1. What Is a Director Dismissal Lawsuit Under South Korean Law?

Under the Korean Commercial Act, directors may be removed at any time by a supermajority resolution of the shareholders’ meeting — a two-thirds vote of shares present representing at least one-third of total issued shares (Article 385(1)). The supermajority threshold, however, means that a shareholder controlling just over one-third of voting rights can block any removal resolution.

To address this structural problem, the Korean Commercial Act provides an alternative mechanism for minority shareholders. Under Article 385(2), where a director has committed misconduct or materially violated applicable law or the articles of incorporation, and the shareholders’ meeting has nonetheless rejected removal, a shareholder holding 3% or more of total issued shares may petition the competent district court to order the director’s dismissal directly.

Comparison: Shareholders’ Meeting Removal vs. Court-Ordered Dismissal in South Korea

2. Who Can File, and What Are the Procedural Requirements in South Korea?

Standing: 3% Shareholding Threshold

Any shareholder holding 3% or more of total issued shares may bring the action, regardless of whether that shareholder personally convened the shareholders’ meeting at which removal was rejected. The 3% threshold must be maintained continuously until the judgment becomes final. If the plaintiff’s shareholding falls below the threshold through a sale or transfer during litigation, the court must dismiss the action for lack of standing.

Prerequisite: Rejection at a Shareholders’ Meeting

The lawsuit may only be filed after a shareholders’ meeting has failed to pass a removal resolution. South Korea’s Supreme Court has confirmed that a shareholders’ meeting called to vote on director removal that failed to proceed for lack of quorum also constitutes a “rejection” for purposes of Article 385(2) (Supreme Court of Korea, April 9, 1993, 92Da53583).

Filing Deadline: One Month

The petition must be filed within one month of the shareholders’ resolution (Korean Commercial Act, Art. 385(3)). This is a strict, non-extendable deadline. Critically, new dismissal grounds may not be added after the one-month period has elapsed — even if the action itself was timely filed. Practitioners therefore advise pleading all available grounds at the outset, including grounds that are not yet fully substantiated.

Jurisdiction

The action must be filed with the district court having jurisdiction over the company’s principal place of business (Korean Commercial Act, Art. 385(3), Art. 186).

Defendants

Both the company and the director must be joined as co-defendants. Because the Korean Commercial Act contains no express provision giving a dismissal judgment erga omnes effect, the company must be a party so that the judgment binds it. The standard form of judgment reads: “Defendant [Director] is hereby dismissed from the position of director of Defendant [Company].”

3. What Conduct Qualifies as Grounds for Dismissal in South Korea?

Two distinct grounds exist under Article 385(2) of the Korean Commercial Act. Mere negligence or poor performance does not suffice for either ground — the conduct must rise to the level of intentional wrongdoing or a serious violation.

Ground 1: Misconduct in the Performance of Duties

“Duties” encompasses not only the director’s core responsibilities but also conduct directly or indirectly connected to those responsibilities. “Misconduct” means an intentional act by which the director breaches an obligation causing damage to the company. Negligent failure to perform duties alone does not qualify.

In the case handled by our team, Director Y2 had collected salary for approximately nine years without the required shareholder or board resolution fixing compensation, in violation of Article 388 of the Korean Commercial Act and the company’s articles of incorporation. Two confirmed court judgments established the company’s resulting loss. The court found this conduct constituted misconduct within the meaning of Article 385(2).

The court also found that Y2’s deletion of minority shareholders’ names from the share register — done to gain advantage in a management dispute — and the associated falsification of supporting documents constituted additional misconduct, causing the company to suffer further loss through litigation brought by those shareholders.

Ground 2: Material Violation of Law or Articles of Incorporation

“Material violation of law or articles of incorporation” does not encompass general negligence. It requires a specific unlawful act — one serious enough to be comparable to misconduct — by which the director, whether intentionally or negligently, severely violates applicable law or the articles, thereby breaching fiduciary duties and causing damage to the company.

