim dividends shall be paid within the limit of the amount calculated by deducting the following amounts from the value of net assets on the balance sheets in the immediately preceding period for the settlement of accounts: <Amended by Act No. 6488, Jul. 24, 2001; Act No. 10600, Apr. 14, 2011>
1. The amount of capital in the immediately preceding period for the settlement of accounts;
2. The total amount of the capital reserve and earned surplus reserve accumulated until the immediately preceding period for the settlement of accounts;
3. The amount which is to be distributed as a profit or paid at an ordinary general meeting of shareholders in the immediately preceding period for the settlement of accounts;
4. The earned surplus reserve which is to be accumulated in the relevant period for the settlement of accounts for the payment of interim dividends.
(3) If the value of net assets on the balance sheets in the relevant period for the settlement of accounts is deemed unlikely to amount to the total sum of amounts listed in the subparagraphs of Article 462 (1), the company shall not pay interim dividends. <Amended by Act No. 6488, Jul. 24, 2001>
(4) Where, even if the value of net assets on the balance sheets in the relevant period for the settlement of accounts fails to amount to the total sum of the amounts listed in the subparagraphs of Article 462 (1), payment of interim dividends is made, directors shall be jointly and severally liable to compensate for the difference (where the amount of dividend is less than such difference, the amount of dividend) to the company: Provided, That the same shall not apply where the directors prove that they have not been negligent in rendering judgment that the situation described in paragraph (3) is not likely to occur. <Amended by Act No. 6488, Jul. 24, 2001>
(5) For the purposes of Articles 340 (1), 344 (1), 350 (3) (including where this shall apply mutatis mutandis under Articles 423 (1), 516 (2), and 516-10: hereafter in this paragraph the same shall apply), 354 (1), 458, and 464 and subparagraph 3 of Article 625, interim dividends shall be deemed dividends under Article 462 (1), and for the purpose of Article 350 (3), a specified date mentioned in paragraph (1) shall be deemed the end of the business year. <Amended by Act No. 10600, Apr. 14, 2011>
(6) The provisions of Articles 399 (2) and (3) and 400 shall apply mutatis mutandis with respect to the liability of directors under paragraph (4), and Article 462 (3) and (4), with respect to interim dividends paid in breach of paragraph (3). <Amended by Act No. 10600, Apr. 14, 2011>
[This Article Newly Inserted by Act No. 5591, Dec. 28, 1998]
 Article 462-4 (Dividends in Kind)
(1) A company may determine in its articles of incorporation that it may pay dividends with assets other than money.
(2) A company that has determined payment of dividends pursuant to paragraph (1) may further determine the following:
1. Where the company determines that a shareholder may claim payment of money in lieu of a dividend in kind, such amount of money and the period set for such claim;
2. Where the company determines that it will pay money to the shareholders who have less than a certain number of stocks, in lieu of a dividend in kind, such number of stocks and the amount of money.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 463 Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 464 (Standards for Distribution of Profits)
Distribution of profits shall be made in proportion to the number of shares held by each shareholder: Provided, That this shall not apply in cases falling under Article 344 (1).
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 464-2 (Date of Payment of Dividends)
(1) A company shall pay dividends under Article 464 within one month from the date of adopting a resolution at a general meeting of shareholders or by the board of directors under Article 462 (2) or from the date of adopting a resolution under Article 462-3 (1): Provided, That this shall not apply where the date of the payment of dividends is determined otherwise by a general meeting of shareholders or the board of directors. <Amended by Act No. 5053, Dec. 29, 1995; Act No. 5591, Dec. 28, 1998; Act No. 10600, Apr. 14, 2011>
(2) The statute of limitations for a claim for payment of dividends under paragraph (1) shall expire, if it is not exercised for five years.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 465 Deleted. <by Act No. 3724, Apr. 10, 1984>
 Article 466 (Shareholder's Right to Inspect Books of Account)
(1) Any shareholder who holds shares representing at least three percent of the total number of issued and outstanding shares may request in writing, stating the grounds therefor, the inspection or copying of the books of account and related documents. <Amended by Act No. 5591, Dec. 28, 1998>
(2) A company shall not reject a request made by a shareholder under paragraph (1) unless it proves that such request is improper. <Amended by Act No. 5591, Dec. 28, 1998>
 Article 467 (Inspection of Affairs and Status of Company's Assets)
(1) If any ground exists to suspect any irregularity or material violation of any statute or the articles of incorporation in connection with the business affairs of the company, any shareholder owning three or more percent of the total number of issued and outstanding shares may request court to appoint an inspector to inspect the business affairs of the company and the status of its assets. <Amended by Act No. 5591, Dec. 28, 1998>
(2) An inspector shall report to court on the outcomes of the inspection.
