INTRODUCTION Details of Enactment and Amendment ● Enactment: The Commercial Act is a law that regulates the existence and the relationships of the enterprises that have the purpose of profit-making, is composed of five parts, such as General Provisions, Commercial Activities, Companies, Insurance, and Maritime Commerce, was enacted on January 20, 1962 as Act No. 1000, and entered into force on January 1, 1963. ● Amendment: This Act has arrived at its present form as the result of being amended eleven times, and the latest amendment was on December 29, 2001. Main Contents ● Companies are grouped into four categories: hapmyong-hwesa (partnership companies), hapja-hwesa (limited partnership companies), joosik-hwesa (stock companies) and yuhan-hwesa (limited liability companies). ● A hapmyong-hwesa (partnership company) shall be incorporated jointly by at least two members, and no member of a hapmyong-hwesa may, without the consent of the other members, transfer his shares to other persons, effect any transaction which falls within the class of business carried by the company, or become a member with unlimited liability at, or a director of, another company whose business purpose is the same kind of business as the company. If no managing member is designated, each member shall represent the company, and if the assets of the company are insufficient to fully satisfy all its obligations, each member shall be jointly and severally liable to discharge the obligations. With the consent of all of the members the company may be transformed into a hapja-hwesa (limited partnership company). ● A hapja-hwesa (limited partnership company) shall be composed of members with limited liability and members with unlimited liability. Members with limited liability may not provide personal services or credits as a form of contributions, and every member with unlimited liability shall have the responsibility and duty to manage the affairs of the company unless otherwise provided in the articles of incorporation. A member with limited liability may, without the consent of the other members, effect a transaction which falls within the class of business carried on by the company and, with the consent of all of the members with unlimited liability, transfer shares to other persons. With the consent of all of the members the company may be transformed into a hapmyong-hwesa (partnership company). ● A joosik-hwesa (stock company) shall be incorporated jointly by at least one person, and the total number of shares authorized to be issued, the par value per share, and the total number of shares to be issued at the time of incorporation shall be determined. The number of shares to be issued at the time of incorporation shall be no less than one fourth of the total number of shares authorized to be issued by the company, and the capital shall be no less than fifty million won. The par value per share shall be at least one hundred won, and shares may be transferred. A joosik-hwesa shall have a general shareholders' meeting, directors and the board of directors, auditors and an audit committee. The general shareholders' meeting shall be the highest organ, and the minority shareholders (shareholders who hold no less than three hundredths of the total issued and outstanding shares) may propose certain matters as issues to be resolved at the general shareholders' meeting. Directors and the board of directors shall manage the affairs of the company. ● A yuhan-hwesa (limited liability company) shall be incorporated jointly by at least one member, the total number of members of which shall not exceed fifty, total amount of capital of which shall be at least ten million won, and the amount of each unit of contribution to which shall be no less than five thousand won and shall be equal. The liability of a member shall be limited to the amount of his contribution to the company. A member may transfer his shares pursuant to the resolution of a general members' meeting, and the company shall have one or more directors who shall represent the company. The Commercial Act originally consists of 5 parts, 998 articles. Due to limited space, we are forced to print only part 3 "companies", which contains the key points of the Korean corporate law. You can download the context in full at the Korea Legislation Research Institute homepage. (http://www.klri.re.kr) COMMERCIAL ACT Act No. 6545, Dec. 29, 2001 PART III COMPANIES CHAPTER I COMMON PROVISIONS ■ Article 169 (Definition) The term "company" as used in this Act means an association incorporated for the purpose of engaging in commercial activities and/or any other profitmaking activities. ■ Article 170 (Kinds of Companies) Companies are categorized into four kinds, namely, partnership companies, limited partnership companies, stock companies and limited liability companies. ■ Article 171 (Company as Juristic Person and Domicile of Company) (1) A company shall be a juristic person. (2) The domicile of a company shall be at the place of its principal office. ■ Article 172 (Incorporation of Company) A company shall come into existence upon the registration of its incorporation at the place of its principal office. ■ Article 173 (Restriction on Legal Capacity) A company shall not become a member with unlimited liability of another company. ■ Article 174 (Merger of Companies) (1) A merger of