소수주식의 강제매수제도

Abstract

The draft new Korean Commercial Code includes the mechanism for acquisition of dissenting minorities. The compulsory buy-out threshold is set at 95% level. The proposed provisions below (translation by Lee & Ko, Korea, and the author) are general ones that allow a controlling shareholder to purchase compulsorily the shares owned by a minority, no matter whether the majority was acquired in a takeover bid or not. The minorities also have the right to be bought out at the same level. However, there is no sophisticated mechanism for determination of a fair price than the current one applicable to the shareholders’ appraisal claims. Also, the Korean law does neither know the concept of the “entire fairness” as developed in Singer v. Magnavox Co., 380 A.2d 969 (Del. 1977) nor the fiduciary duty of majority shareholders to minority shareholders. The new squeezeout institution may work properly if and only if the Korean courts contemporaneously develop the fairness standard applicable to valuation as well as procedure and introduce the fiduciary duty of major shareholders to minority shareholders. This is more so because the draft bill also allows the cash-out merger transaction in Article 523, No.4. Article 360-24 (Controlling Shareholder’s Right to Request for Sale) (1)The shareholder who possesses 95% or more of the total issued and outstanding shares of a company under his own account (hereinafter, “Controlling Shareholder”) may request the other shareholder the sale of the shares possessed by such other shareholder (hereinafter, “Minority Shareholder”) if the purchase is necessary to achieve the business purpose of the company (“Request for Sale”) (2)For the calculation of the shares possessed by the Controlling Shareholder stipulated under Section 1 above, the shares in the same company owned by the parent company and its subsidiary shall be combined. For calculation, the shares of the company, in which a shareholder, who is not a company, owns more than 50% of shares, shall be combined with the shares owned by such shareholder. (3)The Request for Sale under Section 1 must be approved by the shareholders’ meeting in advance. (4)When notifying the convening of a shareholder’s meeting for the Section 3 above, the following items must be included in the notice thereof, and they must be explained by the Controlling Shareholder at such meeting. 1.The shareholding status of the company by the Controlling Shareholder 2.The purpose for the Request for Sale 3.The basis of the calculation on the share price and the appraisal report by the certified appraiser on the appropriateness on the share price 4.Payment guarantee on the share price (5)The Controlling Shareholder shall make a public notice on the following items one month prior to the date when the Request for Sale is made and shall notify the shareholder and the pledgee, who are listed on the shareholder registry, separately. 1.The Minority Shareholder shall deliver the share certificate simultaneously upon the receipt of the share price 2.If the share certificate is not delivered, the share certificate will be null and void on the date when the Minority Shareholder accepts the share price or when the Controlling Shareholder deposits the share price in the public account (6)The Minority Shareholder, who has received the Request for Sale under Section 1 above, must sell its shares to the Controlling Shareholder within 2 months from the date when the Minority Shareholder received the notice for the Request for Sale. (7)In case of Section 6 above, the share price shall be determined by the agreement by and between the Controlling Shareholder requesting the sale and the Minority Shareholder whom such request was made to. (8)In case when the Minority Shareholder and the Controlling Shareholder could not agree on the share price under Section 7 above within 30 days from the date when the Request for Sale was received by the Minority Shareholder pursuant to Section 1 above, the Minority Shareholder or the Controlling Shareholder individually may request the court to determine the share price. (9)In case when the court determines the share price pursuant to the Section 8 above, the court shall determine the share price at fair value considering the financial condition of the company and other relevant factors. Article 360-25 (Minority Shareholder’s Right to Request for Purchase) (1)The Minority Shareholder of a company, where a Controlling Shareholder exists, may request the Controlling Shareholder to purchase its shares at any time (“Request for Purchase”) (2)The Controlling Shareholder, who received the Request for Purchase under the Section 1, must purchase the shares of the Minority Shareholder within 2 months from the date when such Request for Purchase was made. (3)In case of the Section 2 above, the share price shall be determined by the agreement between the Controlling Shareholder and Minority Shareholder. (4)In case when the Minority Shareholder and the Controlling Shareholder could not agree on the share price under Section 2 above within 30 days from the date when the Request for Purchase was made, the Minority Shareholder or the Controlling Shareholder individually may request the court to determine the share price. (5)In case when the court determines the share price pursuant to the Section 4 above, the court shall determine the share price at fair value considering the financial condition of the company and other relevant factors. Article 360-26 (Share Transfer, etc.) (1)The share shall be deemed to be transferred to the Controlling Shareholder on the date when the Controlling Shareholder makes the payment to the Minority Shareholder pursuant to Article 360-24 and 360-25. (2)In case when the Controlling Shareholder is unable to know whom the share price should be paid to or when the Minority Shareholder refuses to accept the share price, then the Controlling Shareholder may deposit the share price in the public account. In this case, the share shall be deemed to be transferred on the date of such deposit.