(3) If court deems it necessary after inspecting a report mentioned in paragraph (2), it may order the representative director to convene a general meeting of shareholders. In such cases, the provisions of Article 310 (2) shall apply mutatis mutandis. <Amended by Act No. 1212, Dec. 12, 1962; Act No. 5053, Dec. 29, 1995>
(4) Directors and auditors shall examine, without delay, whether an inspector’s report mentioned in paragraph (3) is accurate and shall report to a general meeting of shareholders on the findings thereof. <Newly Inserted by Act No. 5053, Dec. 29, 1995>
 Article 467-2 (Prohibition of Granting Pecuniary Benefits)
(1) No company may grant to any person a pecuniary benefit in connection with the exercise of his/her rights as a shareholder.
(2) If a company has given gratuitously any pecuniary benefit to a certain shareholder, such pecuniary benefit shall be presumed to have been given in connection with the exercise of his/her rights as a shareholder. The same shall also apply where a company has given for value any pecuniary benefit to a certain shareholder, but the benefit obtained by the company is considerably less than the pecuniary benefit granted to the shareholder.
(3) If a company has granted any pecuniary benefit in contravention of paragraph (1), the person who has received such benefit shall return it to the company. In such cases, if the person paid to the company any consideration for such benefit, the company may return such consideration to him/her.
(4) The provisions of Articles 403 through 406 shall apply mutatis mutandis to lawsuits for the return of benefits under paragraph (3).
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 468 (Employees' Rights to Preferential Payment)
A person who has a claim for the return of money as a guarantee for fidelity of an employee or any other claim arising out of the employment relationship between the company and its employees shall be entitled to preferential payment from the company's total assets: Provided, That such entitlement shall not be claimed in preference to a pledge or mortgage. <Amended Act No. 10366, Jun. 10, 2010>
SECTION 8 Bonds
 Article 469 (Bond Offering)
(1) A company may issue bonds for subscription by a resolution of the board of directors.
(2) The following bonds shall be included in the bonds mentioned in paragraph (1):
1. Bonds entitling its holders to dividends;
2. Bonds that can be exchanged or redeemed with stocks or other securities;
3. Bonds the redemption or payment amount of which is determined by the pre-determined methods that are linked to the fluctuation of such things as securities, currencies, or other assets or indexes determined by Presidential Decree;
(3) Detailed matters necessary for the issuance of bonds pursuant to paragraph (2), such as the nature and the methods of issuance of such bonds, shall be determined by Presidential Decree.
(4) Notwithstanding the provisions of paragraph (1), as prescribed by the articles of incorporation, the board of directors may determine the amount and type of bonds and entrust the representative director with the issuance of such bonds within a period not exceeding one year.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Articles 470 through 473 Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 474 (Public Offering and Bond Subscription Forms)
(1) A person who intends to subscribe to bonds shall prepare a subscription form in duplicate, stating the number of bonds to which he/she intends to subscribe and his/her address, and shall write his/her name and affix his/her seal, or affix his/her signature, thereon. <Amended by Act No. 5053, Dec. 29, 1995>
(2) A bond subscription form shall be prepared by directors and contain the following: <Amended by Act No. 3724, Apr. 10, 1984; Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
1. The trade name of the company;
2. The total amount of capital and reserve;
3. The value of the net assets of the company indicated in the latest balance sheet;
4. The total amount of the bonds;
5. The face amount of each bond;
6. The issue price or minimum issue price of each bond;
7. The rate of interest payable on each bond;
8. Methods and timing for the redemption of bonds and for the payment of interest;
9. The amount of and timing for each payment of the subscription price of the bonds, if payment is to be made in installments;
10. If a decision has been made to restrict the bonds certificates either in bearer form or in registered form, a statement to that effect;
10-2. If the right of a bond holder has been registered in the electronic registration ledger of an electronic registration agency, in lieu of issuing bond certificates, a statement to that effect;
11. If bonds have been previously issued, the amount yet to be redeemed;
12. Deleted: <by Act No. 10600, Apr. 14, 2011>
13. If there exists a company commissioned to offer bonds for subscription, the trade name and address of such company;
13-2. If there exists a bond administration company, the name and address of such bond administration company;
13-3. If it has been determined that a bond administration company may conduct an act set forth in Article 484 (4) 2 without obtaining a resolution at a meeting of bondholders, a statement to that effect;
14. If a company mentioned in subparagraph 13 has undertaken to subscribe to any portion of the total amount of bonds which have not been subscribed for through the public offering, a statement to that effect;
15. If a transfer agent has been designated, his/her full name, address and business office.
(3) In cases where the minimum issuance price has been determined, a bond subscriber shall state in the subscription form the amount at which he/she intends to subscribe to.