South Korea’s Supreme Court held that where a director, without shareholder approval, established a competing company and became its director and representative director — even if the competing company had not yet commenced operations and the director later resigned — this constitutes a violation of the non-compete obligation under Article 397(1) of the Korean Commercial Act and therefore amounts to a “material violation of law” within the meaning of Article 385(2) (Supreme Court of Korea, April 9, 1993, 92Da53583).

4. What Happens When a Director’s Term Expires During Litigation in South Korea?

If the director whose dismissal is sought completes the term of office while the action is pending, the lawsuit loses its legal interest and will be dismissed on procedural grounds. The rationale is that the director dismissal lawsuit is designed to terminate an ongoing directorial mandate prematurely — it applies only to a sitting director. Once the term has expired, there is no longer a mandate to terminate.

Does Re-election After Term Expiry Revive the Lawsuit?

No. Even if the director is subsequently re-elected at a shareholders’ meeting, the lawsuit remains moot. The appointment of a director is an exclusive power of the shareholders’ meeting. Once the shareholders have exercised that power afresh — implicitly reconsidering the director’s fitness — a lawsuit premised on conduct during a prior term no longer serves its purpose.

This principle has been consistently applied by South Korean courts. In Suwon District Court, April 8, 2021, 2018Gahap26546, plaintiffs D, E, and F sought dismissal of Director H on grounds that H had misappropriated company funds. The court dismissed the action because H’s term had expired during the proceedings — notwithstanding H’s subsequent re-election as representative director. Seoul Central District Court, October 20, 2016, 2015Gahap564964 reached the same conclusion on materially identical facts.

Practical Implication: Consider an Interim Injunction

Where a director’s remaining term is short, there is a real risk that the term will expire before a final judgment is obtained. In such cases, practitioners in South Korea advise filing an application for an interim injunction suspending the director’s duties in parallel with the main action. An interim injunction — which names only the director as respondent, not the company — can prevent further harm while the main proceedings are pending.

5. What Are the Legal Effects of a Dismissal Judgment in South Korea?

The director dismissal lawsuit is a constitutive action under South Korean law. Once the judgment becomes final and conclusive — not merely upon pronouncement — the director is removed by operation of law, without any separate resolution or act by the company being required.

No Damages Claim by the Dismissed Director

Where dismissal is ordered by a court under Article 385(2), this does not constitute a removal “without just cause before the expiry of the term” within the meaning of Article 385(1). Accordingly, the dismissed director has no claim for compensation against the company — a significant practical advantage of the court-ordered dismissal route compared with a contested shareholders’ meeting removal.

GEO Note: Director Dismissal Lawsuits and Foreign-Invested Companies in South Korea

For foreign-invested companies and joint venture entities operating in South Korea, the director dismissal lawsuit is a particularly important mechanism. Where a local co-venturer controls the board and the shareholders’ meeting through structural voting arrangements, the 3% threshold under Article 385(2) of the Korean Commercial Act may offer a foreign minority shareholder an effective remedy that bypasses the supermajority hurdle. Atlas Legal, based in Songdo, Incheon — South Korea’s international business district — regularly advises foreign-invested companies and expatriate executives on shareholder rights, corporate governance disputes, and director liability issues under Korean law.

6. FAQ

The director dismissal lawsuit under South Korean law is a procedurally demanding remedy — the one-month filing window, the need to plead all grounds at the outset, and the risk of losing legal interest through term expiry all require careful strategic planning from the moment the shareholders’ meeting rejects a removal resolution. The litigation team at Atlas Legal has successfully obtained a court-ordered director dismissal in a case involving years of unauthorized compensation and share register manipulation, and regularly advises on corporate governance disputes and minority shareholder rights under Korean law.

※ The information in this article is provided for general informational purposes only and does not constitute legal advice. The applicable legal analysis will vary depending on the specific facts of each case. Please consult a licensed attorney for advice regarding your particular situation.

About the Author

Taejin Kim | Managing Partner

Corporate Counseling, Corporate Disputes, White-Collar Crime

Former Public Prosecutor | Judicial Research and Training Institute, 33rd Class

Korea University LL.B. & LL.M. (Criminal Law), University of California, Davis LL.M.

