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COMMERCIAL ACT
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COMMERCIAL ACT
COMMERCIAL ACT
INTRODUCTION
Details of Enactment and Amendment
- Enactment: The Commercial Act is a law that regulates the existence and the relationships of the enterprises that have the purpose
of profit-making, is composed of five parts, such as General Provisions, Commercial Activities, Companies, Insurance, and Maritime
Commerce, was enacted on January 20, 1962 as Act No. 1000, and entered into force on January 1, 1963.
- Amendment: This Act has arrived at its present form as the result of being amended eleven times, and the latest amendment was on
December 29, 2001.
Main Contents
- Companies are grouped into four categories: hapmyong-hwesa (partnership companies), hapja-hwesa (limited partnership companies),
joosik-hwesa (stock companies) and yuhan-hwesa (limited liability companies).
- A hapmyong-hwesa (partnership company) shall be incorporated jointly by at least two members, and no member of a hapmyong-hwesa
may, without the consent of the other members, transfer his shares to other persons, effect any transaction which falls within the
class of business carried by the company, or become a member with unlimited liability at, or a director of, another company whose
business purpose is the same kind of business as the company. If no managing member is designated, each member shall represent the
company, and if the assets of the company are insufficient to fully satisfy all its obligations, each member shall be jointly and
severally liable to discharge the obligations. With the consent of all of the members the company may be transformed into a hapja-hwesa
(limited partnership company).
- A hapja-hwesa (limited partnership company) shall be composed of members with limited liability and members with unlimited liability.
Members with limited liability may not provide personal services or credits as a form of contributions, and every member with unlimited
liability shall have the responsibility and duty to manage the affairs of the company unless otherwise provided in the articles of
incorporation. A member with limited liability may effect a transaction which falls within the class of business carried on by the
company without the consent of the other members and become a member with unlimited liability, or a director, of another company
of which the business purpose is the same kind of business as the company. Also, he may transfer shares to other persons with the
consent of all of the members with unlimited liability and be transformed into a hapmyong-hwesa (partnership company) with the consent
of all of the members the company, .
- A joosik-hwesa (stock company) shall be incorporated jointly by at least one person, and the total number of shares authorized to
be issued, the par value per share, and the total number of shares to be issued at the time of incorporation shall be determined.
The number of shares to be issued at the time of incorporation shall be no less than one fourth of the total number of shares authorized
to be issued by the company, and the capital shall be no less than fifty million won. The par value per share shall be at least one
hundred won, and shares may be transferred. A joosik-hwesa shall have a general shareholders' meeting, directors and the board of
directors, auditors and an audit committee. The general shareholders' meeting shall be the highest organ, and the minority shareholders
(shareholders who hold no less than three hundredths of the total issued and outstanding shares) may propose certain matters as issues
to be resolved at the general shareholders' meeting. Directors and the board of directors shall manage the affairs of the company.
- A yuhan-hwesa (limited liability company) shall be incorporated jointly by at least one member, the total number of members of which
shall not exceed fifty, total amount of capital of which shall be at least ten million won, and the amount of each unit of contribution
to which shall be no less than five thousand won and shall be equal. The liability of a member shall be limited to the amount of
his contribution to the company. A member may transfer his shares pursuant to the resolution of a general members' meeting, and the
company shall have one or more directors who shall represent the company.
The Commercial Act originally consists of 5 parts, 998 articles. Due to limited space, we are forced to print only part 3 "companies",
which contains the key points of the Korean corporate law. You can download the context in full at the Korea Legislation Research
Institute homepage. (http://www.klri.re.kr)
For Further Information, Please Contact :
- Ministry of Justice
Office of Legal Counsel
Tel : (82-2)-503-7036 Fax : (82-2)-503-7037
- Website : www.moj.go.kr
COMMERCIAL ACT
Amended by Act No. 1000, Jan. 20, 1962
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
PART III COMPANIES
CHAPTER I COMMON PROVISIONS
Article 169 (Definition)
The term "company" as used in this Act means an association incorporated for the purpose of engaging in commercial activities
and/or any other profitmaking activities.
Article 170 (Kinds of Companies)
Companies are categorized into four kinds, namely, partnership companies, limited partnership companies, stock companies and limited
liability companies.
Article 171 (Company as Juristic Person and Domicile of Company)
(1) A company shall be a juristic person.
(2) The domicile of a company shall be at the place of its principal office.
Article 172 (Incorporation of Company)
A company shall come into existence upon the registration of its incorporation at the place of its principal office.
Article 173 (Restriction on Legal Capacity)
A company shall not become a member with unlimited liability of another company.
Article 174 (Merger of Companies)
(1) A merger of companies shall be permissible.
(2) In case where one side of the constituent companies of a merger is a stock company or a limited liability company or both sides
of them are stock companies or limited liability companies, the surviving company or the newly incorporated company in consequence
of the merger shall be a stock company or a limited liability company.
(3) A company after its dissolution may be involved in a merger only where it is merged into an existing company and the latter company
survives after the merger.
Article 175 (Idem-Incorporators)
(1) In case where a new company is to be incorporated in consequence of a merger, the execution of its articles of incorporation and
the performance of any other activities relating to its incorporation shall be effected jointly by incorporators appointed by each
of the constituent companies.
(2) Articles 230, 434 and 585 shall apply mutatis mutandis to the appointment under paragraph (1).
Article 176 (Dissolution Order against Company)
(1) The court may, upon the application by an interested person or by the public 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 justifiable reasons, failed to commence its business within one year after its establishment or discontinued
its business for a period of at least one year; or
3. In case where a director or a member managing the affairs of the company violated acts or subordinate 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 case where an application mentioned in paragraph (1) has been filed, the court may, at the request of an interested person
or of the public prosecutor or ex officio, appoint an administrator or take any other necessary measures for the preservation of
the company' properties, even before issuing the dissolution order.
(3) In case where an application mentioned in paragraph (1) has been filed by an interested person, the court may, upon the request
of the company, order the applicant to furnish adequate security.
(4) In order to make the request mentioned in paragraph (3), 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 Reckoning of Registration Period)
If any matter to be registered in accordance with this Part requires permission or authorization of government authorities, the period
within which the registration should be made shall commence to run from the date of the arrival of the document of such permission
or authorization.
CHAPTER II PARTNERSHIP COMPANY
SECTION 1 Incorporation
Article 178 (Execution of Articles of Incorporation)
In order to incorporate a partnership company, articles of incorporation shall be executed jointly by at least two members of the
company.
Article 179 (Absolute Particulars to Be Entered in Articles of Incorporation)
The articles of incorporation of a partnership company shall contain the following items and all members shall write their names and
affix their seals or shall sign thereon:
1. Purpose;
2. Trade name;
3. Name, resident registration number and domicile of each member;
4. Subject-matter, value, or the basis for valuation of the contribution to be made by each member;
5. Place of the principal office; and
6. Date of execution of the articles of incorporation.
Article 180 (Registration of Incorporation)
The registration of incorporation of a partnership company shall contain the following particulars:
1. Matters set forth in subparagraphs 1 through 3 and 5 of Article 179 and the place of a branch office, if any: Provided, That if
a member representing the company was designated, the domicile of other members shall be excluded;
2. Subject-matter of the contribution of each member and, in case of a contribution in kind, its value and the part already effected;
3. Period of duration or the reasons for dissolution, if such period or such reasons were determined;
4. Name of the member representing the company, if such member was designated; and
5. A provision, if any, to the effect that the company are represented jointly by two or more members.
Article 181 (Registration of Establishment of Branch Office)
(1) If a branch office is established simultaneously with the incorporation of the company, matters set forth in Article 180 (excluding
the places of other branch offices) shall be registered at the place of such branch office within two weeks after the registration
of incorporation.
(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 place of the principal office, and the matters set forth in Article 180 (excluding the
places of other branch offices) shall be registered within three weeks at the place of such branch office.
(3) Deleted. <By Act No. 5053, Dec. 29, 1995>
Article 182 (Registration of Transfer of Principal Office and Branch Office)
(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 the matters set forth in Article 180 (excluding the places of other branch offices) shall be registered within two weeks
at the new place.
(2) If a company transfers its branch office, the new place and the transfer date shall be registered within two weeks at the place
of the principal office and at the previous place of such branch office and the matters set fort in Article 180 (excluding the places
of other branch offices) shall be registered within two weeks at the new place.
(3) Deleted. <By Act No. 5053, Dec. 29, 1995>
Article 183 (Registration of Alteration)
If an alteration has occurred in any of the matters mentioned in Article 180, such alteration shall be registered within two weeks
at the place of the principal office and within three weeks at the place of each branch office.
Article 183-2 (Registration of Temporary Disposition, etc. on Suspension of Business Management)
Where a temporary disposition to suspend the employees' business management or to appoint an agent for business management is made,
or the temporary disposition is altered or revoked, the registration thereof shall be made at the registry office in a place where
the head and branch offices are located.
Article 184 (Action for Nullification or Revocation of Incorporation)
(1) The nullity of the incorporation of a company may be asserted only by a member of the company and the revocation of the incorporation
of a company may be asserted only by a person who has the right to revoke the incorporation, in both cases only by means of an action
to be filed within two years after the date of the incorporation.
(2) Article 140 of the Civil Act shall apply mutatis mutandis to the revocation of the incorporation mentioned in paragraph (1).
Article 185 (Action for Revocation of Incorporation by Creditors)
If a member has incorporated a company with the knowledge that he would thereby prejudice his creditors, the creditors may demand
the revocation of the incorporation of the company by means of an action filed against the member and the company.
Article 186 (Exclusive Jurisdiction)
The actions mentioned in Articles 184 and 185 shall be subject to the exclusive jurisdiction of the district court governing the place
of the principal office of the company.
Article 187 (Public Notice of Filing of Action)
If an action has been filed for nullification or revocation of the incorporation of a company, the company concerned shall give public
notice thereof without delay.
Article 188 (Combined Hearing of Actions)
If two or more actions have been filed for nullification or revocation of the incorporation of a company, the court shall hear the
actions jointly.
Article 189 (Correction of Defects and Dismissal of Action)
The court may dismiss an action for nullification or revocation of the incorporation of a company, if the defects which were the cause
for such 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 (Effect of Judgment)
A judgment affirming the nullification or revocation of the incorporation of a company shall be effective against any third person:
Provided, That it shall not affect the rights and duties which have arisen between any member of the company and any third person
before the judgment becomes final and conclusive.
Article 191 (Liability of Plaintiff who Lost)
If the plaintiff in an action for nullification or revocation of the incorporation of a company has lost in such action and it is
found that he willfully or by gross negligence filed such action, he shall be jointly and severally liable for damages incurred by
the company.
Article 192 (Registration of Nullification or Revocation of Incorporation)
In case where a judgment affirming the nullification or revocation of the incorporation of a company has become final and conclusive,
such fact shall be registered at the place of the principal office and branch offices of the company.