 Article 475 (Method of Firm Committment Underwriting)
The provisions of the preceding Article shall not apply where total subscription to bonds is made under a contract. The same shall apply to the portion of bonds subscribed for by a company commissioned to offer bonds for subscription.
 Article 476 (Payment)
(1) When subscription to bonds is complete, directors shall, without delay, cause bond subscribers to make the full payment or the first instalment payment on each bond.
(2) A company commissioned to offer bonds for subscription may, in its own name, perform an act set forth in Article 474 (2) and the preceding paragraph on behalf of the company.
 Article 477 Deleted. <by Act No. 3724, Apr. 10, 1984>
 Article 478 (Issuance of Bond Certificates)
(1) No certificate may be issued for a bond until its full amount has been paid up.
(2) Each bond certificate shall contain the following particulars and the representative director shall write his/her name and affix his/her seal, or shall affix his/her signature, thereon: <Amended by Act No. 1212, Dec. 12, 1962; Act No. 5053, Dec. 29, 1995; Act No. 10600, Apr. 14, 2011>
1. The serial number of each bond;
2. Matters listed in Article 474 (2) 1, 4, 5, 7, 8, 10, 13, 13-2, and 13-3.
(3) Instead of issuing bonds under paragraph (1), a company may register bonds in the electronic registration ledger of an electronic registration agency, as prescribed by the articles of incorporation of the company. In such cases, the provisions of Article 356-2 (2) through (4) shall apply mutatis mutandis. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
 Article 479 (Transfer of Registered Bonds)
(1) The effect of transfer of registered bonds shall not be asserted against a company or a third party unless the name and address of the transferee have been entered in the bond register and his/her name has been entered in the bond certificates.
(2) The provisions of Article 337 (2) shall apply mutatis mutandis to the transfer of registered bonds. <Newly Inserted by Act No. 3724, Apr. 10, 1984>
 Article 480 (Exchange between Registered Certificates and Bearer Certificates)
A bondholder may, at any time, request a company to change a registered bond certificate into a bearer certificate: Provided, That this shall not apply where the form of a bond certificate is restricted in either registered or bearer form.
 Article 480-2 (Designation and Entrustment of Bond Administration Companies)
In cases of issuing bonds, a company may designate a bond administration company and entrust affairs, such as collecting redemption, preserving bonds and other administration of bonds.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 480-3 (Eligibility as Bond Administration Companies)
(1) Only a bank, trust company, and another person determined by Presidential Decree may become a bond administration company.
(2) No bond underwriter may become a bond administration company of the relevant bond.
(3) No person having special interests, who is determined by Presidential Decree, shall become a bond administration company.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 481 (Resignation of Bond Administration Companies)
A bond administration company may resign with the consent of the issuing company and of a meeting of bondholders. It may do so with the permission of the court where there exist unavoidable grounds therefor.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 482 (Removal of Bond Administration Companies)
If a bond administration company is unfit to handle relevant administrative affairs or if there is good cause, the court may remove such company from office at the request of the issuing company or of a meeting of bondholders. <Amended by Act No. 1212, Dec. 12, 1962>
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 483 (Successors to Affairs of Bond Administration Companies)
(1) Where a bond administration company ceases to exist due to resignation or removal of the bond administration company, the company which has issued bonds shall designate another bond administration company to succeed to the affairs and shall entrust the company with affairs regarding bond administration for the bond holders. In such cases, the company shall, without delay, convene a meeting of bondholders and obtain consent thereto. <Amended by Act No. 10600, Apr. 14, 2011>
(2) If there exists any unavoidable cause, any interested person may request the court to appoint a successor to affairs regarding bond administration.
 Article 484 (Power of Bond Administration Companies)
(1) A bond administration company shall have the power to do on behalf of the bondholders all judicial or extra-judicial acts necessary for collecting redemption concerning the bonds or for preservative measures to materialize the bonds.
(2) When a bond administration company collects redemption under paragraph (1), it shall without delay give a public notice thereof and give separate notice to each bondholder known to the company.
(3) In cases falling under paragraph (2), a bondholder may claim payment of the relevant redemption amount and the interest accrued thereon against the bond administration company. In such cases, when the bond certificate has been issued, the claim for payment of the relevant redemption amount shall be made in exchange for the bondholder‘s bond certificate, and of the interest accrued thereon, in exchange for the coupon, respectively.
