{"id":190,"date":"2025-07-20T05:02:09","date_gmt":"2025-07-20T05:02:09","guid":{"rendered":"https:\/\/atlaw.kr\/en-blog\/?p=190"},"modified":"2026-07-30T10:49:06","modified_gmt":"2026-07-30T10:49:06","slug":"voting-rights-restriction-for-specially-interested-parties-in-director-compensation-limit-approval-supreme-court-case-analysis","status":"publish","type":"post","link":"https:\/\/atlaw.kr\/en-blog\/voting-rights-restriction-for-specially-interested-parties-in-director-compensation-limit-approval-supreme-court-case-analysis\/","title":{"rendered":"Voting Rights Restriction for Specially Interested Parties in Director Compensation Limit Approval &#8211; Supreme Court Case Analysis"},"content":{"rendered":"<p><!--  -->\n\n\n<!--  --><br \/>\n<!-- ATLAS_SEO_BLOCK_START --><br \/>\n<script type=\"application\/ld+json\">{\"@context\":\"https:\/\/schema.org\",\"@type\":\"Article\",\"@id\":\"https:\/\/atlaw.kr\/en-blog\/voting-rights-restriction-for-specially-interested-parties-in-director-compensation-limit-approval-supreme-court-case-analysis#article\",\"headline\":\"Voting Rights Restriction for Specially Interested Parties in Director Compensation Limit Approval - Supreme Court Case Analysis\",\"description\":\"Voting rights restriction for specially interested parties in Korean director compensation decisions.\",\"inLanguage\":\"en\",\"datePublished\":\"2025-07-20\",\"dateModified\":\"2026-05-03\",\"author\":{\"@type\":\"Person\",\"@id\":\"https:\/\/atlaw.kr\/taejin-kim\/#person\",\"name\":\"\uae40\ud0dc\uc9c4\",\"alternateName\":\"Taejin Kim\",\"jobTitle\":\"\ub300\ud45c\ubcc0\ud638\uc0ac (Managing Partner)\",\"worksFor\":{\"@id\":\"https:\/\/atlaw.kr\/#legalservice\"}},\"publisher\":{\"@type\":\"LegalService\",\"@id\":\"https:\/\/atlaw.kr\/#legalservice\",\"name\":\"\ubc95\ubb34\ubc95\uc778 \uc544\ud2c0\ub77c\uc2a4\",\"url\":\"https:\/\/atlaw.kr\"},\"mainEntityOfPage\":{\"@type\":\"WebPage\",\"@id\":\"https:\/\/atlaw.kr\/en-blog\/voting-rights-restriction-for-specially-interested-parties-in-director-compensation-limit-approval-supreme-court-case-analysis#webpage\"},\"about\":[\"Korean special interest voting restriction\",\"Korean Commercial Act \u00a7368(3)\",\"Director compensation voting\",\"Specially interested parties\"]}<\/script><br \/>\n<script type=\"application\/ld+json\">{\"@context\":\"https:\/\/schema.org\",\"@type\":\"FAQPage\",\"@id\":\"https:\/\/atlaw.kr\/en-blog\/voting-rights-restriction-for-specially-interested-parties-in-director-compensation-limit-approval-supreme-court-case-analysis#faqpage\",\"inLanguage\":\"ko-KR\",\"mainEntity\":[{\"@type\":\"Question\",\"name\":\"Can a director who is also a shareholder vote on a resolution approving the director compensation limit?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"No. Article 368(3) of the Commercial Act bars a person with a special interest in a resolution from exercising voting rights, and the courts held that a director-shareholder has such an interest in a resolution approving the director compensation limit \u2014 even where the resolution fixes only the aggregate ceiling for all directors rather than each director's individual pay.\"}},{\"@type\":\"Question\",\"name\":\"What did the courts actually decide in this case?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"A director and major shareholder voted on the \u201cApproval of 2023 Director Compensation Limit\u201d at the regular shareholder meeting of 31 March 2023, and the company's auditor sued to cancel the resolution. Seoul Central District Court (2023Gahap66328, 31 May 2024) and Seoul High Court (2024Na2027590, 2024Na2051821, 22 January 2025) both found the director-shareholder to be a specially interested party. The Supreme Court disposed of the appeal without review, leaving that reasoning intact.\"}},{\"@type\":\"Question\",\"name\":\"Why did lower courts previously disagree on this point?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Earlier decisions went both ways. Seoul High Court 2010Na103118 (19 January 2012) reasoned that when a shareholder meeting approves only the upper limit of total director compensation, an individual director's interest cannot be separated from that of the directors as a whole, so voting rights could not be restricted. Other decisions \u2014 Seoul High Court 2014Na2035141 (23 April 2015) and Seoul Nambu District Court 2021Gahap101384 (15 October 2021) \u2014 recognised a special interest even in limit approval.