Article 193 (Effect of Judgment Affirming Nullification or Revocation of Incorporation)
(1) In case where a judgment affirming the 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 case of paragraph (1), the court may appoint a liquidator upon the application by any member of the company and by any other
interested person.
Article 194 (Nullification or Revocation of Incorporation and Continuance of Company)
(1) If a judgment affirming the nullification or revocation of the incorporation of a company has become final and conclusive and
the cause for such nullification or revocation involves only a particular member, the company may continue to exist with the unanimous
consent of all the other members.
(2) In case of paragraph (1), the member in respect of whom the cause for the nullification or revocation involves shall be deemed
to have retired from the company.
(3) Article 229 (2) and (3) shall apply mutatis mutandis to the cases under paragraphs (1) and (2) above.
SECTION 2 Internal Relationship of a Company
Article 195 (Applicable Provisions)
Unless otherwise provided by the articles of incorporation or by this Act, the provisions concerning partnerships of the Civil Act
shall apply mutatis mutandis to the internal relationship of a partnership company.
Article 196 (Contribution of Claim Rights)
A member who has contributed a claim right shall be responsible for the performance of such claim, if the obligor fails to perform
the obligation thereof by the time for performance. In this case, the member shall not only pay for the interests but also shall
be liable for any damages sustained thereby.
Article 197 (Transfer of Share)
No member shall, without the consent of all the other members, transfer all or a part of his share in the company to another person.
Article 198 (Prohibition of Competitive Business by Members)
(1) No member shall, without the consent of all the other members, effect for his own account or for the account of a third person,
any transaction which falls within the class of business carried on by the company or become a member with unlimited liability or
a director of another company whose business purpose is the same kind of business as the company.
(2) In case where any member has effected a transaction violating paragraph (1), the company may regard such transaction as effected
for the account of the company if such transaction was effected for such member's own account, and the company may demand such member
to transfer any profit accrued therefrom if such transaction was effected for the account of a third person.
(3) Paragraph (2) shall not affect any claim for damages by the company against the member concerned.
(4) The rights mentioned in paragraph (2) shall be exercised by a resolution of the majority of other members of the company and shall
lapse after the passage of two weeks from the date on which any one of other members has become aware of such transaction or after
the passage of one year from the date on which such transaction was effected.
Article 199 (Self-Transaction of Members)
A member may effect a transaction with the company for his own account or for the account of a third person only if a resolution approving
such transaction has been adopted by the majority of other members of the company. In this case, Article 124 of the Civil Act shall
not apply.
Article 200 (Right and Duty of Management of Affairs)
(1) Unless otherwise provided by the articles of incorporation, each member has the right and duty to manage the affairs of the company.
(2) If other members raise an objection with respect to the management of affairs by a member, the member shall immediately cease
such act and follow the decision by the majority of all the members.
Article 200-2 (Authority of Agent for Business Management)
(1) Except as otherwise stipulated in the temporary disposition order, an agent for business management under Article 183-2 shall
not perform any act which does not fall under regular business of a corporation: Provided, That the same shall not apply to any case
where a permit has been obtained from the court.
(2) Where an agent for business management has committed an act in contravention of the provisions of paragraph (1), the company shall
be liable to a third person acting in good faith for any act.
Article 201 (Managing Members)
(1) If one or more members are designated by the articles of incorporation as managing members, those members shall have the right
and duty to manage the affairs of the company.
(2) If other managing members raise an objection with respect to the management by a managing member, the managing member shall immediately
cease such act and follow the decision of the majority of all the managing members.
Article 202 (Joint Managing Members)
In case where several members are designated by the articles of incorporation to jointly manage the affairs of the company, any act
of management shall not be taken without the consent of all such joint managing members: Provided, That this shall not apply if there
is a fear of delay.
Article 203 (Appointment and Dismissal of Manager)
Unless otherwise provided by 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 of Forfeiture of Power against Managing Member)
(1) If a managing member is clearly unfit for performing his duties or he has breached his material duties, the court may, upon the
application of a member, adjudicate the forfeiture of the power against such managing member.
(2) When a judgment mentioned in paragraph (1) 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 (Applicable Provision)
Article 186 shall apply mutatis mutandis to an action mentioned in Article 205.
SECTION 3 External Relationship of a Company
Article 207 (Representation of Company)
If a company has not designated managing members in charge of the management of affairs by the articles of incorporation, each of
the members shall represent the company. If several managing members have been designated to take charge of the management, each
of them shall represent the company: Provided, That the company may specifically designate a person who shall represent the company
from among such managing members, by the articles of incorporation or with the unanimous consent of all the members.
Article 208 (Joint Representation)
(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 case of paragraph (1), any declaration of intention made by a third person to the company shall be effective by giving
such declaration of the intention to any one of the joint representative members.
Article 209 (Authorities of Representative Member)
(1) The representative member is authorized to do all judicial or extra-judicial acts relating to the business of the company.
(2) Any restriction placed on the authorities mentioned in paragraph (1) may not be asserted against a third person acting in good
faith.
Article 210 (Liability for Damages)
In case where the representative member has caused damages to another person by his act of the business administration of the company,
the company and such representative member shall be jointly and severally liable for such damages.
Article 211 (Representation in Legal Actions between Company and Members)
If no representative member exists in case of an action filed by a company against its member or an action filed by a member of a
company against the company, a member who shall represent the company on such action shall be selected by a resolution of a majority
of all the other members.
Article 212 (Liability of Members)
(1) If the assets of a company are insufficient to fully satisfy its obligations, all the members shall be jointly and severally liable
for the performance of the obligations.
(2) Paragraph (1) shall also apply if a compulsory execution of judgement on the company's assets has proved ineffective.
(3) Paragraph (2) 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 Incoming Members)
A member admitted to a company after its establishment shall assume the same liability as other members with respect to the obligations
of the company incurred prior to his admission.
Article 214 (Defenses of Members)
(1) In case where a claim is raised against a member with respect to the company's obligations, the member may raise, against the
claimant, any defense which the company might have asserted.
(2) If the company has a right of set-off, cancellation or rescission against the claimant, the member may refuse performance in respect
of a claim under paragraph (1).
Article 215 (Liability of a self styled Member)
In case where a person who is not a member of a company has acted in a manner to induce others to misconceive him as a true member,
he shall assume the same liability as if he were a true member against any person who has effected a transaction with the company
due to such misconception.
Article 216 (Applicable Provisions)
Articles 205 and 206 shall apply mutatis mutandis to the representative members of a company.
SECTION 4 Retirement of Members
Article 217 (Member's Right to Retire from Company)
(1) In case where the articles of incorporation of a company do not fix the duration of the company or they provide that the company
shall continue to exist during the life of a particular member, any member may retire at the end of any business year: Provided,
That he shall give an advance notice six months prior to the retirement.
(2) In case where unavoidable reasons exist, any member may retire at any time.
Article 218 (Reasons for Retirement of Members)
In addition to Article 217, a member shall retire from the company for any of the following reasons:
1. Occurrence of any event specified in the articles of incorporation;
2. Consent of all the members;
3. Death;
4. Incompetency;
5. Bankruptcy; or
6. Expulsion.
Article 219 (Notice of Succession of Rights at Death of Member)
(1) In case where the articles of incorporation provide that if a member dies, his successor may succeed to the deceased member's
rights and duties against the company to become a member, the successor shall dispatch a notice of either succession or renunciation
to the company within three months from the date on which he has become aware of the commencement of succession.
(2) If three months have elapsed without the successor's notice mentioned in paragraph (1), the successor shall be deemed to have
renounced the right to become a member.
Article 220 (Adjudication of Expulsion)
(1) If any of the following reasons exists in respect of a member, the company may, by a resolution of the majority of all the other
members, demand that the court adjudicate the expulsion of such member:
1. Where such member has failed to perform a duty to contribute;
2. Where such member has acted in violation of Article 198 (1);
3. Where such member has committed a dishonest act with respect to the management of the affairs or the representation of the company,
or where such member has managed the affairs of the company or represented the company without authority; or
4. Where there is any other important reason.
(2) Articles 205 (2) and 206 shall apply mutatis mutandis to the cases under paragraph (1).
Article 221 (Settlement of Accounts between Expelled Member and Company)
The settlement of accounts between the expelled member and the company shall be effected according to the status of the company's
property when an action for expulsion was filed, and legal interest shall accrue therefrom.
Article 222 (Refund of Share)
A retired member shall be entitled to refund of his share even where his contribution was in the form of personal services or credit:
Provided, That this shall not apply if provided otherwise by the articles of incorporation.
Article 223 (Seizure of Share)
A seizure of a member's share of the company shall be effective with regard to his right to demand a dividend and a refund on the
share for the future.
Article 224 (Demand of Retirement of Member by Creditor who Seized Member's Share)
(1) A creditor who seized a member's share in the company may cause the member to retire at the end of a business year: Provided,
That he shall give an advance notice to the company and the member concerned six months prior to the retirement.
(2) The advance notice mentioned in the proviso of paragraph (1) shall lose its effect when the member concerned performs his obligations
or furnishes an adequate security.
Article 225 (Liability of Retired Member)
(1) A retired member shall be liable, as if he continued to be a member, for the obligations of the company incurred before the registration
of his retirement has been effected at the place of the principal office, for the period of two years subsequent to the above registration.
(2) Paragraph (1) shall apply mutatis mutandis to a member who has transferred his share in the company to other persons.
Article 226 (Retired Member's Right to Demand Change in Trade Name)
In case where the name of a retired member has been used in the company's trade name, such member may demand the company to cease
the 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 duration 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; or
6. Order or judgment of the court.
Article 228 (Registration of Dissolution)
In case of the dissolution of a company for reasons other than merger or bankruptcy, such fact shall be registered within two weeks
at the place of the principal office and within three weeks at the place of each branch office, both period starting from the date
on which the reason for dissolution comes into existence.
Article 229 (Continuance of Company)
(1) In cases of 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 retired.
(2) In case of subparagraph 3 of Article 227, the company may continue to exist by admitting a new member.
(3) In case of paragraphs (1) and (2), if the registration of dissolution was already effected, the continuance of existence of a
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) Article 213 shall apply mutatis mutandis to the liabilities of an incoming member pursuant to paragraph (2).
Article 230 (Resolution of 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 from the date of the resolution on a merger, the company shall give to its creditors a public notice demanding
the submission of an objection, if any, against the merger within a specified period of time and shall give a peremptory notice to
the respective creditors known to the company. In this case, the said period shall be no less than one month.
(2) A creditor who fails to raise an objection within the period set forth in paragraph (1) shall be deemed to have approved the merger.
(3) If a creditor has raised an objection, the company shall perform its obligations to the creditor or furnish adequate security,
or entrust a property of reasonable value to a trust company to the same purpose.