companies shall be permissible. (2) In case where one side of the constituent companies of a merger is a stock company or a limited liability company or both sides of them are stock companies or limited liability companies, the surviving company or the newly incorporated company in consequence of the merger shall be a stock company or a limited liability company. (3) A company after its dissolution may be involved in a merger only where it is merged into an existing company and the latter company survives after the merger. ■ Article 175 (Idem-Incorporators) (1) In case where a new company is to be incorporated in consequence of a merger, the execution of its articles of incorporation and the performance of any other activities relating to its incorporation shall be effected jointly by incorporators appointed by each of the constituent companies. (2) Articles 230, 434 and 585 shall apply mutatis mutandis to the appointment under paragraph (1). ■ Article 176 (Dissolution Order against Company) (1) The court may, upon the application by an interested person or by the public prosecutor or ex officio, order that a company be dissolved, in any of the following cases: 1. Where the company was incorporated for an illegal purpose; 2. Where a company, without justifiable reasons, failed to commence its business within one year after its establishment or discontinued its business for a period of at least one year; or 3. In case where a director or a member managing the affairs of the company violated acts or subordinate statutes or the articles of incorporation of the company, as a result of which it is deemed impermissible for the company to continue its existence. (2) In case where an application mentioned in paragraph (1) has been filed, the court may, at the request of an interested person or of the public prosecutor or ex officio, appoint an administrator or take any other necessary measures for the preservation of the company' properties, even before issuing the dissolution order. (3) In case where an application mentioned in paragraph (1) has been filed by an interested person, the court may, upon the request of the company, order the applicant to furnish adequate security. (4) In order to make the request mentioned in paragraph (3), the company shall meet the minimal showing with respect to the fact that the application was filed in bad faith. ■ Article 177 (Starting Point of Reckoning of Registration Period) If any matter to be registered in accordance with this Part requires permission or authorization of government authorities, the period within which the registration should be made shall commence to run from the date of the arrival of the document of such permission or authorization. CHAPTER II PARTNERSHIP COMPANY SECTION 1 Incorporation ■ Article 178 (Execution of Articles of Incorporation) In order to incorporate a partnership company, articles of incorporation shall be executed jointly by at least two members of the company. ■ Article 179 (Absolute Particulars to Be Entered in Articles of Incorporation) The articles of incorporation of a partnership company shall contain the following items and all members shall write their names and affix their seals or shall sign thereon: 1. Purpose; 2. Trade name; 3. Name, resident registration number and domicile of each member; 4. Subject-matter, value, or the basis for valuation of the contribution to be made by each member; 5. Place of the principal office; and 6. Date of execution of the articles of incorporation. ■ Article 180 (Registration of Incorporation) The registration of incorporation of a partnership company shall contain the following particulars: 1. Matters set forth in subparagraphs 1 through 3 and 5 of Article 179 and the place of a branch office, if any: Provided, That if a member representing the company was designated, the domicile of other members shall be excluded; 2. Subject-matter of the contribution of each member and, in case of a contribution in kind, its value and the part already effected; 3. Period of duration or the reasons for dissolution, if such period or such reasons were determined; 4. Name of the member representing the company, if such member was designated; and 5. A provision, if any, to the effect that the company are represented jointly by two or more members. ■ Article 181 (Registration of Establishment of Branch Office) (1) If a branch office is established simultaneously with the incorporation of the company, matters set forth in Article 180 (excluding the places of other branch offices) shall be registered at the place of such branch office within two weeks after the registration of incorporation. (2) If a branch office is established after the incorporation of the company, the place and establishment date of such branch office shall be registered within two weeks at the place of the principal office, and the matters set forth in Article 180 (excluding the places of other branch offices) shall be registered within three weeks at the place of such branch office. (3) Deleted. <by Act No. 5053, Dec. 29, 1995> ■ Article 182 (Registration of Transfer of Principal Office and Branch Office) (1) If a company transfers its principal office, the new place and the transfer date shall be registered within two weeks at the previous place and the matters set forth in Article 180 (excluding the places of other