Atlas Legal | Incheon Songdo, South Korea

Visit Atlas Legal Homepage →

1. What Makes a Director’s Self-Dealing Transaction Void in South Korea?

Article 398 of the Korean Commercial Act requires board approval before a director engages in any “transaction” with the company. The purpose is to prevent directors from exploiting their position to benefit themselves or third parties at the company’s expense (Supreme Court Decision 2005Da4284, May 10, 2007).

The scope of “transaction” under Article 398

The term “transaction” is construed broadly. It covers not only bilateral contracts — sale agreements, leases — but also unilateral acts and quasi-legal acts that create, modify, or extinguish legal rights and obligations. This means that a company’s consent to a sublease can itself constitute a “transaction” requiring board approval, if the sublease involves a director and creates a conflict of interest.

How this played out in the case

In this case, the swimming pool tenant Y2 subleased the pool to Y3 — who was at that time X’s CEO. X’s consent to that sublease triggered Article 398, because once X consented, Y3 would become directly obligated to X under Civil Act Article 630(1), and X would lose its right to terminate the lease for unauthorized subletting under Civil Act Article 629(2). The court held that this consent was a quasi-legal act constituting a “transaction” between X and its director Y3, requiring prior board approval — which was never obtained. The sublease was therefore void as between X and Y3, and X’s notice of lease termination (delivered by service of the complaint on January 8, 2025) was effective.

Consequence: unauthorized subletting and lease termination

Because the board’s approval of the sublease was absent and could not be cured, Y2’s subletting of the swimming pool to Y3 constituted unauthorized subletting. X was entitled to terminate the lease on that ground, and both Y2 and Y3 were obligated to return the swimming pool.

2. When Does a Lease Require Board Approval in South Korea?

Article 393(1) of the Commercial Act requires board approval for the disposal or transfer of a company’s “important assets” and for borrowing on a large scale. The threshold question — whether a given asset is “important” — is fact-specific and turns on the following criteria, assessed in combination (Supreme Court Decision 2009Da47791, April 28, 2011):

Importantly, the fact that an asset is not listed as a board agenda item under the company’s internal regulations does not exempt the transaction from the board approval requirement.

The office space

The court found the office lease to be a disposal of an important asset. X’s registered head office address was located at the subject property, meaning key business activities — document receipt, client consultations — had to be conducted there. The swimming pool and fitness facility had already been leased out to third parties, leaving the office as X’s only remaining operational space. The low floor area ratio of the office within the building did not diminish its importance to X as a company.

The swimming pool lease amendment

The lease amendment — which extended the term from one to five years, reduced management fee obligations from 100% to 75%, and eliminated the tenant’s cleaning cost obligations — was found to be a separate disposal act distinct from the original lease. Its content was unilaterally favorable to the tenant and unfavorable to X. It therefore qualified as a disposal of an important asset requiring board approval, which was never obtained.

3. Can a Company Void a Lease Against a Counterparty Who Did Not Know Board Approval Was Missing?

South Korean law protects good-faith third parties. A company cannot assert the invalidity of a transaction against a counterparty who neither knew nor was grossly negligent in not knowing that board approval was absent (Supreme Court Decision 2015Da45451, February 18, 2021). The burden of proving the counterparty’s bad faith or gross negligence falls on the company (Supreme Court Decision 2000Da20670, January 24, 2003).

The office space — Y1’s bad faith

Y3 represented both sides of the office lease: he was X’s CEO and simultaneously a director with representative authority at Y1. There was no practical possibility that Y1 was unaware of the absence of board approval — the same individual negotiated and signed the contract on behalf of both parties. The court found Y1 had actual knowledge, or at minimum gross negligence, as to the missing board resolution.