(4) In cases where a bond administration company does any of the following acts (excluding acts necessary for collecting redemption concerning bonds or for preservative measures to materialize bonds), a resolution by a meeting of bondholders is required: Provided, That a bond-issuing company may determine that an act under subparagraph 2 may be done by a bond administration company without a resolution adopted by a meeting of bondholders:
1. Deferring of payment with respect to all the relevant bonds, or exoneration from or settlement of the liability accrued due to nonperformance of an obligation;
2. A legal action with respect to all the relevant bonds, or an act falling under the procedures concerning debtor rehabilitation and bankruptcy.
(5) When a bond administration company has done an act under paragraph (4) 2 without a resolution by a meeting of bondholders, pursuant to the proviso to paragraph (4), it shall without delay give a public notice thereof and give separate notice to each bondholder known to the company.
(6) Public notification under paragraphs (2) and (5) shall be made in the same manner as public notification used by the company which has issued bonds.
(7) With respect to bonds, the administration of which has been commissioned to a bond administration company, the bond administration company may investigate the affairs and financial conditions of the bond-issuer company with the permission of the court, if necessary for conducting an act under paragraph (1) or any subparagraph of paragraph (4).
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 484-2 (Duties and Obligations of Bond Administration Companies)
(1) A bond administration company shall fairly and sincerely administer bonds for and on behalf of bondholders.
(2) A bond administration company shall administer bonds for bondholders in good faith with the care of a good manager.
(3) When a bond administration company has done an act in violation of this Act or a resolution by a meeting of bondholders, the company shall be jointly and severally liable to the bondholders to compensate for the damage sustained due to the said violation.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 485 (Powers and Duties in Cases of Two or More Bond Administration Companies)
(1) If there exist two or more bond administration companies, all acts falling within the scope of their power shall be jointly performed.
(2) In cases falling under paragraph (1), when a bond administration company collects redemption under Article 484 (1), the company shall be jointly and severally liable to the bondholders to pay the redemption amount.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 486 (Defects in Coupons)
(1) If, in cases of redemption of a bearer bond to which a coupon is attached, any defect is found in the coupon, a sum equal to the amount of the coupon shall be deducted from the redemption amount.
(2) Any holder of a coupon mentioned in the preceding paragraph may, at any time, demand payment of the amount deducted in exchange for such coupon.
 Article 487 (Statute of Limitations for Rights to Claim Redemption)
(1) The statute of limitations for the right to claim redemption of bonds shall expire, if not exercised for ten years.
(2) Provisions of the preceding paragraph shall also apply to the rights referred to in Article 484 (3).
(3) The statute of limitations for the right to claim payment of interest accrued on bonds and the rights mentioned in paragraph (2) of the preceding Article shall expire, if not exercised for five years.
 Article 488 (Bond Registers)
A company shall prepare a bond register, stating the following particulars:
1. The name and address of each bondholder (excluding bondholders of bonds regarding which bearer bonds have been issued);
2. The serial number of each bond certificate;
3. Matters prescribed in Article 474 (2) 4, 5, 7 through 9, 13, 13-2, and 13-3;
4. The amount paid for each bond and the date of each payment;
5. The date of issuing the bond, or in cases of registering a bondholder's right in the electronic registration ledger of an electronic registration agency in lieu of issuing a bond certificate, a statement to that effect;
6. The date of acquiring each bond;
7. In cases of issuing a bearer bond, the class, number and serial number thereof, and the date of issuance.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 489 (Provisions Applicable Mutatis Mutandis)
(1) The provisions of Article 353 shall apply mutatis mutandis to notice and peremptory notice to bond subscribers and to bondholders.
(2) The provisions of Article 333 shall apply mutatis mutandis where bonds are co-owned by two or more persons.
Sub-Section 2 Meetings of Bondholders
 Article 490 (Matters Requiring Resolutions)
A meeting of bondholders may adopt resolutions with respect to matters provided for in this Act and matters that may affect the interests of bondholders.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 491 (Persons Authorized to Convene)
(1) A meeting of bondholders shall be convened by the company which has issued bonds or by a bond administration company. <Amended by Act No. 10600, Apr. 14, 2011>
(2) A bondholder who has each class of bonds, representing at least one tenth of the total amount of corresponding class of bonds (excluding the amount redeemed) may demand convocation of a meeting of bondholders by submitting to the bond-issuer company or a bond administration company a written statement or an electronic document specifying the agenda for the meeting and the grounds for convening such meeting. <Amended by Act No. 10600, Apr. 14, 2011>
(3) The provisions of Article 366 (2) shall apply mutatis mutandis in cases falling under the preceding paragraph.