Article 233 (Registration of Merger)
In case of a merger, the registration of alteration by the surviving company, the registration of dissolution by the merged company
and the registration of incorporation by the newly incorporated company in consequence of a merger shall be effected within two weeks
at the place of the principal office and within three weeks at the place of each branch office.
Article 234 (Effective Date of Merger)
A merger of companies shall take effect when the surviving company or the newly incorporated company in consequence of a merger has
effected registration set forth in Article 233 at the place of its principal office.
Article 235 (Effect of Merger)
The surviving company or the newly incorporated company in consequence of a merger shall succeed to the rights and duties of the merged
company.
Article 236 (Filing of Action for Nullification of Merger)
(1) The nullification of a merger of companies shall be asserted only by means of an action, which may be brought by the members,
liquidators, trustee in bankruptcy of each company or by those creditors of each company who do not approve such merger.
(2) The action under paragraph (1) shall be filed within six months from the date of the registration under Article 233.
Article 237 (Applicable Provisions)
Article 176 (3) and (4) shall apply mutatis mutandis where the creditors of a company have filed an action under Article 236.
Article 238 (Registration of Nullification of Merger)
When a judgment affirming the nullification of merger has become final and conclusive, the registration of alteration by the surviving
company, the registration of restitution by the merged company and the registration of dissolution by the newly incorporated company
shall be effected at the place of the principal office and each branch office.
Article 239 (Final Judgment of Nullification and Reversion of Rights and Duties of Companies)
(1) When a judgment affirming the nullification of merger has become final and conclusive, the companies which have effected a merger
shall be jointly and severally liable to perform any obligation that the surviving company or the newly incorporated company in consequence
of the merger has incurred after the merger.
(2) Any property which has been acquired after the merger by the surviving company or the newly incorporated company in consequence
of the merger shall be owned in common by the companies which have effected the merger.
(3) If, in case of paragraphs (1) and (2), the companies have failed to determine the proportions of assumption of liabilities or
the proportions of the common ownership, the court shall, upon the application of such companies, determine those proportions, by
taking into account the status of the property of each company as of the time of the merger and all other circumstances.
Article 240 (Applicable Provisions)
Articles 186 through 191 shall apply mutatis mutandis to the action for nullification of merger.
Article 241 (Demand for Dissolution by Members)
(1) Where unavoidable reasons exist, any member may apply to the court for dissolution of the company.
(2) Articles 186 and 191 shall apply mutatis mutandis to the case under paragraph (1).
Article 242 (Change of Organization)
(1) With the consent of all the members a partnership company may be transformed into a limited partnership company either by making
a particular member become a member with limited liability or by admitting a new member with limited liability.
(2) Paragraph (1) shall apply mutatis mutandis to the continuance of existence of a company pursuant to Article 229 (2).
Article 243 (Registration of Change of Organization)
When a partnership company has been transformed into a limited partnership company, the registration of dissolution by the partnership
company and the registration of incorporation by the limited partnership company shall be effected 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 Person who Has Become Member with Limited Liability in Consequence of Change of Organization)
A person who has been a member of a partnership company but now becomes a member with limited liability in accordance with Article
242 (1) shall not be relieved of the unlimited liability with respect to the obligations of the company which had been incurred before
the registration under Article 243 was effected at the place of the principal office, for the period of two years subsequent to the
said registration.
SECTION 6 Liquidation
Article 245 (Company in Process of Liquidation)
To the extent of the objectives of the liquidation, a company shall be deemed to continue to exist even after its dissolution.
Article 246 (Where Several Successors of Share Exist)
In case where there are 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 a member in connection with the liquidation. If there is no such designation,
the company's notice or peremptory notice made upon any one of the successors shall be effective upon all the successors.
Article 247 (Voluntary Liquidation)
(1) The method of disposal of the properties of a dissolved company may be determined by the articles of incorporation or with the
consent of all the members. In this case, an inventory and a balance sheet shall be prepared within two weeks from the date on which
the reason for dissolution occurred.
(2) Paragraph (1) shall not apply in case of the dissolution of a company pursuant to subparagraph 3 or 6 of Article 227.
(3) Article 232 shall apply mutatis mutandis to the case under paragraph (1).
(4) If, in case of paragraph (1), there is any person who has seized a member's share in the company, the consent of such person shall
be required.
(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 properties is completed.
Article 248 (Voluntary Liquidation and Protection of Creditors)
(1) If a company has harmed its creditors by disposing of its properties in violation of Article 247 (3), the creditors may apply
to the court for the revocation of such disposal.
(2) Article 186 of this Act and the proviso of Article 406 (1), Articles 406 (2) and 407 of the Civil Act shall apply mutatis mutandis
to the application for the revocation mentioned in paragraph (1).
Article 249 (Protection of Creditors who Have Seized Share)
If a company has disposed of its properties in violation of Article 247 (4), the creditor who has seized a member's share in the company
may demand that the company pay an amount equivalent to the value of such share. In this case, Article 248 shall apply mutatis mutandis.
Article 250 (Legal Liquidation)
If the method of disposal of the properties 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 the cases of a merger or a bankruptcy.
Article 251 (Liquidator)
(1) In case of the dissolution of a company, a liquidator shall be appointed by a resolution of the majority of all the members.
(2) When a liquidator has not been appointed, the managing member shall become a liquidator.
Article 252 (Liquidator Appointed by Court)
In case of the dissolution of a company pursuant to subparagraph 3 or 6 of Article 227, the court shall appoint a liquidator on the
application of any member, any interested person or the public prosecutor or ex officio.
Article 253 (Registration of Liquidators)
(1) The following particulars shall be registered within two weeks at the place of the principal office and within three weeks at
the place of each branch office, which periods shall commence to run from the date of appointment of a liquidator if a liquidator
has been appointed or from the date of the dissolution if the managing member has become a liquidator:
1. 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. Name of the representative liquidator if such has been appointed; and
3. Provisions to the effect that two or more liquidators shall jointly represent the company, if so determined.
(2) Article 183 shall apply mutatis mutandis to the registration under paragraph (1).
Article 254 (Duties and Powers of Liquidators)
(1) A liquidator shall have the following duties:
1. To wind up pending affairs;
2. To collect claims and to perform obligations;
3. To dispose of assets for realization; and
4. To distribute surplus assets.
(2) In case where there are two or more liquidators, acts in connection with the duties of liquidation shall be determined by a resolution
of the majority of the liquidators.
(3) The representative liquidator is authorized to do all judicial or extra-judicial acts in connection with the duties mentioned
in paragraph (1).
(4) Article 93 of the Civil Act shall apply mutatis mutandis to a partnership company.
Article 255 (Representation of Company by Liquidator)
(1) In case where the managing member has become a liquidator, he shall represent the company as heretofore provided.
(2) In case the court appoints two or more liquidators, the court may designate one who is to represent the company or may decide
upon joint representation by several of them.
Article 256 (Duties of Liquidator)
(1) A liquidator shall, without delay after his inauguration, investigate the status of the company's properties, prepare an inventory
list and a balance sheet and deliver copies thereof to respective members.
(2) A liquidator shall report on the progress of the liquidation at any time that any member requests him to do so.
Article 257 (Transfer of Business)
In case where a liquidator intends to transfer all or part of the business of a company, a resolution of a majority vote of all the
members shall be required.
Article 258 (Impossibility of Full Satisfaction of Obligations and Demand for Contribution)
(1) If the existing properties of a company are insufficient to fully satisfy its obligations, a liquidator may demand the members
to make their contributions irrespective of the time for performance.
(2) The amount of contribution in paragraph (1) shall be determined in proportion to the ratio of the share by each member.
Article 259 (Performance of Obligations)
(1) A liquidator may perform the obligations of the company which have not yet come due.
(2) In case of paragraph (1), an obligation in respect of which no interest was stipulated, the amount of the obligation deducted
by the legal interest up to the time for performance shall be paid.
(3) Paragraph (2) shall apply mutatis mutandis to an obligation in respect of which the stipulated interest is less than the legal
interest rate.
(4) In case of paragraph (1), conditional obligations, obligations with uncertain duration and any other obligations whose value is
uncertain shall be performed according to the valuation of an expert appointed by the court.
Article 260 (Distribution of Surplus Assets)
A liquidator shall not distribute the properties of the company to its members until all the obligations of the company have been
performed completely: Provided, That he may distribute the surplus assets after reserving the properties necessary for the performance
of such obligation in dispute.
Article 261 (Dismissal of Liquidator)
A liquidator appointed by the members may be dismissed by a resolution of a majority vote of all the members.
Article 262 (Idem)
If a liquidator is clearly unfit for performing his duties or he has breached his material duties, the court may, upon the application
of a member or any interested person, dismiss such liquidator.
Article 263 (Termination of Duties of Liquidator)
(1) When the duties of a liquidator have been completed, he shall without delay prepare a statement of account and deliver a copy
thereof to each member for approval.
(2) If a member who has received the statement of account in paragraph (1) has failed to raise an objection thereto within one month,
he shall be deemed to have approved it: Provided, That this shall not apply where a liquidator has committed some 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 in accordance with Article 263.
Article 265 (Mutatis Mutandis Applicable Provisions)
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.
Article 266 (Preservation of Books and Documents)
(1) The 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 completion of liquidation is registered at the place of the principal office: Provided, That the slips or
similar documents shall be preserved for five years.
(2) In case of paragraph (1), the custodian and the method of preservation shall be determined by a resolution of a majority vote
of all the members.
Article 267 (Extinction of Member's Liability)
(1) A member's liability under Article 212 shall extinguish when five years have elapsed from the date of the registration of dissolution
at the place of the principal office.
(2) Even after the lapse of the period mentioned in paragraph (1) if there remains surplus assets which have not been distributed,
creditors of a company may demand the performance of obligations in respect of such surplus assets.
CHAPTER III LIMITED PARTNERSHIP COMPANY
Article 268 (Organization of Company)
A limited partnership company shall be composed of members with unlimited liability and members with limited liability.
Article 269 (Applicable Provisions)
Unless otherwise provided in this Chapter, the provisions governing partnership companies shall apply mutatis mutandis to limited
partnership companies.
Article 270 (Absolute Particulars to Be Entered in Articles of Incorporation)
The articles of incorporation of a limited partnership company shall state all the particulars mentioned in Article 179 and shall
additionally specify whether the liability of each member is limited or unlimited.
Article 271 (Matters to Be Registered)
With respect to the registration of incorporation of a limited partnership company, it shall be registered whether each partner's
liability is limited or not, in addition to the matters as set forth in Article 180.
Article 272 (Contribution by Member with Limited Liability)
Members with limited liability shall not contribute personal credits or services.
Article 273 (Right and Duty of Management of Affairs)
Unless otherwise provided by the articles of incorporation, each member with unlimited liability shall have the right and duty to
manage the affairs of the company.
Article 274 (Appointment and Dismissal of Manager)
The appointment and dismissal of a manager shall be decided by a resolution of a majority vote of members with unlimited liability
even where managing members have been designated.