\"}},{\"@type\":\"Question\",\"name\":\"How are the resolution requirements calculated once a specially interested party is excluded?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Article 371(2) provides that shares which cannot be voted under Article 368(3) are excluded from the voting rights of attending shareholders. In the worked example in this article \u2014 10,000 issued shares, a director-shareholder holding 5,000, and 8,000 voting rights present \u2014 the courts also excluded those shares from the total issued shares used for the one-fourth requirement, so the threshold fell from 2,500 shares to 1,250 shares. Supreme Court Decision 2016Da222996 (17 August 2016) took the same approach for auditor appointment.\"}},{\"@type\":\"Question\",\"name\":\"What should companies change in shareholder meeting practice?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Three things follow from the ruling. Director-shareholders must not vote on director compensation limit agenda items. The meeting notice should state that voting rights of specially interested parties are restricted. And the minutes should record clearly that the specially interested party did not vote.\"}},{\"@type\":\"Question\",\"name\":\"What happens in a company with a single shareholder who is also the director?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"This is an unresolved gap. Where the only shareholder is also the director, applying the restriction strictly leaves no one able to fix director compensation at all. 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font-size: 14px; } .author-detail { clear: both; font-size: 13px; line-height: 1.55; margin-top: 8px; margin-bottom: 1px; } .author-detail ~ .author-detail { clear: none; margin-top: 2px; } .author-link { clear: both; display: block; font-size: 13px; margin-top: 8px; } p.closing { font-size: 14px; } }<\/style>\n<style>\/* ATLAS legacy-content classes (migrated old format) -- gray boxes on white *\/ .direct-answer{background:#f5f5f5;border:1px solid var(--rule);border-radius:8px;padding:20px 24px;margin:0 0 24px;font-weight:500;color:var(--text);line-height:1.8;} .story-hook{background:#f5f5f5;border:1px solid var(--rule);border-radius:8px;padding:18px 22px;margin:0 0 22px;} .story-hook p{font-size:17px;color:var(--text);line-height:1.75;margin:0;} .story-detail{background:#f5f5f5;border:1px solid var(--rule);border-radius:8px;padding:22px 24px;margin:24px 0;} .story-detail h3{margin-top:0;} .statute-box{background:#f5f5f5;border:1px solid var(--rule);border-radius:8px;padding:18px 22px;margin:18px 0 22px;font-size:16px;line-height:1.7;} .statute-box .statute-title{font-weight:700;color:var(--navy);font-size:16px;margin-bottom:8px;display:block;} .statute-box .statute-text{color:var(--text);font-size:16px;margin:0;line-height:1.7;white-space:pre-line;} .statute-box .statute-text + .statute-title{margin-top:12px;} .statute-box .statute-source-title{font-weight:700;color:var(--muted);font-size:14px;margin-top:14px;margin-bottom:4px;display:block;} .statute-box .statute-source-text{color:var(--muted);font-size:14px;margin:0;line-height:1.5;font-style:italic;} .disclaimer{font-size:15px;color:var(--muted);font-style:italic;margin-bottom:15px;} figure{margin:24px 0;}figure img{max-width:100%;height:auto;border-radius:8px;} figcaption{font-size:13.5px;color:var(--muted);text-align:center;margin-top:8px;} @media (max-width:640px){.story-hook p,.statute-box{font-size:14px;}}<\/style>\n<div class=\"content\">\n<div class=\"hero\">\n<div class=\"hero-title\">Voting Rights Restriction for Specially Interested Parties in Director Compensation Limit Approval &#8211; Supreme Court Case Analysis<\/div>\n<div class=\"hero-meta\">\n<div class=\"hero-info\">\n      <strong>Taejin Kim<\/strong> \u00b7 Managing Partner, Atlas Legal\n    <\/div>\n<\/div>\n<\/div>\n<div class=\"toc-nav\">\n<p class=\"toc-label\">Contents<\/p>\n<ol>\n<li><a href=\"#section1\">1. Concept of Director Compensation Limit Approval and Special Interest<\/a><\/li>\n<li><a href=\"#section2\">2. Legal Basis and Meaning of Commercial Act Article 368(3)<\/a><\/li>\n<li><a href=\"#section3\">3. Facts and