(4) No holder of bearer bond certificates may exercise rights mentioned in the preceding two paragraphs unless he/she has deposited his/her bond certificates.
 Article 491-2 (Notice and Public Notice of Convocation)
(1) Article 363 (1) and (2) shall apply mutatis mutandis to cases where a company convene a meeting of bondholders.
(2) Notwithstanding paragraph (1), where a company has issued bearer bonds, it shall give a public notice of its intent to convene a meeting of bondholders and the agenda for the meeting three weeks (two weeks, in case of a company with total capital of less than one billion won) prior to the date of the general meeting of shareholders.
[This Article Newly Inserted by Act No. 12591, May 20, 2014]
 Article 492 (Voting Rights)
(1) Each bondholder shall have the right to vote in proportion to the sum (excluding the amount redeemed) of the corresponding class of bonds he/she owns. <Amended by Act No. 10600, Apr. 14, 2011>
(2) No holder of bearer bond certificates may exercise his/her voting rights unless he/she has deposited his/her bond certificates at least one week prior to the date set for a meeting of bondholders.
 Article 493 (Attendance, etc. of Representatives of Bond-issuer or Bond Administration Company)
(1) A bond-issuer company or bond administration company may have its representative attend a meeting of bondholders or may submit its opinion in writing. <Amended by Act No. 10600, Apr. 14, 2011>
(2) The convocation of a meeting of bondholders shall be notified to companies mentioned in the preceding paragraph.
(3) The provisions of Article 363 (1) and (2) shall apply mutatis mutandis to notification under the preceding paragraph.
 Article 494 (Right to Request Issuer Company to Cause its Representative to Attend)
A meeting of bondholders or a person who has convened such meeting may, if deemed necessary, request the issuer company to cause its representative to attend the meeting.
 Article 495 (Methods of Resolutions)
(1) The provisions of Article 434 shall apply mutatis mutandis to resolutions adopted by a meeting of bondholders.
(2) Any consent or request under Articles 481 through 483 and 494 may, notwithstanding the provisions of paragraph (1) above, be decided upon by a majority vote of the bondholders present. <Amended by Act No. 10600, Apr. 14, 2011>
(3) A bondholder not attending a meeting of bondholders may exercise his/her right to vote in writing. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
(4) To exercise votes in writing, a bondholder shall submit a written application specifying required entries to the convocator of the meeting by no later than the day immediately preceding the date set for the meeting of bondholders. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
(5) The number of voting rights exercised in writing pursuant to paragraph (4) shall be included in the number of votes present. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
(6) The provisions of Article 368-4 shall apply mutatis mutandis to a meeting of bondholders. <Newly Inserted by Act No. 10600, Apr. 14, 2011>
 Article 496 (Requests for Authorization of Resolutions)
A person who has convened a meeting of bondholders shall request that a court authorize a resolution within one week from the date of adoption of such resolution.
 Article 497 (Grounds for Non-Authorization of Resolutions)
(1) A court shall not authorize a resolution of a meeting of bondholders in the following cases:
1. If procedures for convening the meeting of bondholders or the manner of adopting the resolution are in contravention of any statute or of any statement contained in the prospectus for offering of bonds;
2. If the resolution is adopted in an improper manner;
3. If the resolution is considerably unfair;
4. If the resolution is contrary to the general interests of the bondholders.
(2) In cases falling under subparagraph 1 or 2 of the preceding paragraph, the court may authorize such a resolution by taking into account the details of the resolution and all other circumstances.
 Article 498 (Effects of Resolutions)
(1) A resolution of a meeting of bondholders shall take effect by obtaining authorization of a court: Provided, That the said authorization shall not be required if the resolution is made with the consent of all holders of the class of bonds concerned.
(2) A resolution of a meeting of bondholders shall be effective vis-a-vis all the bondholders who have the class of bonds concerned.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 499 (Public Notice of Authorization or Non-Authorization of Resolutions)
When a decision has been made either to authorize or not to authorize a resolution of a meeting of bondholders, the company which issued the bonds shall, without delay, give a public notice thereof.
 Article 500 (Representatives of Meetings of Bondholders)
(1) A meeting of bondholders may elect one or more representatives from among the holders of bonds representing no less than 1/500 of the total amount of the corresponding class of bonds (excluding the amount repaid) and may delegate a decision concerning matters which are to be dealt with by its resolution to him/her or them. <Amended by Act No. 10600, Apr. 14, 2011>
(2) If two or more representatives have been appointed, a decision under the preceding paragraph shall be made by a majority of their votes.