branch offices) shall be registered within two weeks at the new place. (2) If a company transfers its branch office, the new place and the transfer date shall be registered within two weeks at the place of the principal office and at the previous place of such branch office and the matters set fort in Article 180 (excluding the places of other branch offices) shall be registered within two weeks at the new place. (3) Deleted. <by Act No. 5053, Dec. 29, 1995> ■ Article 183 (Registration of Alteration) If an alteration has occurred in any of the matters mentioned in Article 180, such alteration shall be registered within two weeks at the place of the principal office and within three weeks at the place of each branch office. ■ Article 183-2 (Registration of Temporary Disposition, etc. on Suspension of Business Management) Where a temporary disposition to suspend the employees' business management or to appoint an agent for business management is made, or the temporary disposition is altered or revoked, the registration thereof shall be made at the registry office in a place where the head and branch offices are located. ■ Article 184 (Action for Nullification or Revocation of Incorporation) (1) The nullity of the incorporation of a company may be asserted only by a member of the company and the revocation of the incorporation of a company may be asserted only by a person who has the right to revoke the incorporation, in both cases only by means of an action to be filed within two years after the date of the incorporation. (2) Article 140 of the Civil Act shall apply mutatis mutandis to the revocation of the incorporation mentioned in paragraph (1). ■ Article 185 (Action for Revocation of Incorporation by Creditors) If a member has incorporated a company with the knowledge that he would thereby prejudice his creditors, the creditors may demand the revocation of the incorporation of the company by means of an action filed against the member and the company. ■ Article 186 (Exclusive Jurisdiction) The actions mentioned in Articles 184 and 185 shall be subject to the exclusive jurisdiction of the district court governing the place of the principal office of the company. ■ Article 187 (Public Notice of Filing of Action) If an action has been filed for nullification or revocation of the incorporation of a company, the company concerned shall give public notice thereof without delay. ■ Article 188 (Combined Hearing of Actions) If two or more actions have been filed for nullification or revocation of the incorporation of a company, the court shall hear the actions jointly. ■ Article 189 (Correction of Defects and Dismissal of Action) The court may dismiss an action for nullification or revocation of the incorporation of a company, if the defects which were the cause for such action have been remedied in the course of the hearing and the court considers it improper to nullify or revoke the incorporation of the company in light of the present condition of the company and all other circumstances. ■ Article 190 (Effect of Judgment) A judgment affirming the nullification or revocation of the incorporation of a company shall be effective against any third person: Provided, That it shall not affect the rights and duties which have arisen between any member of the company and any third person before the judgment becomes final and conclusive. ■ Article 191 (Liability of Plaintiff who Lost) If the plaintiff in an action for nullification or revocation of the incorporation of a company has lost in such action and it is found that he willfully or by gross negligence filed such action, he shall be jointly and severally liable for damages incurred by the company. ■ Article 192 (Registration of Nullification or Revocation of Incorporation) In case where a judgment affirming the nullification or revocation of the incorporation of a company has become final and conclusive, such fact shall be registered at the place of the principal office and branch offices of the company. ■ Article 193 (Effect of Judgment Affirming Nullification or Revocation of Incorporation) (1) In case where a judgment affirming the nullification or revocation of the incorporation of a company has become final and conclusive, the company shall be liquidated as if the company had been dissolved. (2) In case of paragraph (1), the court may appoint a liquidator upon the application by any member of the company and by any other interested person. ■ Article 194 (Nullification or Revocation of Incorporation and Continuance of Company) (1) If a judgment affirming the nullification or revocation of the incorporation of a company has become final and conclusive and the cause for such nullification or revocation involves only a particular member, the company may continue to exist with the unanimous consent of all the other members. (2) In case of paragraph (1), the member in respect of whom the cause for the nullification or revocation involves shall be deemed to have retired from the company. (3) Article 229 (2) and (3) shall apply mutatis mutandis to the cases under paragraphs (1) and (2) above. SECTION 2 Internal Relationship of a Company ■ Article 195 (Applicable Provisions) Unless otherwise provided by the articles of incorporation or by this Act, the provisions concerning partnerships of the Civil Act shall apply mutatis mutandis to the internal