Article 275 (Freedom to Engage in Competitive Business by Member with Limited Liability)
A member with limited liability may, without the consent of the other members, effect for his own account or for the account of a
third person any transaction which falls within the class of business carried on by the company or become a member with unlimited
liability or a director of another company whose business purpose is the same kind of business as the company.
Article 276 (Transfer of Share of Member with Limited Liability)
With the consent of all the members with unlimited liability, a member with limited liability may transfer to another person the whole
or part of his share in the company. The same shall apply even where such transfer is to be accompanied by an amendment of the articles
of incorporation.
Article 277 (Right to Monitor by Member with Limited Liability)
(1) A member with limited liability may, at the end of each business year but only during business hours, inspect the account books,
balance sheets and other documents of the company and may investigate its business and the state of its property.
(2) In case where any material reason exists, a member with limited liability may, with the permission of the court, conduct the inspection
and investigation mentioned in paragraph (1) at any time.
Article 278 (Prohibition on Management and Representation by Member with Limited Liability)
A member with limited liability shall neither manage the affairs of the company nor represent the company.
Article 279 (Liability of Member with Limited Liability)
(1) A member with limited liability shall be liable to perform the obligations of the company to the extent of the amount of his contribution
deducting the amount which has been already paid.
(2) If any dividends have been distributed, notwithstanding the fact that the company accrued no profit, such amount shall be added
in determining the liability for performance.
Article 280 (Liability in Case of Decrease in Contribution)
In case where the contribution of a member with limited liability has been reduced, he shall not be relieved of the liabilities under
Articles 279 with regard to any obligation of the company which has been incurred prior to the registration of such reduction at
the place of the principal office, for the period of two years after such registration.
Article 281 (Liability of a Self-Styled Member with Unlimited Liability)
(1) In case where a member with limited liability has acted in a manner to induce others to misconceive him as a member with unlimited
liability, he shall assume the same liability as if he were a member with unlimited liability against any person who has effected
a transaction with the company due to such misconception.
(2) Paragraph (1) shall apply mutatis mutandis where a member with limited liability has acted in a manner to mislead others as to
the extent of his liability.
Article 282 (Liability of Member whose Liability Has Been Changed)
Article 213 shall apply mutatis mutandis where a member with limited liability has become a member with unlimited liability and Article
225 shall apply mutatis mutandis where a member with unlimited liability has become a member with limited liability.
Article 283 (Death of Member with Limited Liability)
(1) Upon the death of a member with limited liability, his successor shall succeed to the share of the deceased in the company and
shall become a member.
(2) Where, in case of paragraph (1), there are two or more successors, they shall appoint from among themselves one person who shall
exercise the right of the member. If there is no such appointment, the company's notice or peremptory notice made upon any one of
the successors shall be effective upon all the successors.
Article 284 (Incompetence of Member with Limited Liability)
A member with limited liability shall not be subject to retirement, even if he is adjudged incompetent.
Article 285 (Dissolution and Continuance of Company)
(1) A limited partnership company shall be dissolved if either all the members with unlimited liability or all the members with limited
liability have retired from the company.
(2) The members, either with unlimited liability or with limited liability, remaining in case of paragraph (1), may, with the unanimous
consent among themselves, continue the company by admitting a member with limited liability or a member with unlimited liability.
(3) Articles 213 and 229 (3) shall apply mutatis mutandis to the cases under paragraph (2).
Article 286 (Change of Organization)
(1) With the consent of all the members, a limited partnership company may transform its organization to a partnership company and
continue to exist.
(2) In case where all the members with limited liability have retired from the company, the members with unlimited liability may,
with the unanimous consent among themselves, transform its organization to a partnership company and continue to exist.
(3) In cases of paragraphs (2) and (3), the registration of dissolution shall be effected by the limited partnership company, and
the registration of incorporation shall be effected 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 (Liquidator)
A liquidator of a limited partnership company shall be appointed by a resolution of the majority of the members with unlimited liability.
If there is no such appointment, the managing member who has been in charge of the management shall become a liquidator.
CHAPTER IV STOCK COMPANY
SECTION 1 Incorporation
Article 288 (Promoters)
In order to incorporate a stock company, the promoters shall prepare the articles of incorporation.
Article 289 (Preparation of Articles of Incorporation, Absolute Particulars to Be Entered Therein)
(1) Each promoter shall prepare, write his name and affix his seal or sign on, the articles of incorporation, in which the following
particulars shall be contained:
1. Purpose;
2. Trade name;
3. Total number of shares authorized to be issued;
4. Par value per share;
5. Number of shares to be issued at the time of incorporation;
6. Place of principal office;
7. Method of public notice;
8. Name, residence registration number and address of each promoter; and
9. Deleted. <By Act No. 3724, Apr. 10, 1984>
(2) The number of shares to be issued at the time of incorporation shall be no less than a fourth of the total number of shares authorized
to be issued by the company.
(3) Public notices by a company shall be given by inserting them in the Official Gazette or in a daily newspaper in which matters
relating to current events are published.
Article 290 (Particulars of Abnormal Incorporation)
The following matters shall be effective by being stated in the articles of incorporation:
1. Any special benefits to be received by promoters and names of such promoters;
2. Name of the person who is to make a contribution in kind, the type, quantity and value of the subject-matter of such contribution
in kind and the class and number of shares to be given in consideration thereof;
3. The class, number and value of the property which has been agreed to be transferred to the company after its incorporation and
the name of the transferor; and
4. The expenses for incorporation which are to be borne by the company and the amount of promoter's compensation.
Article 291 (Determination of Matters Concerning Issuance of Shares at Time of Incorporation)
Unless otherwise provided in the articles of incorporation, the following matters in connection with the shares to be issued at the
time of incorporation shall be determined with the unanimous consent among the promoters:
1. Class and number of shares; and
2. If the company is to issue shares at the price higher than the par value, the number of such shares and the price.
Article 292 (Authentication of Articles of Incorporation)
The articles of incorporation shall take effect upon authentication by a notary public.
Article 293 (Subscription of Shares by Promoters)
Each promoter shall subscribe for shares in writing.
Article 294 Deleted. <By Act No. 5053, Dec. 29, 1995>
Article 295 (Payment of Subscription Price and Performance of Contribution in Kind in Promotion of Incorporation)
(1) In case where the promoters have subscribed for all of the shares to be issued at the time of incorporation, they shall without
delay make full payment of the subscription price. In this case, they shall designate the bank or other financial institution at
which the subscription price is to be paid and the place of payment.
(2) A promoter who is to make a contribution in kind shall, without delay, on the date fixed for the payment of the subscription price,
deliver the pertinent property and, if registration, recording or the creation or transfer of a right is required, the promoter shall
completely prepare the documents thereon and deliver them to the company.
Article 296 (Appointment of Officers in Promotion of Incorporation)
(1) When the payment of subscription price and the performance of contribution in kind have been completed in accordance with Article
295, the promoters shall without delay appoint the directors and auditors by a majority vote.
(2) The promoters shall have one vote per each share which they have subscribed for.
Article 297 (Preparation of Minutes by Promoters)
The promoters shall prepare and write their names and affix their seals or sign on the minutes of the meeting, in which the proceedings
of deliberation and the results thereof shall be entered.
Article 298 (Investigation and Reporting by Director and Auditor, and Request for Appointment of Inspector)
(1) The director and auditor shall, without delay after their appointment, investigate whether or not all matters concerning the incorporation
of the company have complied with the relevant acts, subordinate statutes and the articles of incorporation, and report the results
thereof to the promoters.
(2) Any director and auditor who was a promoter, or is now a contributor in kind or a party to a contract whereby the company is to
take over a property after its incorporation shall not participate in the investigation and reporting mentioned in paragraph (1).
(3) If all of the directors and auditors are subject to paragraph (2), the directors shall have a notary public make the investigation
and reporting mentioned in paragraph (1).
(4) In case where the articles of incorporation provide for any matter set forth in Article 290, the directors shall request the court
to appoint an inspector for the purpose of conducting the investigation on such matter: Provided, That this shall not apply to the
case of Article 299-2.
Article 299 (Investigation and Reporting by Inspector)
(1) The inspector shall investigate any matter set forth in Article 290 and whether or not the contribution in kind has been performed
pursuant to Article 295 and shall report the results thereof to the court.
(2) The inspector shall, without delay after he has prepared a report of investigation under paragraph (1), deliver a copy of it to
each promoter.
(3) Where any statement in the report of investigation is contrary to the true fact, the promoters may submit an explanatory note
thereon to the court.
Article 299-2 (Certification of Contribution in Kind, etc.)
With respect to the matters set forth in subparagraphs 1 and 4 of Article 290 the investigation and reporting by a notary public may
substitute for the investigation of the inspector mentioned in Article 299 (1) and with respect to the matters set forth in subparagraphs
2 and 3 of Article 290 and the performance of contribution in kind pursuant to Article 295, the appraisal by a certified appraiser
may substitute for the investigation of the inspector mentioned in Article 299 (1). In this case, the notary public or appraiser
shall report on the results of the investigation or appraisal to the court.
Article 300 (Disposition of Alteration by Court)
(1) If the court has found any of the matters falling under Article 290 to be improper after examining the investigation reports by
an inspector or notary public or the results of appraisal by an appraiser and an explanatory note by the promoters, it may alter
such matters and notify each promoter thereof.
(2) A promoter who disagrees to an alteration under paragraph (1) may revoke the subscription of his shares. In this case, the procedures
for the incorporation may be continued by amending the articles of incorporation.
(3) If no promoter revokes the subscription of his shares within two weeks after receiving the notification from the court, the articles
of incorporation shall be deemed to have been amended in accordance with the notification.
Article 301 (Offer of Shares in Case of Subscriptive Incorporation)
Where the promoters do not subscribe for all the shares issued at the time of incorporation, they shall offer shares for subscription.
Article 302 (Offer of Share Subscription and Particulars to Be Entered in Subscription Form)
(1) A person who intends to subscribe for shares shall complete two copies of subscription form, in which the class and number of
shares for which he is to subscribe and his address are stated, and shall write his name and affix his seal or shall sign thereon.
(2) The promoters shall prepare the subscription form, in which the following particulars shall be stated:
1. Date on which the articles of incorporation were authenticated, and the name of the notary public;
2. Matters set forth in Articles 289 (1) and 290;
3. Duration or reasons for dissolution of the company, if determined;
4. Class and number of shares subscribed by promoters;
5. Matters set forth in Article 291;
5-2. A provision that transfer of shares shall be subject to the approval of the board of directors, if so determined;
6. Distribution of interest prior to the commencement of business, if determined;
7. Redemption of shares out of profits to be distributed to shareholders, if 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. Bank and any other financial institution in charge of the payment of the subscription price and the place of payment; and
10. Name, address and business office of a transfer agent, if any.
(3) The proviso of Article 107 (1) of the Civil Act shall not apply to the offer of share subscription.