 Article 501 (Implementation of Resolutions)
A resolution of a meeting of bondholders shall be implemented by a bond administration company and, in the absence of such company, by the representatives mentioned in Article 500: Provided, That this shall not apply where a person has been appointed to implement the resolution by a resolution of a meeting of bondholders.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 502 (Two or More Representatives of Meetings or Executors of Resolutions)
The provisions of Article 485 (1) shall apply mutatis mutandis where there exist two or more representatives of a meeting or implementers of a resolution.
 Article 503 (Implementation of Resolutions relating to Redemption)
The provisions of Articles 484, 485 (2), and 487 (2) shall apply mutatis mutandis where either the representatives of a meeting or the implementers of a resolution implement a resolution for the redemption of bonds.
 Article 504 (Removal, etc. of Representatives of Meetings or Implementers of Resolutions)
A meeting of bondholders may adopt a resolution at any time to remove from office any representative of the meeting or implementer of the resolution and may alter details of any matter delegated to such person.
 Articles 505 and 506 Deleted. <by Act No. 10600, Apr. 14, 2011>
 Article 507 (Remuneration and Expenses for Bond Administration Company, etc.)
(1) Unless otherwise provided for in a contract concluded with the issuer company, any remuneration payable to a bond administration company, representatives, or implementers or any expenses incurred in the performance of their duties may be borne by the said issuer company, with the permission of court.
(2) A bond administration company, representative or implementer may receive remuneration and expenses mentioned in paragraph (1) out of the amount of debt repaid, in preference to bondholders.
[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]
 Article 508 (Expenses relating to Meetings of Bondholders)
(1) Any expenses incurred in relation to meetings of bondholders shall be borne by the issuer company.
(2) Any expenses incurred in relation to a request under Article 496 shall be borne by the company. The court may, however, upon the application of any interested person or ex officio, specially determine a person who will bear all or part of such expenses.
 Article 509 (Meetings of Certain Classes of Bondholders)
If at least two classes of bonds have been issued, a meeting of bondholders shall be convened for each class of bonds.
 Article 510 (Provisions Applicable Mutatis Mutandis)
(1) The provisions of Articles 368 (2) and (3), 369 (2), and 371 through 373 shall apply mutatis mutandis to meetings of bondholders. <Amended by Act No. 12591, May 20, 2014>
(2) The minutes of meetings of bondholders shall be retained by the issuing company at its principal office.
(3) A bond administration company and a bondholder may request inspection of the minutes mentioned in paragraph (2), at any time during its business hours. <Amended by Act No. 10600, Apr. 14, 2011>
 Article 511 (Lawsuit for Revocation by Bond Administration Company)
(1) If payment, settlement or any other process made by a company to a certain bondholder is considerably unfair, a bond administration company may demand the revocation thereof, only by lawsuits. <Amended by Act No. 10600, Apr. 14, 2011>
(2) A lawsuit under paragraph (1) shall be filed within six months from the date a ground for revocation has been brought to the attention of the bond administration company, and within one year from the date such act was committed. <Amended by Act No. 10600, Apr. 14, 2011>
(3) The provisions of Article 186 of this Act and the proviso to Article 406 (1) and Article 407 of the Civil Act shall apply mutatis mutandis to lawsuits under paragraph (1).
 Article 512 (Lawsuit for Revocation by Representatives, etc.)
When a resolution has been adopted by a meeting of bondholders, any representative of a meeting or implementer of a resolution may also file a lawsuit under paragraph (1) of the preceding Article: Provided, That such lawsuit shall be filed within one year from the date such act was committed.
Sub-Section 3 Convertible Bonds
 Article 513 (Issuance of Convertible Bonds)
(1) A company may issue convertible bonds.
(2) In cases falling under paragraph (1), any of the following matters not provided for in the articles of incorporation shall be determined by the board of directors, unless the articles of incorporation provide that it shall be determined by a general meeting of shareholders:
1. The total amount of convertible bonds;
2. Conversion conditions;
3. Details on shares to be issued upon conversion;
4. The period within which conversion may be requested;
5. Details on the preemptive rights of shareholders to subscribe to convertible bonds, and the amount of convertible bonds subject to such rights;
6. Details on issuance of convertible bonds to persons other than shareholders, and the amount of such convertible bonds to be issued.
