Supreme Court Decision 2026Da202091, July 16, 2026 [Claim for Registration of Restoration of Cancelled Director Registration]

【Holding】

Purport of Article 394(1) of the Commercial Act, which provides that the auditor shall represent the company in a lawsuit between a director and a stock company, and whether the auditor represents the company pursuant to Article 394(1) of the Commercial Act even where a retired director under Article 386(1) of the Commercial Act files a lawsuit against the company or the company files a lawsuit against such retired director (affirmative, in principle)

【Summary of Decision】

The reason Article 394(1) of the Commercial Act provides that the auditor shall represent the company in a lawsuit between a director and a stock company is that a conflict of interest is likely to arise between the director and the company, and the provision seeks to prevent such conflict and to ensure the fair conduct of litigation. In a lawsuit between the company and a retired director under Article 386(1) of the Commercial Act, who has retired upon the expiration of his or her term of office or resignation but retains the rights and duties of a director until a newly elected director assumes office because the number of directors prescribed by law or the articles of incorporation is lacking, a conflict of interest is also likely to arise between the director and the company, and there is likewise a need to prevent such conflict and to ensure the fair conduct of litigation.

Therefore, a retired director under Article 386(1) of the Commercial Act should, absent special circumstances, be regarded as a director under Article 394(1) of the Commercial Act, and where the company files a lawsuit against such retired director or such retired director files a lawsuit against the company, the auditor represents the company in that lawsuit pursuant to Article 394(1) of the Commercial Act, absent special circumstances.

【Referenced Statutes】

Articles 386(1) and 394(1) of the Commercial Act

【Referenced Precedents】

Supreme Court Decision 2016Da275679, March 15, 2018 (Gong2018Sang, 675)

(Source: Supreme Court Decision 2026Da202091, July 16, 2026 | Judicial Information Disclosure Portal, Precedents)

2026. 10. 14. · By Attorney Dongwoo Shin