Article 303 (Duties of Subscribers)
A person who has subscribed for shares shall be responsible for the payment of the subscription price in accordance with the number
of shares allotted to him by the promoters.
Article 304 (Notice or Peremptory Notice to Subscribers, etc.)
(1) Any notice or peremptory notice to a person who has subscribed for shares or who has applied for subscription for shares may be
delivered to his address stated in the certificate of the share subscription or the subscription form for shares or to the address
notified to the company by such person.
(2) The notice or peremptory notice under paragraph (1) shall be deemed to have delivered at the time when it would normally have
arrived.
Article 305 (Payment of Subscription Price for Shares)
(1) When all the shares to be issued at the time of incorporation have been subscribed for, the promoters shall without delay have
the subscription price be fully paid by the subscribers.
(2) The payment under paragraph (1) shall be made at the place as prescribed in the subscription form for shares.
(3) Article 295 (2) shall apply mutatis mutandis to the cases under paragraph (1).
Article 306 (Change of Depository, etc. of Payment)
A change of the depository at which the subscription price shall be kept and of the place of payment shall be subject to approval
of the court.
Article 307 (Procedures for Forfeiture of Subscriber's Rights)
(1) In case where a person who has subscribed for shares fails to make the payment in accordance with Article 305, the promoters shall
fix a certain date and shall, before two weeks prior to such date, give such person a notice to the effect that such person's right
shall be forfeited if he fails to make the payment by such date.
(2) If the person who has received the notice under paragraph (1) fails to perform the payment by such date, his rights shall be forfeited.
In this case, the promoters may again offer such shares for subscription.
(3) Paragraphs (2) and (3) shall not affect any claim for damages against the person concerned who has subscribed for shares.
Article 308 (Inaugural General Meeting)
(1) In case where the payment pursuant to Article 305 and the performance of the contribution in kind have been completed, the promoters
shall without delay convene an inaugural general meeting.
(2) Articles 363 (1) and (2), 364, 368 (3) and (4), 368-2, 369 (1), 371 (2), 372, 373, 376 through 381 and 435 shall apply mutatis
mutandis to the inaugural general meeting.
Article 309 (Resolutions at Inaugural General Meeting)
At the inaugural general meeting, resolutions 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.
Article 310 (Investigation in Case of Abnormal Incorporation)
(1) If any matter set forth in Article 290 has been determined by the articles of incorporation, the promoters shall request the court
for the appointment of an inspector to investigate such matters.
(2) A written report of the inspector mentioned in paragraph (1) shall be submitted to the inaugural general meeting.
(3) The proviso of Article 298 (4) and Article 299-2 shall apply mutatis mutandis to the investigation under paragraph (1).
Article 311 (Reporting by Promoters)
(1) The promoters shall report in writing on the matters relating to the incorporation of the company, at the inaugural general meeting.
(2) The written report under paragraph (1) shall specify the following:
1. General circumstances concerning subscription of shares and payment of subscription price; and
2. Actual conditions regarding matters mentioned in Article 290.
Article 312 (Election of Officers)
At the inaugural general meeting, directors and auditors shall be elected.
Article 313 (Investigation and Reporting by Directors and Auditors)
(1) The directors and auditors shall, without delay after their inauguration, investigate whether all matters concerning the incorporation
of the company have complied with the relevant acts, subordinate statutes and the article of incorporation and shall report the results
thereof to the inaugural general meeting.
(2) Article 298 (2) and (3) shall apply mutatis mutandis to the investigation and reporting under paragraph (1).
(3) Deleted. <By Act No. 5053, Dec. 29, 1995>
Article 314 (Alteration of Matters Concerning Abnormal Incor- poration)
(1) If the inaugural general meeting finds any of the matters falling under Article 290 to be improper, it may alter them.
(2) Article 300 (2) and (3) shall apply mutatis mutandis to the cases under paragraph (1).
Article 315 (Claim for Damages against Promoters)
Article 314 shall not affect any claim for damages against the promoters.
Article 316 (Resolution for Amending Articles of Incorporation and Abandoning Incorporation)
(1) At the inaugural general meeting, a resolution calling for amending the Articles of incorporation or abandoning the incorporation
of the company may be adopted.
(2) A resolution under paragraph (1) may be adopted even where such matter has not been stated in the convocation notice for the meeting.
Article 317 (Registration of Incorporation)
(1) The registration of incorporation of a stock company shall be effected within two weeks from the date on which the procedures
in accordance with Articles 299 and 300 have been completed, in case where the promoters subscribed for all the shares issued at
the time of incorporation, and within two weeks from the date on which the inaugural general meeting has been closed or from the
date on which the procedures in accordance with Article 314 have been completed, in case where the promoters have offered shares
for subscription.
(2) For the registration under paragraph (1), the following matters shall be registered:
1. Matters set forth in Article 289 (1) 1 through 4, 6 and 7;
2. Total amount of the capital;
3. Total number and class of the outstanding shares and contents and number of each class of shares;
3-2. Provision that the transfer of shares shall be subject to the approval of the board of director, if so determined;
3-3. Provision under which stock option is granted, if determined;
3-4. Places of branch offices;
4. Duration or reasons for dissolution of the company, if determined;
5. Dividend of interest prior to the commencement of business, if determined;
6. Redemption of shares out of profits to be distributed to shareholders, if determined;
7. Matters set forth in Article 347, if convertible shares are issued;
8. Name and residence registration number of each director and auditor;
9. Name, residence registration number and address of the representative director;
10. Provision that two or more representing directors shall jointly represent the company, if so determined;
11. Trade name and the principal office of a transfer agent, if any; and
12. Name and resident registration number of each auditor of the audit committee, if such committee has been set up.
(3) Matters set forth in paragraph (2) 1, 4, 9 and 10 shall be included in the registration to be made in case of establishing a new
branch or transferring a branch, at the place of such newly established branch or the changed place of such transferred branch.
(4) Articles 181 through 183 shall apply mutatis mutandis to the registration of a stock company.
Article 318 (Certification and Liability by Depository for Paid Subscription Price)
(1) A bank and other financial institution which have had the custody of the subscription price paid shall deliver the certificate
as to the amount of money which are in its custody on demand by a promoter or a director.
(2) The bank and other financial institution under paragraph (1) may not assert, in respect of the amount of money duly certified
to be in its custody, non-performance, in whole or in part, of such payment or any restriction upon the return of such amount against
the company.
Article 319 (Transfer of Rights Deriving from Share Subscription)
The transfer of any right deriving from the subscription of shares shall not be effective against the company.
Article 320 (Restrictions on Asserting Nullity or Revocation of Share Subscription)
(1) After the company comes into existence, no subscriber of shares may assert the nullity of his subscription by reason of defects
in any requirement for the subscription form for shares, nor may revoke his subscription on the ground of fraud, duress or mistake.
(2) The same shall apply even before the company comes into existence, if the subscriber has attended, and has exercised his rights
at, the inaugural general meeting.
Article 321 (Promoter's Warranty Liability for Subscription and Payment)
(1) In case where, after the company comes into existence, any shares issued at the time of incorporation of the company have not
been subscribed or the subscription for certain shares has been revoked, the promoters shall be deemed to have subscribed for such
shares jointly.
(2) In case where, after the company comes into existence, shares upon which payment of the subscription price in accordance with
Article 295 (1) or 305 (1) has not been completed, the promoters shall make such payment jointly and severally.
(3) Article 315 shall apply mutatis mutandis to the cases under paragraphs (2) and (3).
Article 322 (Promoter's Liability for Damages)
(1) If promoters have neglected to perform their duties in connection with the incorporation of the company, they shall be jointly
and severally liable for damages to the company.
(2) If promoters have failed to perform their duties willfully or by gross negligence, they shall be jointly and severally liable
for damages to third persons.
Article 323 (Joint and Several Liability of Promoters and Officers)
If directors or auditors have neglected to perform their duties under Article 313 (1) and are thereby liable for damages to the company
or to third persons and if promoters are also liable therefor, the directors, auditors and promoters shall be liable for such damages
jointly and severally.
Article 324 (Release of Promoter's Liability and Derivative Suits by Shareholders)
Articles 400, and 403 through 406 shall apply mutatis mutandis to promoters.
Article 325 (Inspector's Liability for Damage)
If an inspector appointed by the court has failed to perform his duties willfully or by gross negligence, he shall be liable for damages
to the company or to third persons.
Article 326 (Promoter's Liability where Company Fails to Come into Existence)
(1) If the company fails to come into existence, the promoters shall be jointly and severally liable for all acts conducted in connection
with the incorporation of the company.
(2) In case of paragraph (1), the promoters shall be responsible for any expenditures incurred in connection with the incorporation
of the company.
Article 327 (Liability of Self-styled Promoter)
A person who has consented to have his name and any statement indicating his participation in the incorporation of the company entered
in the application form for subscription and/or in any other documents which have been issued in connection with the offering of
shares for subscription shall assume the same liability as that of a promoter.
Article 328 (Action for Nullity of Incorporation)
(1) The nullity of the incorporation of a company may be asserted only by the shareholders, directors or auditors and only by means
of an action which shall be filed within two years from the date on which the company comes into existence.
(2) Articles 186 through 193 shall apply mutatis mutandis to the action mentioned in paragraph (1).
SECTION 2 Shares
Sub-Section 1 Shares and Share Certificates
Article 329 (Formation of Capital and Par Value per Share)
(1) The capital of a stock company shall be no less than fifty million won.
(2) The capital of a stock company shall be divided into shares.
(3) The par value per share shall be equal.
(4) The par value per share shall be at least one hundred won.
Article 329-2 (Share Split)
(1) A company may split shares by a resolution of a general meeting of shareholders in accordance with Article 434.
(2) In case of paragraph (1), the par value per share after the split shall not be less than the amount under Article 329 (4).
(3) The provisions of Articles 440 through 444 shall apply mutatis mutandis to a share split under paragraph (1).
Article 330 (Restriction on Issuance of Share, Below Par)
Shares may not be issued at a price less than the par value: Provided, That this shall not apply to the case of Article 417.
Article 331 (Liability of Shareholder)
The liability of a shareholder shall be limited to the subscription price which he has paid for his shares.
Article 332 (Liability of Person who Subscribed for Shares under Fictitious Name or Another Person's Name)
(1) A person who has subscribed for shares either in the name of a fictitious person or in the name of another person without such
another person's consent shall assume the liability as a subscriber.
(2) A person who has subscribed for shares in the name of another person with such another person s consent shall have joint and several
liability with such another person for the payment of subscription price for shares.
Article 333 (Ownership of Shares in Common)
(1) Persons who have subscribed for shares jointly shall be jointly and severally liable for the payment of the subscription price.
(2) In case where a share belongs to an ownership in common of two or more persons, they shall designate one from among themselves
who is to exercise the rights of a shareholder.