(3) In cases where convertible bonds are issued to those who are not the shareholders of the company, if the articles of incorporation do not specify the amount of convertible bonds to be issued, conditions of conversion, details of the shares to be issued upon conversion and the period during which the conversion may be requested, such matters shall be determined by a resolution under Article 434. In such cases, the proviso to Article 418 (3) shall apply mutatis mutandis. <Amended by Act No. 6488, Jul. 24, 2001>
(4) In cases of a resolution under paragraph (3), a summary of the agenda relating to the issuance of convertible bonds shall be stated in a notice under Article 363. <Amended by Act No. 12591, May 20, 2014>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
 Article 513-2 (Rights of Shareholders Entitled to Subscribe to Convertible Bonds)
(1) Any shareholder who has the right to subscribe to convertible bonds shall be entitled to allocation of bonds in proportion to the number of shares that he/she holds: Provided, That this shall not apply to any fractional bond the amount of which is less than the minimum face value of each convertible bond.
(2) The provisions of Article 418 (3) shall apply mutatis mutandis where a shareholder has the right to subscribe to convertible bonds. <Amended by Act No. 10600, Apr. 14, 2011>
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 513-3 (Peremptory Notice to Shareholders with Right to Subscribe to Convertible Bonds)
(1) If shareholders have a preemptive right to subscribe to convertible bonds, a company shall notify each shareholder of the amount of convertible bonds that he/she is entitled to subscribe for, issuance price, conditions of conversion, the details of shares to be issued upon conversion, the period within which he/she may demand conversion and a statement to the effect that if he/she fails to subscribe to convertible bonds on or before the specified date, he/she shall lose his/her right.
(2) The provisions of Article 419 (2) and (3) shall apply mutatis mutandis in cases falling under paragraph (1). <Amended by Act No. 12591, May 20, 2014>
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 514 (Procedures for Issuance of Convertible Bonds)
(1) With regard to convertible bonds, the following particulars shall be stated in the bond subscription form, bond certificates, and bond register: <Amended by Act No. 5053, Dec. 29, 1995>
1. A statement to the effect that bonds are convertible into shares;
2. Conversion conditions;
3. Particulars as to shares to be issued upon conversion;
4. The period during which conversion may be demanded;
5. A provision that the transfer of shares should be subject to approval of the board of directors, if any.
(2) Deleted. <by Act No. 3724, Apr. 10, 1984>
 Article 514-2 (Registration of Convertible Bonds)
(1) When a company has issued convertible bonds, the company shall register them at the location of its principal office within two weeks from the date of completion of payment under Article 476. <Amended by Act No. 5053, Dec. 29, 1995>
(2) The particulars to be registered under paragraph (1) shall be as follows:
1. The total amount of convertible bonds;
2. The face value of each convertible bond;
3. The amount paid for each convertible bond;
4. Matters prescribed in subparagraphs 1 through 4 of Article 514.
(3) The provisions of Article 183 shall apply mutatis mutandis to registration under paragraph (2).
(4) Where the offering of convertible bonds takes place in a foreign country and matters requiring registration arise in such foreign country, the period for the registration shall run from the date of arrival of the notification thereof.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 515 (Request for Conversion)
(1) Any person who requests conversion shall submit to a company a written application form in duplicate together with bond certificates: Provided, That in cases where the right of a bond holder has been registered with the electronic registration ledger of an electronic registration agency, in lieu of issuing bond certificates, proof of the right of a bond holder shall be attached thereto and submitted to the company. <Amended by Act No. 10600, Apr. 14, 2011>
(2) A written application form mentioned in paragraph (1) shall state the bonds to be converted and the date of request, and the person requesting such conversion shall write his/her name and affix his/her seal, or affix his/her signature, thereon. <Amended by Act No. 5053, Dec. 29, 1995>
 Article 516 (Provisions Applicable Mutatis Mutandis)
(1) The provisions of Articles 346 (4), 424 and 424-2 shall apply mutatis mutandis to the issuance of convertible bonds. <Amended by Act No. 10600, Apr. 14, 2011>
(2) The provisions of Articles 339, 348, 350 and 351 shall apply mutatis mutandis to the conversion of bonds. <Amended by Act No. 5053, Dec. 29, 1995>
[This Article Wholly Amended by Act No. 3724, Apr. 10, 1984]
Sub-Section 4 Bonds with Warrants
 Article 516-2 (Issuance of Bonds with Warrants)
(1) A company may issue bonds with warrants to subscribe to new shares.
(2) In cases falling under paragraph (1), any of the following matters that are not provided for in the articles of incorporation shall be determined by the board of directors, unless the articles of incorporation provide that it be determined by a general meeting of shareholders: <Amended by Act No. 10600, Apr. 14, 2011>
1. The total amount of bonds with warrants;
2. Details of warrants vested to such bonds;
3. The period during which the warrants can be exercised;
4. A statement on the transferability of the warrants only;
5. A statement to the effect that, upon request of a person who intends to exercise his/her preemptive right to new stocks, payment of the issuance price of bonds with warrants shall be deemed made under Article 516-9 (1), instead of the redemption of such bonds;
6. Deleted; <by Act No. 5053, Dec. 29, 1995>
7. Details on the preemptive rights to subscribe to bonds with warrants and the amount of bonds subject to such rights;
8. Details on issuance of bonds with warrants to persons other than shareholders and the amount of such bonds with warrants to be issued.