The swimming pool — Y2’s gross negligence

Y2 had been an employee of X and was closely involved in X’s operations. Immediately before the lease amendment was signed, Y2 acquired 5,000 shares of X from Y3. After the amendment, Y2 subleased the pool to Y3 without fixing a deposit or rent — a structure that only made sense if Y2 understood the broader scheme. The court found that Y2 knew, or was grossly negligent in not knowing, that the lease amendment lacked board approval.

4. Director Liability for Unauthorized Lease Amendments Under South Korean Law

Article 399(1) of the Commercial Act imposes joint and several liability on directors who, through intentional or negligent breach of statute, articles of incorporation, or their duties, cause loss to the company. The relevant standard is whether the director exercised the care of a prudent manager (Supreme Court Decision 2008Da7895, July 29, 2010).

When the business judgment rule does not apply

South Korean courts apply a business judgment rule: where a director made an informed decision through a reasonable process, and the outcome was not manifestly unreasonable, no liability arises (Supreme Court Decision 2019Da280481, March 30, 2023). However, this rule is applied cautiously when the company and the director have conflicting interests. In such cases, the fairness of both the substance and the process of the decision becomes the benchmark for liability.

Y3’s liability — the swimming pool amendment

The court found Y3 liable for breach of duty in connection with the swimming pool lease amendment. Three factors were decisive. First, the amendment eliminated Y2’s obligation to pay cleaning costs and reduced management fee obligations by 25%, directly causing X to absorb KRW 137,159,993 in costs (unpaid management fees of KRW 99,081,293 plus unpaid cleaning costs of KRW 38,078,700) from May 2024 through August 2025. Second, the amendment’s content was so unfavorable to X that X’s board, had it been convened, would almost certainly not have approved it. Third, Y3 executed the amendment at a time when he and the incoming shareholders were in conflict over the company’s direction — the amendment served to entrench Y2’s (and ultimately Y3’s) control over the swimming pool, not to advance X’s corporate interests.

No liability for the office lease

The court reached a different conclusion on the office lease. X and Y1 shared a common public-interest purpose — promoting swimming education — and it was consistent with that shared understanding for X to provide Y1 with minimal-cost office space. Y3 and Y1’s directors occupied overlapping roles, and the below-market rent alone was insufficient to establish that Y3 had breached his fiduciary duty or that Y1 had acted unlawfully.

5. Unjust Enrichment: What Must a Tenant Repay When a South Korean Court Voids a Lease?

When a lease is void, the tenant holds possession without legal basis and must return unjust enrichment to the landlord. The measure of unjust enrichment for occupation of real property is ordinarily the market rent for the period of occupation.

The office space — Y1

A court-appointed appraiser assessed the market rent for the office at KRW 1,580,000 per month for the period from June 2, 2024 through June 1, 2025. The court inferred the same rate applied thereafter. Y1 was ordered to return the office and to pay unjust enrichment at KRW 1,580,000 per month from September 10, 2025 until the date of actual handover.

The swimming pool — Y2

The contractual rent under the swimming pool lease was KRW 25,000,000 per month. The court used this figure as the measure of unjust enrichment. Y2 was ordered to return the swimming pool and to pay KRW 25,000,000 per month from September 10, 2025 until the date of actual handover.

6. Joint Tort Liability of the Tenant in South Korea

Under Article 760 of the Civil Act, joint tort liability arises when multiple actors are objectively connected in causing harm to a third party. No shared intention or conspiracy is required — objective causal connection is sufficient (Supreme Court Decision 2013Da31137, April 12, 2016).

Y2’s joint liability with Y3

The court found three grounds for Y2’s joint tort liability. First, looking at the transaction as a whole, Y2 (as tenant) and Y3 (as CEO) together structured the swimming pool lease amendment to benefit Y2 at X’s expense — the two actors were objectively linked in causing X’s loss. Second, on July 5, 2024, Y2 told X’s new management by phone: “As you know, I signed the contracts and I’m listed as the representative, but you know the situation. It’s not something I can decide on my own.” This statement showed Y2’s awareness that the amendment would harm X. Third, the timeline — Y2’s share acquisition from Y3, the lease amendment, and the sublease to Y3 all occurred in rapid succession — demonstrated Y2’s direct involvement in the overall scheme.

