Background
Conflict over management control and equity deepened between the two co-CEOs of a startup. One of them (the plaintiff, a former co-CEO) then claimed that "the other CEO agreed by KakaoTalk to transfer their shares to me for no consideration, so I came to hold 50% of the company's equity," and brought a combined claim for ① entry in the register of shareholders against the company, ② rescission of, or a declaration of the non-existence of, the shareholders' resolution removing the plaintiff, and ③ damages for wrongful removal (about KRW 85 million). Changchun represented the company and its majority shareholder CEO (the defendants).
The Issue — Are KakaoTalk Messages a "Contract," and Was the Removal Valid?
The key questions were ① whether fragmentary KakaoTalk messages alone could be regarded as forming a share transfer agreement; ② whether the resolution removing a director, passed with the affirmative vote of a shareholder holding 73% of the issued shares, was valid; and ③ whether removal during a term of office entitles the director to damages equal to remuneration.
How Changchun Helped
Changchun (attorneys Jaesun Yoon and Jonghwa Kim) dismantled each of the three claims.
① Share transfer — no contract formed: formation of a contract requires a concrete meeting of minds on the essential and material terms (Supreme Court 2000Da51650, among others). The KakaoTalk messages produced were fragmentary exchanges from the course of negotiation, with no dispositive document such as a written contract, and we proved they could not be treated as an agreement to transfer shares.
② Removal resolution — quorum satisfied: we established that the removal resolution was valid, having satisfied the special resolution quorum under the Commercial Act (arts. 385(1) and 434) with the affirmative vote of a shareholder holding 73% of the issued shares.
③ Damages for wrongful removal — no loss: we proved that even assuming removal without just cause, the plaintiff had never received remuneration from the company and no shareholders' resolution on remuneration existed, so no "loss" to be compensated existed at all (Commercial Act art. 388; Supreme Court 2012Da98720, among others).
Outcome
The court dismissed both the plaintiff's principal and alternative claims. Our client preserved the company's management control and equity intact.
An assertion that "we agreed over KakaoTalk" does not by itself establish a share transfer or rights of great value. Precisely identifying the requirements for contract formation and the Commercial Act rules on resolution quorums and director remuneration can protect a company's control to the end. (Outcomes may differ depending on the facts of each matter.)