relationship of a partnership company. ■ Article 196 (Contribution of Claim Rights) A member who has contributed a claim right shall be responsible for the performance of such claim, if the obligor fails to perform the obligation thereof by the time for performance. In this case, the member shall not only pay for the interests but also shall be liable for any damages sustained thereby. ■ Article 197 (Transfer of Share) No member shall, without the consent of all the other members, transfer all or a part of his share in the company to another person. ■ Article 198 (Prohibition of Competitive Business by Members) (1) No member shall, without the consent of all the other members, effect for his own account or for the account of a third person, any transaction which falls within the class of business carried on by the company or become a member with unlimited liability or a director of another company whose business purpose is the same kind of business as the company. (2) In case where any member has effected a transaction violating paragraph (1), the company may regard such transaction as effected for the account of the company if such transaction was effected for such member's own account, and the company may demand such member to transfer any profit accrued therefrom if such transaction was effected for the account of a third person. (3) Paragraph (2) shall not affect any claim for damages by the company against the member concerned. (4) The rights mentioned in paragraph (2) shall be exercised by a resolution of the majority of other members of the company and shall lapse after the passage of two weeks from the date on which any one of other members has become aware of such transaction or after the passage of one year from the date on which such transaction was effected. ■ Article 199 (Self-Transaction of Members) A member may effect a transaction with the company for his own account or for the account of a third person only if a resolution approving such transaction has been adopted by the majority of other members of the company. In this case, Article 124 of the Civil Act shall not apply. ■ Article 200 (Right and Duty of Management of Affairs) (1) Unless otherwise provided by the articles of incorporation, each member has the right and duty to manage the affairs of the company. (2) If other members raise an objection with respect to the management of affairs by a member, the member shall immediately cease such act and follow the decision by the majority of all the members. ■ Article 200-2 (Authority of Agent for Business Management) (1) Except as otherwise stipulated in the temporary disposition order, an agent for business management under Article 183-2 shall not perform any act which does not fall under regular business of a corporation: Provided, That the same shall not apply to any case where a permit has been obtained from the court. (2) Where an agent for business management has committed an act in contravention of the provisions of paragraph (1), the company shall be liable to a third person acting in good faith for any act. ■ Article 201 (Managing Members) (1) If one or more members are designated by the articles of incorporation as managing members, those members shall have the right and duty to manage the affairs of the company. (2) If other managing members raise an objection with respect to the management by a managing member, the managing member shall immediately cease such act and follow the decision of the majority of all the managing members. ■ Article 202 (Joint Managing Members) In case where several members are designated by the articles of incorporation to jointly manage the affairs of the company, any act of management shall not be taken without the consent of all such joint managing members: Provided, That this shall not apply if there is a fear of delay. ■ Article 203 (Appointment and Dismissal of Manager) Unless otherwise provided by the articles of incorporation, the appointment and dismissal of a manager shall be decided by a majority of all the members, even where managing members have been designated. ■ Article 204 (Amendment of Articles of Incorporation) The consent of all the members shall be required in order to amend the articles of incorporation. ■ Article 205 (Adjudication of Forfeiture of Power against Managing Member) (1) If a managing member is clearly unfit for performing his duties or he has breached his material duties, the court may, upon the application of a member, adjudicate the forfeiture of the power against such managing member. (2) When a judgment mentioned in paragraph (1) has become final and conclusive, such fact shall be registered at the place of the principal office and branch offices of the company. ■ Article 206 (Applicable Provision) ■ Article 186 shall apply mutatis mutandis to an action mentioned in Article 205. SECTION 3 External Relationship of a Company ■ Article 207 (Representation of Company) If a company has not designated managing members in charge of the management of affairs by the articles of incorporation, each of the members shall represent the company. If several managing members have been designated to take charge of the management, each of them shall represent the company: Provided, That the company may specifically designate a person who shall represent the company from among such managing members, by the