Background
The Fair Trade Commission found that the chief executive of a KOSDAQ-listed company had fixed product prices with competitors on nine occasions over about four years. The company was fined approximately KRW 16 billion as a result. The wrongdoing was the CEO's, but the loss fell on the company — that is, on its shareholders. Changchun represented the company's minority shareholders.
What Was at Stake
Ordinarily the company should claim damages from the director at fault, but where the CEO controls the company it is unrealistic to expect the company to sue him itself. A "shareholder derivative suit" allows shareholders to pursue the director on the company's behalf in exactly that situation. The issue was establishing the CEO's breach of law and the loss it caused the company.
How Changchun Helped
Acting for the minority shareholders, Changchun (attorney Jaesun Yoon) brought a derivative suit and proved that the CEO had personally committed the statutory violation of price fixing, causing the company loss equal to the fine.
The court ordered the CEO to compensate the company approximately KRW 9.6 billion (about 60% of the fine). The case demonstrates what a derivative suit is for: shareholders directly recovering loss caused to a company by management misconduct. (Outcomes depend on the facts of each case and may differ.)