Issues of the Supreme Court Decision<\/a><\/li>\n<li><a href=\"#section4\">4. Lower Court and Supreme Court Rulings<\/a><\/li>\n<li><a href=\"#section5\">5. Significance of the Ruling and Impact on Practice<\/a><\/li>\n<li><a href=\"#section6\">6. Changes in Calculation Method for Shareholder Meeting Resolution Requirements<\/a><\/li>\n<li><a href=\"#section7\">7. Future Commercial Act Amendments and Legislative Tasks<\/a><\/li>\n<li><a href=\"#section8\">8. Conclusion and Practical Response Measures<\/a><\/li>\n<li><a href=\"#sec-faq\">Frequently asked questions<\/a><\/li>\n<\/ol>\n<\/div>\n<p>        <main class=\"article-content\"><\/p>\n<section id=\"section1\">\n<h2>1. Concept of Director Compensation Limit Approval and Special Interest<\/h2>\n<p>When a director of a corporation is simultaneously a shareholder, can they exercise voting rights in shareholder meeting resolutions related to their own compensation? This has been a contentious issue in corporate legal practice for a long time.<\/p>\n<p>Article 368(3) of the Commercial Act stipulates that &#8220;a person who has a special interest in the resolution of the meeting shall not exercise voting rights.&#8221; Here, &#8216;special interest&#8217; refers to personal and direct interests that are distinct from those of general shareholders.<\/p>\n<p>Korean corporations have traditionally adopted a practice of not directly determining specific compensation for individual directors at shareholder meetings, but rather approving only director compensation limits and then having the board of directors decide individual compensation within that range. Due to this practical convention, the legal determination of whether director compensation limit approval constitutes personal interest was not clear.<\/p>\n<\/section>\n<section id=\"section2\">\n<h2>2. Legal Basis and Meaning of Commercial Act Article 368(3)<\/h2>\n<p>The provision restricting voting rights of specially interested parties under Article 368(3) of the Commercial Act is a system designed to ensure fairness in shareholder meeting resolutions. The relevant provisions are as follows:<\/p>\n<p><strong>Commercial Act Article 368(3)<\/strong>: &#8220;A person who has a special interest in the resolution of the meeting shall not exercise voting rights&#8221;<\/p>\n<p><strong>Commercial Act Article 371(2)<\/strong>: &#8220;For resolutions of the meeting, the number of voting rights of shares that cannot be exercised under Article 368(3) shall not be included in the number of voting rights of attending shareholders&#8221;<\/p>\n<p><strong>Commercial Act Article 388<\/strong>: &#8220;When director compensation is not specified in the articles of incorporation, it shall be determined by resolution of the shareholder meeting&#8221;<\/p>\n<p>The criteria for determining specially interested parties have been established through Supreme Court precedents. The Supreme Court interprets &#8220;persons with special interests&#8221; as &#8220;cases where they have personal interests apart from their position as shareholders&#8221; (Supreme Court Decision 2007Da40000, decided September 6, 2007).<\/p>\n<\/section>\n<section id=\"section3\">\n<h2>3. Facts and Issues of the Supreme Court Decision<\/h2>\n<p>The facts of the case recently decided by the Supreme Court are as follows:<\/p>\n<p>Person A, who is both a director and major shareholder of a corporation, exercised voting rights on &#8220;Approval of 2023 Director Compensation Limit&#8221; at the regular shareholder meeting held on March 31, 2023, and the agenda was approved. In response, the company&#8217;s auditor filed a lawsuit to cancel the shareholder meeting resolution on May 30, 2023, based on Article 368(3) of the Commercial Act.<\/p>\n<p>The core issue was whether a director-shareholder constitutes a specially interested party in shareholder meeting resolutions determining the compensation limit for all directors including themselves. Particularly, the key point of contention was whether special interest is recognized even when determining the compensation limit for all directors rather than specific compensation for individual directors.<\/p>\n<\/section>\n<section id=\"section4\">\n<h2>4. Lower Court and Supreme Court Rulings<\/h2>\n<h3>Lower Court Rulings<\/h3>\n<p>Seoul Central District Court and Seoul High Court determined that director-shareholders are specially interested parties.