articles of incorporation or with the unanimous consent of all the members. ■ Article 208 (Joint Representation) (1) A company may, either by the articles of incorporation or with the unanimous consent of all the members, provide that two or more members shall jointly represent the company. (2) Even in case of paragraph (1), any declaration of intention made by a third person to the company shall be effective by giving such declaration of the intention to any one of the joint representative members. ■ Article 209 (Authorities of Representative Member) (1) The representative member is authorized to do all judicial or extra-judicial acts relating to the business of the company. (2) Any restriction placed on the authorities mentioned in paragraph (1) may not be asserted against a third person acting in good faith. ■ Article 210 (Liability for Damages) In case where the representative member has caused damages to another person by his act of the business administration of the company, the company and such representative member shall be jointly and severally liable for such damages. ■ Article 211 (Representation in Legal Actions between Company and Members) If no representative member exists in case of an action filed by a company against its member or an action filed by a member of a company against the company, a member who shall represent the company on such action shall be selected by a resolution of a majority of all the other members. ■ Article 212 (Liability of Members) (1) If the assets of a company are insufficient to fully satisfy its obligations, all the members shall be jointly and severally liable for the performance of the obligations. (2) Paragraph (1) shall also apply if a compulsory execution of judgement on the company's assets has proved ineffective. (3) Paragraph (2) shall not apply if any member proves that the company is capable of performing its obligations and that the execution can easily be effected. ■ Article 213 (Liability of Incoming Members) A member admitted to a company after its establishment shall assume the same liability as other members with respect to the obligations of the company incurred prior to his admission. ■ Article 214 (Defenses of Members) (1) In case where a claim is raised against a member with respect to the company's obligations, the member may raise, against the claimant, any defense which the company might have asserted. (2) If the company has a right of set-off, cancellation or rescission against the claimant, the member may refuse performance in respect of a claim under paragraph (1). ■ Article 215 (Liability of a self styled Member) In case where a person who is not a member of a company has acted in a manner to induce others to misconceive him as a true member, he shall assume the same liability as if he were a true member against any person who has effected a transaction with the company due to such misconception. ■ Article 216 (Applicable Provisions) Articles 205 and 206 shall apply mutatis mutandis to the representative members of a company. SECTION 4 Retirement of Members ■ Article 217 (Member's Right to Retire from Company) (1) In case where the articles of incorporation of a company do not fix the duration of the company or they provide that the company shall continue to exist during the life of a particular member, any member may retire at the end of any business year: Provided, That he shall give an advance notice six months prior to the retirement. (2) In case where unavoidable reasons exist, any member may retire at any time. ■ Article 218 (Reasons for Retirement of Members) In addition to Article 217, a member shall retire from the company for any of the following reasons: 1. Occurrence of any event specified in the articles of incorporation; 2. Consent of all the members; 3. Death; 4. Incompetency; 5. Bankruptcy; or 6. Expulsion. ■ Article 219 (Notice of Succession of Rights at Death of Member) (1) In case where the articles of incorporation provide that if a member dies, his successor may succeed to the deceased member's rights and duties against the company to become a member, the successor shall dispatch a notice of either succession or renunciation to the company within three months from the date on which he has become aware of the commencement of succession. (2) If three months have elapsed without the successor's notice mentioned in paragraph (1), the successor shall be deemed to have renounced the right to become a member. ■ Article 220 (Adjudication of Expulsion) (1) If any of the following reasons exists in respect of a member, the company may, by a resolution of the majority of all the other members, demand that the court adjudicate the expulsion of such member: 1. Where such member has failed to perform a duty to contribute; 2. Where such member has acted in violation of Article 198 (1); 3. Where such member has committed a dishonest act with respect to the management of the affairs or the representation of the company, or where such member has managed the affairs of the company or represented the company without authority; or 4. Where there is any other important reason. (2) Articles 205 (2) and 206 shall apply mutatis mutandis to the cases under paragraph (1). ■ Article 221 (Settlement of Accounts between Expelled Member and Company) The settlement of accounts between the expelled member and the company shall