(3) The total issuance price of shares to be issued upon exercise of preemptive right to new stocks vested to each bonds shall not exceed the total amount of such bonds with warrant.
(4) If, in cases where bonds with warrants are issued to those who are not shareholders, the articles of incorporation do not specify the amount of such bonds, the particulars of the preemptive rights to new stocks, and the period during which the preemptive rights to new stocks are to be exercised, these matters shall be determined by a resolution under Article 434. In such cases, the proviso to Article 418 (3) shall apply mutatis mutandis. <Amended by Act No. 6488, Jul. 24, 2001>
(5) The provisions of Article 513 (4) shall apply mutatis mutandis in cases falling under paragraph (4).
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 516-3 (Peremptory Notice to Shareholders with Right to Subscribe to Bonds with Warrants)
(1) If shareholders have preemptive rights to subscribe to bonds with warrants, the company shall notify each shareholder of the amount of bonds with warrants that he/she is entitled to subscribe for, the issuance price, the particulars of preemptive rights to new stocks, the period during which he/she may exercise his/her preemptive rights to new stocks and a statement to the effect that if he/she fails to subscribe to the bonds with warrants on or before the specified date, he/she will relinquish his/her right. In such cases, if matters prescribed in Article 516-2 (2) 4 or 5 have been determined, the details of such matters shall also be notified.
(2) The provisions of Article 419 (2) and (3) shall apply mutatis mutandis in cases falling under paragraph (1). <Amended by Act No. 12591, May 20, 2014>
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 516-4 (Particulars to be Entered in Bond Subscription Forms, Bond Certificates and Bond Register)
The following matters shall be entered in bond subscription forms, bond certificates, and the bond register in cases of bonds with warrants: Provided, That when the company issues warrant certificates as prescribed in Article 516-5 (1), it shall not be required to enter them in the bond certificates: <Amended by Act No. 5053, Dec. 29, 1995>
1. A statement to the effect that it is a bond with warrant;
2. The particulars prescribed in Article 516-2 (2) 2 through 5;
3. Banks and other financial institutions that will be responsible to receive the payment under Article 516-9 and places where such payments are to be made;
4. A provision that the transfer of shares should be subject to approval of the board of directors, if any.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 516-5 (Issuance of Warrant Certificates)
(1) If a company has determined the particulars prescribed in Article 516-2 (2) 4, it shall issue warrant certificates, together with bond certificates.
(2) A warrant certificate shall contain the following particulars and its serial number, and directors shall write their names and affix their seals, or affix their signatures, thereon: <Amended by Act No. 5053, Dec. 29, 1995>
1. A statement to the effect that it is a warrant certificate;
2. The trade name of the company;
3. Matters prescribed in Article 516-2 (2) 2, 3 and 5;
4. Matters prescribed in subparagraph 3 of Article 516-4;
5. A provision that the transfer of shares is subject to approval of the board of directors, if any.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 516-6 (Transfer of Preemptive Rights to New Stocks)
(1) If a warrant certificate has been issued, transfer of the preemptive right to new stocks shall be made only by the issuance of such warrant certificate.
(2) The provisions of Articles 336 (2) and 360 of this Act, and Article 21 of the Check Act shall apply mutatis mutandis to warrant certificates.
[This Article Newly Inserted by Act No. 3724, Apr. 10, 1984]
 Article 516-7 (Electronic Registration of Bonds with Warrants)
As provided for in the articles of incorporation, a company may register bonds with warrants in the electronic registration ledger of an electronic registration agency, in lieu of issuing warrant certificates. In such cases, the provisions of Article 356-2 (2) through (4) shall apply mutatis mutandis to such registration.
[This Article Newly Inserted by Act No. 10600, Apr. 14, 2011]
 Article 516-8 (Registration of Bonds with Warrants)
(1) When a company has issued bonds with warrants, it shall register the following:
1. A statement to the effect that they are bonds with warrants;
2. The total issuance price of shares to be issued upon exercise of preemptive rights to new stocks;
3. The face value of each bond with warrants;
4. The amount paid for such bonds with warrants;
5. Matters prescribed in Article 516-2 (2) 1 through 3.
(2) The provisions of Article 514-2 (1), (3), and (4) shall apply mutati