<\/p>\n<p>Seoul Central District Court (Decision 2023Gahap66328, decided May 31, 2024) and Seoul High Court (Decisions 2024Na2027590, 2024Na2051821, decided January 22, 2025) ruled as follows:<\/p>\n<p>&#8220;The director compensation limit determined at the shareholder meeting inevitably has a significant impact on determining specific compensation amounts for individual directors in the future. Since the compensation of director-shareholders is closely related to the personal interests of the shareholders rather than interests related to corporate control, such shareholders should be judged as specially interested parties under Article 368(3) of the Commercial Act.&#8221;<\/p>\n<h3>Supreme Court&#8217;s Final Ruling<\/h3>\n<p>The Supreme Court concluded the case with dismissal without review, considering the lower court&#8217;s judgment to be appropriate. This established the legal principle that director-shareholders are restricted from exercising voting rights in shareholder meetings determining their compensation limits, and that shareholder meeting resolutions are illegal if this restriction is violated.<\/p>\n<\/section>\n<section id=\"section5\">\n<h2>5. Significance of the Ruling and Impact on Practice<\/h2>\n<h3>Precedential Significance<\/h3>\n<p>This ruling represents the Supreme Court&#8217;s first clear judgment on whether director-shareholders have special interests in director compensation limit approval resolutions. Previously, lower court decisions had been inconsistent.<\/p>\n<p><strong>Previous precedents denying special interest<\/strong>: Seoul High Court Decision 2010Na103118 (decided January 19, 2012) ruled that &#8220;when approving the upper limit of total director compensation at a shareholder meeting, it is impossible to separate individual directors&#8217; interests from the interests of all directors, so voting rights cannot be restricted on the grounds of being specially interested parties.&#8221;<\/p>\n<p><strong>Previous precedents recognizing special interest<\/strong>: Seoul High Court Decision 2014Na2035141 (decided April 23, 2015), Seoul Nambu District Court Decision 2021Gahap101384 (decided October 15, 2021), and others determined that special interest is recognized even in director compensation limit approval.<\/p>\n<h3>Impact on Practice<\/h3>\n<p>Due to this ruling, the following matters must be considered in future shareholder meeting practice:<\/p>\n<ol>\n<li><strong>Restriction of voting rights for director-shareholders<\/strong>: Director-shareholders cannot exercise voting rights on director compensation limit approval agenda items.<\/li>\n<li><strong>Specification in shareholder meeting notices<\/strong>: The fact of voting rights restriction for specially interested parties must be specified in meeting notices.<\/li>\n<li><strong>Caution in minute preparation<\/strong>: The fact that specially interested parties did not exercise voting rights must be clearly recorded in the minutes.<\/li>\n<\/ol>\n<\/section>\n<section id=\"section6\">\n<h2>6. Changes in Calculation Method for Shareholder Meeting Resolution Requirements<\/h2>\n<p>The Commercial Act provides as follows:<\/p>\n<aside class=\"law-citation\">\n<p><strong>Article 368 (Resolution Method and Exercise of Voting Rights at Meetings)<\/strong> \u2460 Unless otherwise provided by this Act or the articles of incorporation, resolutions of meetings shall be made by a majority of voting rights of attending shareholders and at least one-fourth of the total number of issued shares.<\/p>\n<p>\u2461 Shareholders may have their voting rights exercised by proxy. In this case, the proxy must submit documents proving the proxy authority to the meeting.<\/p>\n<p>\u2462 A person who has a special interest in the resolution of the meeting shall not exercise voting rights.<\/p>\n<p><strong>Article 371 (Calculation of Quorum and Number of Voting Rights)<\/strong> \u2460 For resolutions of meetings, the number of shares without voting rights under Article 344-3(1) and Article 369(2) and (3) shall not be included in the total number of issued shares.