be effected according to the status of the company's property when an action for expulsion was filed, and legal interest shall accrue therefrom. ■ Article 222 (Refund of Share) A retired member shall be entitled to refund of his share even where his contribution was in the form of personal services or credit: Provided, That this shall not apply if provided otherwise by the articles of incorporation. ■ Article 223 (Seizure of Share) A seizure of a member's share of the company shall be effective with regard to his right to demand a dividend and a refund on the share for the future. ■ Article 224 (Demand of Retirement of Member by Creditor who Seized Member's Share) (1) A creditor who seized a member's share in the company may cause the member to retire at the end of a business year: Provided, That he shall give an advance notice to the company and the member concerned six months prior to the retirement. (2) The advance notice mentioned in the proviso of paragraph (1) shall lose its effect when the member concerned performs his obligations or furnishes an adequate security. ■ Article 225 (Liability of Retired Member) (1) A retired member shall be liable, as if he continued to be a member, for the obligations of the company incurred before the registration of his retirement has been effected at the place of the principal office, for the period of two years subsequent to the above registration. (2) Paragraph (1) shall apply mutatis mutandis to a member who has transferred his share in the company to other persons. ■ Article 226 (Retired Member's Right to Demand Change in Trade Name) In case where the name of a retired member has been used in the company's trade name, such member may demand the company to cease the use of such name. SECTION 5 Dissolution of Company ■ Article 227 (Reasons for Dissolution) A company shall be dissolved for any of the following reasons: 1. Expiration of the duration of the company or occurrence of any events specified in the articles of incorporation; 2. Consent of all the members; 3. Where there is only one member left; 4. Merger; 5. Bankruptcy; or 6. Order or judgment of the court. ■ Article 228 (Registration of Dissolution) In case of the dissolution of a company for reasons other than merger or bankruptcy, such fact shall be registered within two weeks at the place of the principal office and within three weeks at the place of each branch office, both period starting from the date on which the reason for dissolution comes into existence. ■ Article 229 (Continuance of Company) (1) In cases of subparagraphs 1 and 2 of Article 227, the company may continue to exist with the consent of all or some of the members: Provided, That the dissenting members shall be deemed to have retired. (2) In case of subparagraph 3 of Article 227, the company may continue to exist by admitting a new member. (3) In case of paragraphs (1) and (2), if the registration of dissolution was already effected, the continuance of existence of a company shall be registered within two weeks at the place of the principal office and within three weeks at the place of each branch office. (4) Article 213 shall apply mutatis mutandis to the liabilities of an incoming member pursuant to paragraph (2). ■ Article 230 (Resolution of Merger) The consent of all the members shall be required for a merger of a company. ■ Article 231 Deleted. <by Act No. 3724, Apr. 10, 1984> ■ Article 232 (Objections by Creditors) (1) Within two weeks from the date of the resolution on a merger, the company shall give to its creditors a public notice demanding the submission of an objection, if any, against the merger within a specified period of time and shall give a peremptory notice to the respective creditors known to the company. In this case, the said period shall be no less than one month. (2) A creditor who fails to raise an objection within the period set forth in paragraph (1) shall be deemed to have approved the merger. (3) If a creditor has raised an objection, the company shall perform its obligations to the creditor or furnish adequate security, or entrust a property of reasonable value to a trust company to the same purpose. ■ Article 233 (Registration of Merger) In case of a merger, the registration of alteration by the surviving company, the registration of dissolution by the merged company and the registration of incorporation by the newly incorporated company in consequence of a merger shall be effected within two weeks at the place of the principal office and within three weeks at the place of each branch office. ■ Article 234 (Effective Date of Merger) A merger of companies shall take effect when the surviving company or the newly incorporated company in consequence of a merger has effected registration set forth in Article 233 at the place of its principal office. ■ Article 235 (Effect of Merger) The surviving company or the newly incorporated company in consequence of a merger shall succeed to the rights and duties of the merged company. ■ Article 236 (Filing of Action for Nullification of Merger) (1) The nullification of a merger of companies shall be asserted only by means of an action, which may be brought by the members, liquidators, trustee in bankruptcy of each company or by those creditors of each company who do not approve such merger. (2) The action under paragraph (1) shall be filed within