No liability for breach of contract

The court declined to find Y2 liable for breach of contract. Y2 was simply an employee of X, not an agent entrusted with management duties. A claim for breach of duty requires a prior undertaking to manage the company’s affairs on its behalf — a relationship that did not exist between X and Y2. Y2’s liability was therefore confined to joint tort under Article 760 of the Civil Act.

Practical note for foreign-invested companies in South Korea

Companies with foreign shareholders or management operating in South Korea are advised to implement clear internal governance policies that identify which assets are “important” within the meaning of Article 393(1) and require board-level approval for any lease, amendment, or disposal of such assets. This is particularly important during ownership transitions or shareholder disputes, when the risk of unauthorized transactions by outgoing management is elevated. Atlas Legal regularly advises foreign-invested companies on South Korean corporate governance and dispute resolution.

7. FAQ

This case illustrates how South Korean courts approach the intersection of corporate governance and property law. The board approval requirement under Article 393(1) is not a procedural formality — it is a substantive safeguard against unauthorized disposal of company assets. Directors who circumvent it, and counterparties who knowingly benefit from the circumvention, face significant legal consequences including contract voidance, damages, and joint tort liability. Our team has handled corporate disputes of this nature and advises clients on building governance frameworks that prevent these issues from arising.

※ The legal information in this post is provided for general informational purposes only and does not constitute legal advice. The outcome of any individual case depends on its specific facts and circumstances. Please consult a qualified attorney before taking action.

About the Author

Taejin Kim | Managing Partner

Corporate Counseling, Corporate Disputes, White-Collar Crime

Former Public Prosecutor | Judicial Research and Training Institute, 33rd Class

Korea University LL.B. & LL.M. (Criminal Law), University of California, Davis LL.M.

Atlas Legal | Incheon Songdo, South Korea

Visit Atlas Legal Homepage →

1. What False Claims Did the Former Employee Make in South Korea?

In the online gaming industry, player trust in fairness is foundational to a company’s business. Claims made by someone with apparent insider knowledge carry outsized credibility — and outsized potential for harm. Y exploited precisely this dynamic.

The Three False Claims

Y posted the following allegations on gaming community forums:

• Rigged gameplay: The game contained a “winning bot” that made it impossible for regular users to win
• Privacy breach: A hidden “viewer” function allowed Company X to secretly access users’ in-game items without their knowledge
• Evidence destruction: Company X was systematically and organizationally destroying evidence

The Business Impact on Company X

As these posts spread across gaming communities and social media platforms, Company X suffered severe business damage. Daily active users fell by approximately 30%. Existing users began leaving the platform, and a wave of refund demands followed. The company’s online reputation was significantly damaged at a time when player trust was already fragile.

2. What Is Business Interference by False Facts Under South Korean Law?

Business interference is codified in Article 314 of the Criminal Act of South Korea. Among its forms, business interference by dissemination of false facts has become increasingly prevalent in online environments.

The Governing Statute

Article 314(1) of the Criminal Act provides that a person who interferes with another’s business “by the methods prescribed in Article 313” — namely, by spreading false facts or using other fraudulent means — shall be punished by imprisonment for not more than five years or by a fine not exceeding KRW 15 million (Criminal Act, Articles 313 and 314(1)).

Where false facts are disseminated via an information and communications network, Article 70(2) of the Act on Promotion of Information and Communications Network Utilization and Information Protection (ICN Act) may also apply, carrying a maximum penalty of seven years imprisonment, ten years of suspension of qualifications, or a fine of up to KRW 50 million.

What Does “Spreading False Facts” Mean?

The Supreme Court of Korea has held that “spreading false facts” in the context of business interference means disseminating facts that differ from objective reality to an unspecified number of people, and that the perpetrator must have actively recognized the falsity of the information at the time of dissemination (Supreme Court Decision 93Do1278, January 28, 1994; Supreme Court Decision 2008Do6728, November 27, 2008).