<\/p>\n<p>\u2461 For resolutions of meetings, the number of voting rights of shares that cannot be exercised under Article 368(3) and the number of voting rights of shares that cannot be exercised as shares exceeding the ratio under Article 409(2) and Article 542-12(4) shall not be included in the number of voting rights of attending shareholders.<\/p>\n<\/aside>\n<h3>Practical Application of Calculation Method<\/h3>\n<p>For example, assume a company with 10,000 total issued shares where director-shareholder A holds 5,000 shares. Suppose shareholders holding a total of 8,000 voting rights attend the shareholder meeting to decide on director A&#8217;s compensation. A is excluded from voting, and the remaining shareholders with 3,000 shares vote, resulting in 1,700 votes for approval and 1,300 votes against.<\/p>\n<p>Applying Article 371 of the Commercial Act, A&#8217;s compensation agenda would be rejected (requiring 2,500 or more votes). Conversely, without applying Article 371 of the Commercial Act, A&#8217;s compensation agenda would be approved (requiring 1,501 or more votes).<\/p>\n<p><strong>A. Application of Commercial Act Article 371<\/strong><\/p>\n<p>Calculation of majority of attending shareholder voting rights:<\/p>\n<ul>\n<li>Total attending voting rights: 8,000 shares<\/li>\n<li>Excluding specially interested party voting rights: 8,000 shares &#8211; 5,000 shares = 3,000 shares<\/li>\n<li>Majority standard: Majority of 3,000 shares = 1,501 shares or more<\/li>\n<\/ul>\n<p>Calculation of one-fourth of total issued shares:<\/p>\n<ul>\n<li>Total issued shares: 10,000 shares<\/li>\n<li>One-fourth standard: 2,500 shares or more<\/li>\n<\/ul>\n<p><strong>B. Non-application of Commercial Act Article 371<\/strong><\/p>\n<p>Calculation of majority of attending shareholder voting rights:<\/p>\n<ul>\n<li>Total attending voting rights: 8,000 shares<\/li>\n<li>Excluding specially interested party voting rights: 8,000 shares &#8211; 5,000 shares = 3,000 shares<\/li>\n<li>Majority standard: Majority of 3,000 shares = 1,501 shares or more<\/li>\n<\/ul>\n<p>Calculation of one-fourth of total issued shares:<\/p>\n<ul>\n<li>Total issued shares: 10,000 shares<\/li>\n<li>Excluding specially interested party shares: 10,000 shares &#8211; 5,000 shares = 5,000 shares<\/li>\n<li>One-fourth standard: 5,000 shares \u00d7 1\/4 = 1,250 shares or more<\/li>\n<\/ul>\n<p>Therefore, in this case, approval of 1,250 shares or more is required for the resolution to be valid.<\/p>\n<p><strong>C. Conclusion<\/strong><\/p>\n<p>Seoul Central District Court (Decision 2023Gahap66328, decided May 31, 2024) and Seoul High Court (Decisions 2024Na2027590, 2024Na2051821, decided January 22, 2025) also excluded A&#8217;s shares when calculating issued shares. That is, in the above case, the company&#8217;s total issued shares were calculated as 5,000 shares.<\/p>\n<p>In Supreme Court Decision 2016Da222996 (decided August 17, 2016), regarding auditor appointment, shares with restricted voting rights were also excluded from issued shares in the calculation.<\/p>\n<\/section>\n<section id=\"section7\">\n<h2>7. Future Commercial Act Amendments and Legislative Tasks<\/h2>\n<h3>Issue of Single-Shareholder Companies<\/h3>\n<p>When there is only one shareholder who also serves as a director, the current Commercial Act framework creates a problem where there is no entity to determine director compensation. In such cases, exception provisions need to be established through legislation.<\/p>\n<h3>Limitations of Voting Rights Restriction Ratios<\/h3>\n<p>If the total number of shares with restricted voting rights due to special interests exceeds one-fourth of the total issued shares, it becomes fundamentally impossible to meet the requirement of &#8220;at least one-fourth of the total issued shares&#8221; under Article 368(1) of the Commercial Act.<\/p>\n<p>The Supreme Court has also pointed out this problem. It ruled that &#8220;if shares exceeding 3% are included in the &#8216;total issued shares&#8217; referred to in Article 368(1) of the Commercial Act, when any one shareholder owns more than 78% of the total issued shares, such as when the number of shares exceeding 3% exceeds 75% of the total issued shares, it becomes fundamentally impossible to meet the requirement of &#8216;at least one-fourth of the total issued shares&#8217; referred to in Article 368(1) of the Commercial Act&#8221; (Supreme Court Decision 2016Da222996, decided August 17, 2016).