(3) In case where no one is designated to exercise the rights of a shareholder, a notice or peremptory notice required to be given
to the owners in common may be given to any one of them.
Article 334 (Prohibition of Set-off by Shareholder against Company)
A shareholder may not assert a set-off against the company with respect to payment of the subscription price for shares.
Article 335 (Transferability of Shares)
(1) Shares may be transferred to other persons: Provided, That the articles of incorporation may subject the transfer of shares to
be approved by the board of directors.
(2) The transfer of shares which is not approved by the board of directors in contravention of the proviso of paragraph (1) shall
have no effect against the company.
(3) The transfer of shares made before the issuance of share certificates shall have no effect against the company: Provided, That
it shall not be the case if six months have passed after the existence of the company or the date of the payment of the subscription
price for new shares.
Article 335-2 (Request for Approval of Transfer)
(1) In case where the transfer of shares requires the approval of the board of directors, the shareholder intending to transfer his
shares may request in writing the company to approve the transfer, by specifying the contemplated transferee and the class and number
of the shares to be transferred.
(2) The company shall notify in writing the shareholder of whether or not it approves the transfer, within one month after the request
under paragraph (1) is made.
(3) If the company fails to notify the shareholder of its refusal within the period set forth in paragraph (2), the board of directors
shall be deemed to have approved the transfer of shares.
(4) The shareholder who has received the notification of the refusal to approve the transfer in accordance with paragraph (2) may
request the company to designate the alternative transferee or to purchase the shares, within twenty days after receiving the notification.
Article 335-3 (Request for Designation of Alternative Transferee)
(1) If a shareholder requests the company to designate an alternative transferee, the board of directors shall designate one and notify
in writing the shareholder and the designated person thereof, within two weeks after the request is made.
(2) If the board of directors fails to notify the shareholder of the designation of the alternative transferee within the period set
forth in paragraph (1), the board of directors shall be deemed to have approved the transfer of shares.
Article 335-4 (Claim for Sale by Designated Transferee)
(1) Any person designated as the alternative transferee in accordance with Article 335-3 (1) may request in writing the shareholder
who made the request for such designation to sell the shares to him within ten days after he receives the notification of such designation.
(2) Article 335-3 (2) shall apply mutatis mutandis to the case where the person designated as the alternative transferee fails to
make the request for sale within the period set forth in paragraph (1).
Article 335-5 (Determination of Sale Price)
(1) In case of Article 335-4, the sale price of the shares concerned shall be determined through a negotiation between the shareholder
and the person requesting the sale.
(2) In case where a negotiation under paragraph (1) is not effected within 30 days from the date of receiving the request under Article
335-4 (1), the provisions of Article 374-2 (4) and (5) shall apply mutatis mutandis.
Article 335-6 (Right of Shareholders to Request Purchase of Share)
Article 374-2 (2) through (5) shall apply mutatis mutandis where the shareholder requests the company to purchase the shares in accordance
with Article 335-2 (4).
Article 335-7 (Request for Approval by Transferee of Shares)
(1) In case where the transfer of shares is subject to the approval of the board of directors, any person who has acquired the shares
may request the company in writing to approve such acquisition, by specifying the class and number of the acquired shares.
(2) Article 335-2 (2) through (4), and 335-3 through 335-6 shall apply mutatis mutandis to the cases under paragraph (1).
Article 336 (Method of Transfer of Shares)
(1) Share certificates shall be delivered for the transfer of shares.
(2) A possessor of a share certificate shall be presumed to be a due holder thereof.
Article 337 (Requirements for Setting up of Transfer of Registered Shares against Company)
(1) The transfer of a registered share shall not be asserted against the company, unless the name and address of the transferee have
been entered in the register of shareholders.
(2) A company may designate a transfer agent in accordance with the articles of incorporation. In this case, if the transfer agent
has entered the name and address of the transferee in the register of shareholders, the entry of a change of shareholders under paragraph
(1) shall be deemed to have been duly effected.
Article 338 (Pledging of Registered Shares)
(1) In order to have a registered share pledged, the share certificate shall be delivered to the pledgee.
(2) Unless the pledgee possesses the share certificate, he shall not assert his pledge right against third persons.
Article 339 (Subrogation of Pledge)
In case of redemption, consolidation, split or conversion of shares, a pledge over the original shares may be extended to the money
or shares which the original shareholder is to receive in consequence thereof.
Article 340 (Registered Pledge on Registered Shares)
(1) If, with respect to a pledge created over a registered share, 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 name in the share certificate, the pledgee may receive
from the company the dividends of profits or interest, the distribution of surplus assets or money mentioned in Article 339, and
may apply them to the satisfaction of his claims due to him in preference to other creditors.
(2) Article 353 (3) of the Civil Act shall apply mutatis mutandis to the case under paragraph (1) above.
(3) A pledgee under paragraph (1) may demand that the company deliver the share certificate of the share mentioned in Article 340.
Article 340-2 (Stock Option)
(1) The company may, in accordance with the articles of incorporation, grant by the resolution of the general shareholders' meeting
in accordance with Article 434 the option to purchase new shares or shares it owns (hereinafter referred to as "stock option")
at a fixed price established in advance(hereinafter referred to as "fixed price for stock option") to its directors, auditors
or other employees who have contributed or will be able to contribute to the promotion of its incorporation and management, technological
innovation and the like. Provided, That, in case the fixed price for the stock option is lower than the current price of the stock
concerned, the company may compensate for the difference between the two prices with cash or its own shares which are equivalent
to the difference. In this case, the current stock price shall be appraised as of the date of the exercise of the stock option.
(2) The stock option mentioned in paragraph(1) shall not be granted to persons who fall under any of the following subparagraphs:
1. A shareholder who holds 10/100 or more of the total outstanding shares of the company excluding the shares without voting rights;
2. A person who in reality exercises his influence over important matters relating to the management of the company such as the appointment
or dismissal of directors and auditors and the like; and
3. The spouse, lineal ascendants or descendents of the person falling under subparagraph 1 or 2.
(3) The number of new shares to be issued or the company's own shares to be assigned under paragraph(1) shall not exceed 10/100 of
the total outstanding shares of the company.
(4) The fixed price for the stock option shall be no less than the prices mentioned in the following subparagraphs:
1. In the case of issuing new shares, either their current price or their face value, whichever is higher as of the date of the granting
of the stock option
2. In the case of assigning the company's own shares, their current price as of the date of the granting of the stock option.
Article 340-3 (Granting of Stock Option)
(1) The following particulars shall be entered in the provisions of the articles of incorporation concerning the stock option under
paragraph(1) of Article 340-2:
1. A statement to the effect that stock option may be granted in specified cases;
2. Classes and number of shares to be issued or assigned in consequence of the exercise of stock option;
3. Qualifications of a person who may be granted stock option;
4. Period within which stock option may be exercised; and
5. A statement to the effect that the granting of the stock option may be revoked by the resolution of the board of directors under
certain conditions.
(2) In adopting a resolution concerning the granting of stock option at the general shareholders' meeting, the following matters shall
be determined:
1. Names of persons who are to be granted the stock option;
2. Method by which the stock option is granted;
3. Matters concerning a fixed price for stock option and an adjustment thereof;
4. Period within which the stock option may be exercised; and
5. Classes and number of shares to be issued or assigned to each of the persons to be granted the stock option in case he exercises
the stock option.
(3) The company shall enter into contract with the optionee who has been granted the stock option and prepare a written contract thereon
within a reasonable time frame.
(4) The company shall keep the written contract as set forth in paragraph(3) at its principal office until the expiration of the period
within which the stock option may be exercised in order that its shareholders may inspect the contract during its office hours.
Article 340-4 (Exercise of Stock Option)
(1) The stock option under Article 340-2(1) may be exercised only when the stock optionee has been in the service of the company for
two years or more from the date when the matters relating to subparagraphs of Article 340-3(2) were determined by the resolution
of the general shareholders' meeting.
(2) The stock option under Article 340-2(1) shall not be transferable to another person: Provided, That, in the case of the death
of the optionee entitled to exercise the stock option under Article 340-2(1), his heir thereto may exercise it.
Article 340-5 (Applicable Provisions)
Article 350(2), the latter part of article 350(3), Articles 351 and 516-8(1), (3) and (4), and the former part of Article 516-9 shall
apply mutatis mutandis where new shares are to be issued in consequence of the exercise of the stock option.
Article 341 (Acquisition of Company's Own Shares)
A company may not acquire its own shares on its own account, except in the following cases:
1. In case of the redemption of shares;
2. In case of a merger of companies or an acquisition of the entire business of another company;
3. Where it is necessary to do so for achieving the objective in the course of exercising the rights of the company;
4. Where it is necessary to deal with the fractional shares; and
5. Where a shareholder exercises the right to request the company to purchase his shares.
Article 341-2 (Acquisition of Its Own Shares for Granting of Stock Option)
(1) In the case of the acquisition of its own shares either for the purpose of assigning them under Article 340-2(1) or by the transfer
of shares from its outgoing directors, auditors or other employees, the company may, on its account, acquire such shares of its own
within the limits not exceeding 10/100 of the total outstanding shares: Provided, That the total amount to be paid for the acquisition
shall be within such limits as shall not affect the availability of dividends to shareholders in accordance with Article 462(1)
(2) In case the company, under paragraph(1), acquires its own shares for value from a shareholder who holds shares exceeding 10/100
of the total outstanding shares, a resolution in accordance with Article 434 shall be adopted in the general shareholders' meeting
with respect to the matters set forth in the following subparagraphs. In this case, the company shall acquire the foregoing shares
of its own within six months after the resolution by the general shareholders' meeting:
1. Name of the shareholder who desires to assign his shares;
2. Classes and number of shares to be acquired; and
3. Amount to be paid for the acquisition of its own shares.
(3) In case of the acquisition of its own shares under paragraph(1), the company shall dispose of the shares within a reasonable period
of time.
(4) Article 433(2) shall apply mutatis mutandis to the general shareholders' meeting under paragraph(2).
Article 341-3 (Receipt of Company's Own Shares as Pledge)
A company may not take its own shares as an object of a pledge in excess of a twentieth of the total number of outstanding shares:
Provided, That such limit shall not apply in case of subparagraph 2 or 3 of Article 341.
Article 342 (Disposition of Company's Own Shares)
In case of subparagraph 1 of Article 341, the company shall, without delay, cancel the shares, and in the cases of subparagraphs 2
through 5 of Article 341, and the proviso of Article 341-3, it shall dispose of the shares or the pledge within reasonable period.