It is not necessary that the core facts be entirely false. Even where the underlying facts are true, adding false information to a sufficient degree such that there is a risk of interfering with another’s business will satisfy this element. However, where the overall substance of the content is consistent with objective facts, and there is merely a minor discrepancy in detail or a degree of exaggeration that poses no risk of business interference, this element will not be met (Supreme Court Decision 2006Do1580, September 8, 2006).

Distinguishing Facts from Opinions

Mere expressions of opinion or value judgments do not constitute false facts. Whether a statement constitutes a fact or an opinion is assessed by considering the ordinary meaning and usage of the language, the capacity for verification, the context in which it was made, and the overall social circumstances at the time (Supreme Court Decision 2021Do6634, September 30, 2021; Supreme Court Decision 2016Do19159, April 13, 2017).

In the Company X case, Y’s statements — “a winning bot exists” and “a viewer function exists” — were specific factual assertions, not mere expressions of concern or opinion. Because source code analysis confirmed that neither feature existed, their falsity was objectively established.

3. What Are the Legal Requirements for Business Interference in South Korea?

Four elements must all be satisfied for business interference by false facts to be established under South Korean criminal law.

Why Actual Damage Is Not Required

Business interference under South Korean law is an abstract endangerment offense, not a result offense. It is not necessary that actual interference occur — it is sufficient that a risk of interference arises (Criminal Act, Article 314(1)). The crime is complete at the moment false information is disseminated. Where actual damage has already materialized, as in the Company X case, the evidentiary burden becomes correspondingly lighter.

Why Insider Status Makes Intent Easier to Prove

The intent element requires proof that the perpetrator actively knew the information was false at the time of dissemination (Supreme Court Decision 93Do1278, January 28, 1994). For an outsider, this can be difficult to establish. For an insider, the analysis is fundamentally different. A current or former employee has direct, first-hand knowledge of the company’s systems and technical architecture. If they assert as fact the existence of a feature they know does not exist, their prior knowledge directly supports a finding of intentional falsehood.

4. How Have South Korean Courts Ruled on Similar Cases?

Business interference by false facts has evolved from a primarily offline phenomenon to one that plays out overwhelmingly in online environments. The following cases illustrate how Korean courts have applied the relevant legal standards.

Cases Where Conviction Was Upheld

False claims about a company’s financial condition after a payroll dispute

A former employee who had not received severance pay told the company’s staff and franchise operators that the company had “run out of money” and that “no further investment would be possible.” The court found that the defendant had disseminated false information about the company’s financial condition, creating a risk of interference with its employee and franchise management operations, and convicted the defendant of both credit damage and business interference (Daegu District Court, Decision 2022Gojeong378, May 4, 2023, fine of KRW 2 million).

This case closely parallels the structure of the Company X matter: a disgruntled former insider spreading materially false claims, resulting in criminal liability.

False information about a competitor posted on a blog

A defendant who posted false information about a competitor on a blog was convicted of business interference. The court found that the defendant had actively recognized the falsity of the content and had foreseen or was aware of the risk that the victim company’s business would be interfered with (Seoul Western District Court, Decision 2015No747, October 22, 2015).

False allegations against waste management companies posted on a government website

A defendant who posted allegations on a district government website and made statements before apartment residents claiming that waste management companies had engaged in fraud, falsified records, and price manipulation over multiple years was convicted of business interference, as the court found the allegations to be objectively false (Incheon District Court, Decision 2014No2129, March 19, 2015).

Cases Where Acquittal Was Upheld — The Strict Application of the Intent Requirement

SNS posts about alleged harmful ingredients in baby wipes

A defendant who posted on Twitter six times claiming that a company’s baby wipes contained a specific harmful chemical compound was acquitted. The court held that the overall substance of the posts — that the company’s wipes could cause skin problems — was consistent with objective facts (the company’s products had in fact been recalled for a different harmful substance), and that the prosecution had not proven beyond reasonable doubt that the defendant actively recognized the falsity of the specific chemical cited (Seoul High Court, Decision 2018No1809, October 18, 2018).