<\/p>\n<h3>Need for Amendment of Commercial Act Article 371<\/h3>\n<p>The current Article 371 of the Commercial Act was enacted based on resolution requirements before the 1995 Commercial Act amendment, but revision of the provision is necessary in the current situation where the concept of meeting quorum has been abolished.<\/p>\n<\/section>\n<section id=\"section8\">\n<h2>8. Conclusion and Practical Response Measures<\/h2>\n<p>This Supreme Court ruling clearly recognizes the special interests of director-shareholders in director compensation limit approval, and is expected to bring significant changes to future shareholder meeting practice.<\/p>\n<h3>Practical Response Measures<\/h3>\n<ol>\n<li><strong>Shareholder Meeting Preparation Stage<\/strong>:\n<ul>\n<li>Identify the status of director-shareholders in advance and clarify subjects for voting rights restriction<\/li>\n<li>Specify the fact of voting rights restriction for specially interested parties in meeting notices<\/li>\n<\/ul>\n<\/li>\n<li><strong>Shareholder Meeting Proceedings Stage<\/strong>:\n<ul>\n<li>The chairperson should announce voting rights restriction for specially interested parties when presenting director compensation limit agenda<\/li>\n<li>Calculate resolution requirements excluding specially interested party voting rights<\/li>\n<\/ul>\n<\/li>\n<li><strong>Post-Management Stage<\/strong>:\n<ul>\n<li>Record in detail the fact of voting rights restriction for specially interested parties and resolution requirement fulfillment in the minutes<\/li>\n<li>Accurately reflect resolution contents in related documents such as corporate registration certificates<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<h3>Future Precautions<\/h3>\n<p>Companies should consider that director compensation limit resolutions themselves may become impossible when director-shareholders have high shareholding ratios, and should review such legal constraints in advance when considering shareholder composition or director appointments.<\/p>\n<p>Additionally, until issues such as methods for determining director compensation in single-shareholder companies or limitations on voting rights restriction ratios are resolved through Commercial Act amendments, careful legal review is required for individual cases.<\/p>\n<p>Having successfully handled numerous shareholder meeting-related dispute cases recently, particularly recognized for expertise in legal advice related to shareholder meeting operations for companies with complex governance structures. Please feel free to request consultation if you need legal advice on the legality of shareholder meeting resolutions or determination of specially interested parties.<\/p>\n<\/section>\n<p>        <\/main><br \/>\n<\/p>\n<h2 id=\"sec-faq\">Frequently asked questions<\/h2>\n<div class=\"faq-item\">\n<p class=\"faq-q\">Q. Can a director who is also a shareholder vote on a resolution approving the director compensation limit?<\/p>\n<p>A. No. Article 368(3) of the Commercial Act bars a person with a special interest in a resolution from exercising voting rights, and the courts held that a director-shareholder has such an interest in a resolution approving the director compensation limit \u2014 even where the resolution fixes only the aggregate ceiling for all directors rather than each director&#8217;s individual pay.<\/p>\n<\/div>\n<div class=\"faq-item\">\n<p class=\"faq-q\">Q. What did the courts actually decide in this case?<\/p>\n<p>A. A director and major shareholder voted on the \u201cApproval of 2023 Director Compensation Limit\u201d at the regular shareholder meeting of 31 March 2023, and the company&#8217;s auditor sued to cancel the resolution. Seoul Central District Court (2023Gahap66328, 31 May 2024) and Seoul High Court (2024Na2027590, 2024Na2051821, 22 January 2025) both found the director-shareholder to be a specially interested party. The Supreme Court disposed of the appeal without review, leaving that reasoning intact.<\/p>\n<\/div>\n<div class=\"faq-item\">\n<p class=\"faq-q\">Q. Why did lower courts previously disagree on this point?