Article 342-2 (Acquisition of Parent Company's Shares by Subsidiary Company)
(1) In case where a company (hereinafter referred to as "the parent company" ) holds more than 50/100 of the total outstanding
shares of another company (hereinafter referred to as "the subsidiary company"), the subsidiary company may not acquire
shares of the parent company, except in the following cases:
1. In case of the all-inclusive exchange and all-inclusive transfer of stocks, the merger of companies or the acquisition of the entire
business of another company; and
2. Where it is necessary to do so for achieving the objective in the course of exercising the rights of the company.
(2) In case of respective subparagraphs of paragraph (1), the subsidiary company shall dispose of the shares of the parent company
within six months after its acquisition.
(3) If a parent company and its subsidiary company in aggregate hold, or a subsidiary company by itself holds, more than 50/100 of
the total outstanding shares of another company, such another company shall be deemed to be subsidiary company of the parent company
for the purpose of the application of this Act.
Article 342-3 (Acquisition of Another Company's Shares)
If a company acquires more than 10/100 of the total outstanding shares in another company, it shall without delay notify such another
company thereof.
Article 343 (Retirement of Shares)
(1) Shares may be retired only in accordance with the provisions of this Act relating to the reduction of capital: Provided, That
this shall not apply to the case of the retirement of shares effected out of profits to be distributed to shareholders in accordance
with the articles of incorporation.
(2) Articles 440 and 441 shall apply mutatis mutandis in case of the retirement of shares.
Article 343-2 (Retirement of Shares by Resolution of General Meeting)
(1) A company may retire the shares after purchasing them under a resolution of the regular general meeting pursuant to Article 434,
in addition to a case under Article 343.
(2) The kind and total number of shares to be purchased, the total sum of acquired values and the available period for share purchases
shall be determined by a resolution at the general meeting under paragraph (1).
(3) In case of paragraph (2), the total sum of acquired values of shares to be purchased shall not exceed the amount obtained by subtracting
the amount under each subparagraph of Article 462 (1) from the net assets value on the balance sheet.
(4) In case of paragraph (2), the available period for share purchase shall not pass the closing date of the general meeting regarding
the first period of settlement of accounts after the resolution under paragraph (1).
(5) A company shall not purchase shares under paragraph (1) in case where it is feared that the net assets value on the balance sheet
for the period of settlement of accounts in the relevant business year falls short of the total sum of each subparagraph of Article
462 (1).
(6) Notwithstanding the net assets value on the balance sheet for the period of settlement of accounts in the relevant business year
falls short of the total sum of each subparagraph of Article 462 (1), if a company retires the shares after purchasing them under
paragraph (1), the directors are jointly and severally liable to indemnify the company against the relevant insufficient amount.
In such case, the provisions of Article 462-3 (4) (proviso) shall apply mutatis mutandis.
Article 344 (Different Classes of Shares)
(1) A company may issue two or more classes of shares which are different in respect of their particulars as to the dividends of profits
or interest or the distribution of the surplus assets.
(2) In case of paragraph (1), the articles of incorporation shall provide for the contents and number of each class of shares and
shall also provide the minimum dividend rate with respect to a class of shares having any preferential right as to the dividend of
profits.
(3) If the company issues different classes of shares, special provisions may be made from class to class with respect to the subscription
for new shares, the consolidation, split, or redemption of shares or the allotment of shares in consequence of a merger or split
of companies, even where no such matters have been provided in the articles of incorporation.
Article 345 (Redeemable Shares)
(1) In case of Article 344, the company may provide that a class of shares, having preferential right as to a dividend may be redeemed
out of profits.
(2) In case of paragraph (1), the price, time and method of the redemption of shares and the number of redeemable shares shall be
stated in the articles of incorporation.
Article 346 (Issuance of Convertible Shares)
(1) If a company issues different classes of shares, the articles of incorporation may provide that a shareholder may demand the shares
subscribed by the shareholder to be converted into shares of another class. In this case, the conditions of conversion, the period
within which the conversion may be demanded, and the number and contents of the shares to be issued in consequence of the conversion
shall be prescribed.
(2) The number of shares to be issued in consequence of the conversion shall be reserved in each class of shares under Article 344
(2) within the period mentioned in paragraph (1).
Article 347 (Procedures of Issuance of Convertible Shares)
In case of Article 346 (1), the following particulars shall be stated in the subscription form for shares or the certificate of preemptive
rights to new shares:
1. A statement to the effect that the shares concerned may be converted into shares of another class;
2. Conditions of conversion;
3. Contents of the shares to be issued in consequence of the conversion; and
4. Period within which the conversion may be demanded.
Article 348 (Issue Price of Shares to be Issued in Consequence of Conversion)
If shares are to be issued in consequence of the conversion, the issue price of such new shares shall be that of the shares which
existed before the conversion.
Article 349 (Demand for Conversion)
(1) A person demanding the conversion shall submit to the company two copies of written demand together with the share certificates.
(2) The written demand mentioned in paragraph (1) shall contain the class and number of shares to be converted and the date of the
demand. The shareholder demanding conversion shall write his name and affix his seal or sign on it.
(3) Deleted. <By Act No. 5053, Dec. 29, 1995>
Article 350 (Effective Date of Conversion)
(1) Conversion of shares shall take effect at the time when it is demanded.
(2) Any shareholder of the shares converted during the period mentioned in Article 354 (1) may not exercise the voting right at the
general shareholders' meeting held during such period.
(3) With regard to a dividend of profit or interest to be distributed to the shares converted pursuant to paragraph (1), the conversion
shall be deemed to have been effected at the end of the business year in which the conversion is demanded. However, the articles
of incorporation may provide that with respect to a dividend of profit or interest to be distributed to the new shares, the conversion
shall be deemed to have been effected at the end of the business year immediately before the business year in which the conversion
is demanded.
Article 351 (Registration of Conversion)
The registration for changes caused by 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.
Article 352 (Particulars to Be Entered in Register of Shareholders)
(1) In case where registered shares are issued, the following particulars shall be entered in the register of shareholders:
1. Name and address of each shareholder;
2. Class and number of shares held by each shareholder;
2-2. Serial number of the share certificates when the share certificates have been issued for shares held by each shareholder; and
3. Date of acquisition of each share.
(2) If bearer share certificates are issued, the register of shareholders shall state the class, number, serial number and issuance
date of such certificates.
(3) If, in case of paragraphs (1) and (2), convertible shares are issued, the register of shareholder shall also contain the particulars
set forth in Article 347.
Article 353 (Effect 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) Article 304 (2) shall apply mutatis mutandis to the notice or peremptory notice under paragraph (1).
Article 354 (Suspension of Alteration of Register of Shareholders and Record Date)
(1) In order to determine the person who shall exercise the voting right, receive dividends or exercise other rights as a shareholder
or a pledgee, the company may suspend the alteration of entry 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.
(2) The period mentioned in paragraph (1) shall not exceed three months.
(3) The date mentioned in paragraph (1) shall be determined to be a day within three months prior to the date on which the person
may exercise the rights as a shareholder or pledgee.
(4) If a company has determined the period or the date mentioned in paragraph (1), it shall give public notice thereof two weeks in
advance: Provided, That this shall not apply where such period or date has been determined by the articles of incorporation.
Article 355 (Time to Issue Share Certificates)
(1) A company shall without delay issue share certificates after it has come into existence or after the date of payment on new shares.
(2) No share certificate may be issued before the existence of the company or the date of payment for new shares.
(3) Share certificates issued in contravention of paragraph (2) shall be null and void: Provided, That this shall not affect any claim
for damages against those who have issued them.
Article 356 (Particulars to Be Entered in Share Certificates)
Each share certificate shall contain the following particulars and a serial number and the representative director shall write his
name and affix his seal or shall sign thereon:
1. Trade name of the company;
2. Date on which a company has come into existence;
3. Total number of shares authorized to be issued by the company;
4. Par value per share;
5. If the shares are issued after the existence of the company, date of issuance of such certificates.
6. Class and contents of shares, if there are different classes of shares;
6-2. Provision that any transfer of shares shall be subject to the approval of the board of directors, if determined;
7. Matters set forth in Article 345 (2), if redeemable shares have been issued; and
8. Matters set forth in Article 347, if convertible shares have been issued.
Article 357 (Issuance of Bearer Share Certificates)
(1) A bearer share certificate may be issued only if it is so provided in the articles of incorporation.
(2) A shareholder may at any time demand of the company that a bearer share certificate be converted into a registered share certificate.
Article 358 (Exercise of Rights by Shareholders Holding Bearer Share Certificates)
The owner of a bearer share certificate may not exercise his rights as a shareholder unless he deposits his share certificate with
the company.
Article 358-2 (Non-bearing of Share Certificates)
(1) Unless otherwise provided in the articles of incorporation, any shareholder may declare to the company that he will not bear share
certificates as to his registered shares.
(2) Upon receiving the declaration mentioned in paragraph (1), the company shall without delay enter in the register of shareholders
and part of a set thereof its statement that it will not issue the share certificates and notify the shareholder thereof. In this
case, the company may not issue the share certificates concerned.
(3) In case of 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 paragraphs (1) through (3), a shareholder may demand at any time that the company issue or return the share certificates.
Article 359 (Bona Fide Acquisition of Share Certificates)
Article 21 of the Check Act shall apply mutatis mutandis to share certificates.
Article 360 (Judgment of Nullification and Re-issuance of Share Certificates)
(1) A share certificate may be invalidated by undergoing the procedures of public summons.
(2) A person who has lost his share certificates shall not request the company to re-issue them, unless he has obtained a judgment
of nullification with respect thereto.
Sub-Section 2 All-inclusive Share Exchange
Article 360-2 (Incorporation of Complete Parent Company by All-inclusive Exchange of Shares)
(1) A company may become the company (hereinafter referred to as the "complete parent company") possessing the total number
of issued shares of another company by an all-inclusive share exchange under the provisions of this Sub-Section. In such case, the
said another company shall be called the "complete subsidiary".
(2) The shares owned by the shareholders of the company becoming the complete subsidiary by an all-inclusive share exchange (hereafter
in this Sub-Section, referred to as the "share exchange") shall be transferred to the company becoming the complete parent
company by the share exchange on the day of share exchange; and the shareholders of the company becoming the said complete subsidiary
shall become the shareholders of the company becoming the said complete parent company by receiving the allocation of new shares
to be issued by the company becoming the said complete parent company for the share exchange.
Article 360-3 (Preparation of Contract for Share Exchange and Approval of Shareholders' General Meeting)
(1) A company which intends to make a share exchange shall prepare a contract for share exchange and obtain an approval of the shareholders'
general meeting.
(2) The resolution for an approval under paragraph (1) shall be governed by the provisions of Article 434.
