Background
Minority shareholders of a listed food company took collective action, challenging decisions made by the management. Demanding the establishment of a compliance monitoring system and measures to enhance shareholder value (increased dividends), they retained Changchun as their legal representative.
The Issue — Starting With "Who the Shareholders Are"
For minority shareholders to combine their strength, they must first know "who the shareholders are." Article 396 of the Commercial Act guarantees shareholders the right to inspect and copy the company's register of shareholders, but the company refused. The key was whether the court would recognize that right swiftly by injunction.
How Changchun Helped
Acting for the minority shareholders, Changchun (attorneys Younghoon Jung, Jaesun Yoon and Jonghwa Kim) applied for an injunction for inspection and copying of the register of shareholders, making a prima facie showing that ① inspection and copying is a legitimate right under article 396 of the Commercial Act; ② the request had a proper purpose and reason; and ③ there was a need for preservation that could not await the merits.
The court granted the injunction, holding the shareholders' claim well founded. The minority shareholders thereby secured a foundation for the next steps — inspection of the accounting books, a derivative suit and more. The case shows that shareholders with small stakes can still check management through the rights the law provides. (Related coverage: Chosun Biz article) (Outcomes depend on the facts of each case and may differ.)