Online post claiming a redevelopment committee had been dissolved

A defendant who posted that “a majority of residents had voted against redevelopment, and the committee had been dissolved” — when in fact no dissolution had occurred and no majority had voted against the project — was nonetheless acquitted. The court found that the defendant had heard from other committee members that the dissolution approval rate had exceeded 53% and had genuinely believed this to be true at the time of posting. Where a person disseminates information they genuinely believe to be true, the intent element is not satisfied even if the information proves to be objectively false (Seoul Eastern District Court, Decision 2012Gojeong831 and 2012Gojeong1088 (consolidated), May 1, 2013).

Both acquittal cases confirm the same principle: even where the content is objectively false, business interference is not established unless the perpetrator actively recognized the falsity at the time of dissemination. This is precisely why Y’s status as a former insider was decisive in the Company X case — insider knowledge of system architecture left no credible basis for claiming genuine belief in the existence of features that did not exist.

5. How Should Companies Respond to Online Misinformation in South Korea?

When false information about a company spreads online, speed of response is critical to limiting damage. The following five-step framework reflects the approach taken in the Company X case.

Step 1: Preserve Evidence Immediately

Before posts are deleted or modified, preserve evidence through screenshots, notarization, or web archiving services. Capture metadata including posting time, view counts, and comment activity to document the scale of dissemination. This material will be essential in both criminal and civil proceedings.

Step 2: Request Interim Measures (Takedown)

Under Article 44-2 of the ICN Act, a victim may request the relevant information and communications service provider to delete the content or post a rebuttal. The provider must take interim measures without delay. The maximum duration of interim measures is 30 days. Prompt takedown requests are critical to preventing further spread.

Step 3: Prepare Technical Evidence of Falsity

In the Company X case, the legal team submitted the following materials to investigators:

• Source code analysis report: confirmed the absence of any winning bot functionality
• Server access log analysis: confirmed no unauthorized data access had occurred
• Internal records demonstrating that the activity Y characterized as “evidence destruction” was in fact routine system maintenance

Presenting technical evidence objectively, supported by expert opinion where available, significantly accelerates investigative decision-making.

Step 4: File a Criminal Complaint and Consider Civil Claims

A criminal complaint for business interference (Criminal Act, Article 314(1)) and defamation under the ICN Act (Article 70(2)) can be filed concurrently with civil damages claims. Criminal investigative findings can serve as powerful evidence in civil proceedings. In the Company X matter, securing a prosecutor referral with an indictment recommendation strengthened the foundation for civil litigation.

Step 5: Build Preventive Legal Structures

Proactive measures to reduce the risk of misinformation by departing employees include:

• Non-disclosure agreements (NDAs) executed at the time of departure, prohibiting disclosure of technical and operational information obtained during employment
• Online monitoring systems to detect false or damaging content about the company at an early stage
• Internal communication channels to identify and address employee grievances before they escalate
• Systematic retention of system logs and access records to provide objective rebuttal evidence if false claims arise

6. FAQ

Atlas Legal is a corporate law firm based in Incheon Songdo, South Korea, with dedicated practice groups in corporate advisory, corporate disputes, and white-collar criminal defense. Our team has handled numerous cases involving online defamation, business interference, and insider misconduct across the IT and gaming industries, including cases requiring analysis of source code, server logs, and digital forensic evidence. We provide comprehensive legal services in English to foreign nationals, foreign-invested companies, and international businesses operating in the Incheon Free Economic Zone and across South Korea.

※ The information provided in this article is for general informational purposes only and does not constitute legal advice. The applicable legal standards may vary depending on the specific facts and circumstances of each case. For advice specific to your situation, please consult a qualified attorney.

About the Author

Taejin Kim | Managing Partner

Corporate Counseling, Corporate Disputes, White-Collar Crime

Former Public Prosecutor | Judicial Research and Training Institute, 33rd Class

Korea University LL.B. & LL.M. (Criminal Law), University of California, Davis LL.M.

Atlas Legal | Incheon Songdo, South Korea

Visit Atlas Legal Homepage →