(3) Matters falling under any of the following subparagraphs shall be entered on the share exchange contract:
1. Where the company becoming a complete parent company alters the articles of incorporation due to the share exchange, the relevant
provisions;
2. Matters on the total number and kinds of new shares to be issued by the company becoming a complete parent company, and the number
of such shares by kind, and on the allocation of new shares to the shareholders of the company becoming a complete subsidiary;
3. Matters on the amount of capital to be increased for the company becoming a complete parent company, and on the capital reserves;
4. Where the amount to be paid to the shareholders of the company becoming a complete subsidiary is determined, the relevant provisions;
5. Date of the shareholders' general meeting of each company to make a resolution under paragraph (1);
6. Date to make a share exchange;
7. Where each company pays a dividend not later than the date of share exchange or makes a payment of dividend in cash under Article
462-3, the relevant limit amount;
8. Where a company transfers its own stocks under Article 360-6, the total number and kinds of stocks to be transferred, and the number
of such stocks by kind; and
9. Where the directors, auditors or members of audit committee who are to be appointed by the company becoming a complete parent company
are determined, their names and resident registration numbers.
(4) A company shall enter the matters falling under any of the following subparagraphs on the notification and public notice under
Article 363:
1. Major details of a share exchange contract;
2. Details and exercising methods of the appraisal right under Article 360-5 (1); and
3. Where one company has a regulation 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 other company do not carry such regulations, the purport thereof.
Article 360-4 (Public Notification of Share Exchange Contract, etc.)
(1) The directors shall keep the documents falling under any of the following subparagraphs at the head office from two weeks prior
to the meeting day of the shareholders' general meeting under Article 360-3 (1) to the date on which six months elapse since the
date of share exchange:
1. Contract for share exchange;
2. Documents carrying the reasons for an allocation of stocks to the shareholders of the company becoming a complete subsidiary; and
3. Final balance sheets and profit and loss statements of each company making a share exchange prepared on a certain date within six
months prior to the meeting day of the shareholders' general meeting under Article 360-3 (1) (in a case of simplified share exchange
under Article 360-9, the date on which the public notice or notification is made under paragraph (2) of the same Article).
(2) The provisions of Article 391-3 (3) shall apply mutatis mutandis to the documents under paragraph (1).
Article 360-5 (Appraisal Right of Opposing Shareholders)
(1) The shareholders opposed to a resolution of the board of directors on the matter to be approved under Article 360-3 (1) may, if
they informed in writing the company of their intents to oppose to the said resolution prior to the shareholders' general meeting,
claim to the company for the purchase of shares owned by them in writing, indicating the kind and number of such shares, within 20
days since the date of resolution of such general meeting.
(2) The shareholders informed the company in writing of their intents to be opposed to the share exchange within two weeks since the
date of public notice or notification under Article 360-9 (2) may claim to the company for the purchase of shares owned by them in
writing, indicating the kind and number of such shares, within 20 days since the expiration of such period.
(3) The provisions of Article 374-2 (2) through (5) shall apply mutatis mutandis to the claims for purchase under paragraphs (1) and
(2).
Article 360-6 (Transfer of Treasury Shares Substituting Issue of New Shares)
The company becoming a complete parent company may transfer the treasury shares owned by it substituting an issue of new shares in
making a share exchange, which are to be disposed of in a considerable period under Article 342, to the shareholders of the company
becoming a complete subsidiary.
Article 360-7 (Maximum Limit of Capital Increase of Complete Parent Company)
(1) The capital of the company becoming a complete parent company shall not be increased in excess of the amount obtained by subtracting
the amount falling under each of the following subparagraphs from the current net assets amount of the company becoming a complete
subsidiary on the date of share exchange:
1. Amount to be paid to the shareholders of the company becoming a complete subsidiary; and
2. Total sum of book values of the shares to be transferred to the shareholders of the company becoming a complete subsidiary under
Article 360-6.
(2) In case where the company becoming a complete parent company already owns the shares of the company becoming a complete subsidiary
prior to share exchange, the capital of the company becoming the complete parent company shall not be increased in excess of the
limit of amount obtained by subtracting the amount falling under each subparagraph of paragraph (1) from the amount derived from
multiplying the current net assets value of the company becoming the complete subsidiary on the date of share exchange by the rate
of the number of shares to be transferred to the company becoming the complete parent company due to a share exchange with the total
number of shares issued by the relevant company.
Article 360-8 (Procedures for Invalidation of Share Certificates)
(1) The company becoming a complete subsidiary due to a share exchange shall, where its shareholders' general meeting has made an
approval under Article 360-3 (1), make a public notice on the matters falling under each of the following subparagraphs one month
before the date of share exchange, and notify the shareholders listed in the share register and the pledgees respectively:
1. Purport of an approval under Article 360-3 (1);
2. Purport that the share certificates shall be submitted to the company not later than the day preceding the date of share exchange;
and
3. Purport that the share certificates shall become invalid on the date of share exchange.
(2) The provisions of Articles 442 and 444 shall apply mutatis mutandis to the case where an approval is made under Article 360-3
(1),
Article 360-9 (Simplified Share Exchange)
(1) In case where there exists a consent by all shareholders of the company becoming a complete subsidiary or where the company becoming
a complete parent company owns 90/100 or more of the total number of shares issued by the company becoming the complete subsidiary,
an approval of the shareholder's general meeting of the company becoming the complete subsidiary may substitute for an approval of
the board of directors.
(2) The company becoming a complete subsidiary shall, in the case of paragraph (1), make a public notice to the effect that a share
exchange is to be made without obtaining an approval of the shareholders' general meeting within two weeks since the preparation
of a share exchange contract, or notify the shareholders thereof: Provided, That this shall not apply to the case where there exists
a consent of all shareholders.
Article 360-10 (Small-Scale Share wap)
(1) In case where the total number of new shares issued for a share swap by the company becoming a complete parent company is not
in excess of 5/100 of the total number of shares issued by the relevant company, an approval of the shareholders' general meeting
under Article 360-3 (1) of the relevant company may substitute for an approval of the board of directors: Provided, That this shall
not apply to the case where the amount to be paid to the shareholders of the company becoming a complete subsidiary, if so determined,
is in excess of 2/100 of the current net assets value of the company becoming the complete parent company on its final balance sheet
as provided in Article 360-4 (1) 3.
(2) The shares to be transferred to the shareholders of the company becoming a complete subsidiary under Article 360-6 shall be deemed
the new shares to be issued for a share exchange, in applying the provisions of paragraph (1).
(3) In a case of the text of paragraph (1), the share exchange contract shall include the purport that the company becoming a complete
parent company may make a share exchange without obtaining an approval of the shareholders' general meeting under Article 360-3 (1),
and shall not include the matters listed in paragraph (3) 1 of the said Article.
(4) The company becoming a complete parent company shall make a public notice on the business title and head office of the company
becoming a complete subsidiary, the date of share exchange and the purport that a share exchange is to be made without obtaining
an approval under Article 360-3 (1), or notify the shareholders thereof, within two weeks since the preparation of a share exchange
contract.
(5) In case where the shareholder possessing the shares equivalent to 20/100 or more of the total number of shares issued by the company
becoming a complete parent company notifies of his intent to be opposed to the share exchange under the text of paragraph (1), the
share exchange under this Article shall not be made.
(6) In a case of the text of paragraph (1), where the provisions of Article 360-4 (1) is applicable to the company becoming a complete
parent company, the term "two weeks prior to the meeting days of shareholders" general meeting under Article 360-3 (1)"
in other portions than each subparagraph of the same paragraph of same Article, and "the meeting days of shareholders"
general meeting under Article 360-3 (1)" in subparagraph 3 of the same paragraph of same Article shall be "the date of
a public notice or notification under paragraph (4) of this Article", respectively.
(7) In a case of the text of paragraph (1), the provisions of Article 360-5 shall not be applicable.
Article 360-11 (Mutatis Mutandis Application of Regulations for Fractional Shares)
(1) The provisions of Article 443 shall apply mutatis mutandis to the case of share exchange of a company.
(2) The provisions of Articles 339 and 340 (3) shall apply mutatis mutandis to the pledge for the shares of the company becoming a
complete subsidiary in a case of share exchange.
Article 360-12 (Post Public Notice of Documents Carrying Matters on Share Exchange)
(1) The directors shall keep the documents carrying the matters falling under each of the following subparagraphs at the head office
for six weeks from the date of share exchange:
1. Date of share exchange;
2. Current net assets value of the company becoming a complete subsidiary on the date of share exchange;
3. Number of shares of a complete subsidiary transferred to a complete parent company due to a share exchange; and
4. Other matters on the share exchange.
(2) The provisions of Article 391-3 (3) shall apply mutatis mutandis to the documents under paragraph (1).
Article 360-13 (Tenure of Director and Auditor of Complete Parent Company)
The directors and auditors of the company becoming a complete parent company due to a share exchange who have taken office before
the share exchange shall retire from office on the closing date of the general meeting on the first period of settlement of accounts
after the date of the share exchange.
Article 360-14 (Litigation over Invalidation of Share Exchange)
(1) Any shareholder, director, auditor, member of audit committee or liquidator of each company may claim the invalidation of share
exchange by only a litigation within six months since the date of such share exchange.
(2) The litigation under paragraph (1) shall be under an exclusive jurisdiction of the district court having jurisdiction over the
location of head office of the company becoming a complete parent company.
(3) When the judgment invalidating a share exchange becomes final, the company becoming a complete parent company shall transfer the
shares of the company becoming a complete subsidiary, which have been owned by it, to holders of new shares issued for a share exchange
or shares transferred under Article 360-6.
(4) The provisions of Articles 187 through 189, 190 (text), 191, 192, 377 and 431 shall apply mutatis mutandis to the litigation under
paragraph (1), and those of Articles 339 and 340 (3) to the case of paragraph (3), respectively.
Sub-Section 3 All-inclusive Transfer of Shares
Article 360-15 (Establishment of Complete Parent Company due to All-inclusive Share Transfer)
(1) A company may establish a complete parent company due to an all-inclusive share transfer under this Sub-Section (hereafter in
this Sub-Section, referred to as the "share transfer"), and become a complete subsidiary.
(2) The shares of a company becoming a complete subsidiary due to the share transfer, which are owned by its shareholders, shall be
transferred to a complete parent company established due to the share transfer, and the shareholders of the relevant complete subsidiary
shall become the shareholders of the relevant complete parent company by receiving an allocation of shares issued by the relevant
complete parent company for the share transfer.
Article 360-16 (Approval of Share Transfer by Shareholders' General Meeting)
(1) A company intending to transfer the shares shall prepare a plan for share transfer stating matters falling under each of the following
subparagraphs, and obtain an approval of the shareholders' general meeting:
1. Provisions of the articles of incorporation of a complete parent company to be established;
2. Kind and number of the shares issued for a share transfer by a complete parent company to be established, and matters on the share
allocation to the shareholders of a company becoming a complete subsidiary;
3. Matters on the equity capital value and capital reserves of a complete parent company to be established;
4. Where the amount to be paid to the shareholders of a company becoming a complete subsidiary is determined, the provisions therefor;
5. Time of the share transfer;
6. Where a company becoming a complete subsidiary distributes profits not later than the date of share transfer, or makes the profit
distribution by cash under Article 462-3, the relevant limit;
7. Names and resident registration numbers of