<\/p>\n<p>A. Earlier decisions went both ways. Seoul High Court 2010Na103118 (19 January 2012) reasoned that when a shareholder meeting approves only the upper limit of total director compensation, an individual director&#8217;s interest cannot be separated from that of the directors as a whole, so voting rights could not be restricted. Other decisions \u2014 Seoul High Court 2014Na2035141 (23 April 2015) and Seoul Nambu District Court 2021Gahap101384 (15 October 2021) \u2014 recognised a special interest even in limit approval.<\/p>\n<\/div>\n<div class=\"faq-item\">\n<p class=\"faq-q\">Q. How are the resolution requirements calculated once a specially interested party is excluded?<\/p>\n<p>A. Article 371(2) provides that shares which cannot be voted under Article 368(3) are excluded from the voting rights of attending shareholders. In the worked example in this article \u2014 10,000 issued shares, a director-shareholder holding 5,000, and 8,000 voting rights present \u2014 the courts also excluded those shares from the total issued shares used for the one-fourth requirement, so the threshold fell from 2,500 shares to 1,250 shares. Supreme Court Decision 2016Da222996 (17 August 2016) took the same approach for auditor appointment.<\/p>\n<\/div>\n<div class=\"faq-item\">\n<p class=\"faq-q\">Q. What should companies change in shareholder meeting practice?<\/p>\n<p>A. Three things follow from the ruling. Director-shareholders must not vote on director compensation limit agenda items. The meeting notice should state that voting rights of specially interested parties are restricted. And the minutes should record clearly that the specially interested party did not vote.<\/p>\n<\/div>\n<div class=\"faq-item\">\n<p class=\"faq-q\">Q. What happens in a company with a single shareholder who is also the director?<\/p>\n<p>A. This is an unresolved gap. Where the only shareholder is also the director, applying the restriction strictly leaves no one able to fix director compensation at all. The article treats this as a legislative task \u2014 an express exception would need to be created by amendment to the Commercial Act.<\/p>\n<\/div>\n<div class=\"author-box\">\n<img decoding=\"async\" class=\"author-avatar\" src=\"https:\/\/atlaw.kr\/wp-content\/uploads\/2022\/12\/\uae40\ud0dc\uc9c4-1.png\" alt=\"Taejin Kim, Managing Partner \u2014 Atlas Legal\"><\/p>\n<div class=\"author-text\">\n<div class=\"author-section-label\">About the Author<\/div>\n<div class=\"author-name\">Taejin Kim | Managing Partner<\/div>\n<div class=\"author-detail\">Corporate Counseling, Corporate Disputes, White-Collar Crime<\/div>\n<div class=\"author-detail\">Former Public Prosecutor | Judicial Research and Training Institute, 33rd Class<\/div>\n<div class=\"author-detail\">Korea University LL.B. &amp; LL.M. (Criminal Law), University of California, Davis LL.M.<\/div>\n<div class=\"author-detail\">Atlas Legal | Incheon Songdo, South Korea<\/div>\n<p><a class=\"author-link\" href=\"https:\/\/atlaw.kr\" target=\"_blank\" rel=\"noopener noreferrer\">Visit Atlas Legal Homepage \u2192<\/a>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Analysis of the Supreme Court ruling recognizing special interests of director-shareholders in director compensation limit approval. Detailed explanation of practical responses for shareholder meetings and application scope of Commercial Act Article 368 voting rights restrictions.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"default","_kad_post_title":"default","_kad_post_layout":"default","_kad_post_sidebar_id":"","_kad_post_content_style":"default","_kad_post_vertical_padding":"default","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[218,15,230],"tags":[181,178,180,179,182],"class_list":["post-190","post","type-post","status-publish","format-standard","hentry","category-corporate-counseling","category-corporate","category-management-disputes","tag-commercial-act-article-368","tag-director-compensation","tag-shareholder-meeting-resolution","tag-specially-interested-parties","tag-voting-rights-restriction"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Voting Rights Restriction for Specially Interested Parties in Director Compensation Limit Approval - Supreme Court Case Analysis<\/title>\n<meta name=\"description\" content=\"Analysis of the Supreme Court ruling recognizing special interests of director-shareholders in director compensation limit approval. 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