six months from the date of the registration under Article 233. ■ Article 237 (Applicable Provisions) Article 176 (3) and (4) shall apply mutatis mutandis where the creditors of a company have filed an action under Article 236. ■ Article 238 (Registration of Nullification of Merger) When a judgment affirming the nullification of merger has become final and conclusive, the registration of alteration by the surviving company, the registration of restitution by the merged company and the registration of dissolution by the newly incorporated company shall be effected at the place of the principal office and each branch office. ■ Article 239 (Final Judgment of Nullification and Reversion of Rights and Duties of Companies) (1) When a judgment affirming the nullification of merger has become final and conclusive, the companies which have effected a merger shall be jointly and severally liable to perform any obligation that the surviving company or the newly incorporated company in consequence of the merger has incurred after the merger. (2) Any property which has been acquired after the merger by the surviving company or the newly incorporated company in consequence of the merger shall be owned in common by the companies which have effected the merger. (3) If, in case of paragraphs (1) and (2), the companies have failed to determine the proportions of assumption of liabilities or the proportions of the common ownership, the court shall, upon the application of such companies, determine those proportions, by taking into account the status of the property of each company as of the time of the merger and all other circumstances. ■ Article 240 (Applicable Provisions) Articles 186 through 191 shall apply mutatis mutandis to the action for nullification of merger. ■ Article 241 (Demand for Dissolution by Members) (1) Where unavoidable reasons exist, any member may apply to the court for dissolution of the company. (2) Articles 186 and 191 shall apply mutatis mutandis to the case under paragraph (1). ■ Article 242 (Change of Organization) (1) With the consent of all the members a partnership company may be transformed into a limited partnership company either by making a particular member become a member with limited liability or by admitting a new member with limited liability. (2) Paragraph (1) shall apply mutatis mutandis to the continuance of existence of a company pursuant to Article 229 (2). ■ Article 243 (Registration of Change of Organization) When a partnership company has been transformed into a limited partnership company, the registration of dissolution by the partnership company and the registration of incorporation by the limited partnership company shall be effected within two weeks at the place of the principal office and within three weeks at the place of each branch office. ■ Article 244 (Liability of Person who Has Become Member with Limited Liability in Consequence of Change of Organization) A person who has been a member of a partnership company but now becomes a member with limited liability in accordance with Article 242 (1) shall not be relieved of the unlimited liability with respect to the obligations of the company which had been incurred before the registration under Article 243 was effected at the place of the principal office, for the period of two years subsequent to the said registration. SECTION 6 Liquidation ■ Article 245 (Company in Process of Liquidation) To the extent of the objectives of the liquidation, a company shall be deemed to continue to exist even after its dissolution. ■ Article 246 (Where Several Successors of Share Exist) In case where there are two or more successors upon the death of a member after dissolution of a company, they shall designate one person from among themselves to exercise the rights of a member in connection with the liquidation. If there is no such designation, the company's notice or peremptory notice made upon any one of the successors shall be effective upon all the successors. ■ Article 247 (Voluntary Liquidation) (1) The method of disposal of the properties of a dissolved company may be determined by the articles of incorporation or with the consent of all the members. In this case, an inventory and a balance sheet shall be prepared within two weeks from the date on which the reason for dissolution occurred. (2) Paragraph (1) shall not apply in case of the dissolution of a company pursuant to subparagraph 3 or 6 of Article 227. (3) Article 232 shall apply mutatis mutandis to the case under paragraph (1). (4) If, in case of paragraph (1), there is any person who has seized a member's share in the company, the consent of such person shall be required. (5) The company under paragraph (1) shall register the completion of liquidation within two weeks at the place of its principal office and within three weeks at the place of its branch office after the disposal of properties is completed. ■ Article 248 (Voluntary Liquidation and Protection of Creditors) (1) If a company has harmed its creditors by disposing of its properties in violation of Article 247 (3), the creditors may apply to the court for the revocation of such disposal. (2) Article 186 of this Act and the proviso of Article 406 (1), Articles 406 (2) and 407 of the Civil Act shall apply mutatis mutandis to the application for the revocation mentioned in paragraph (1). ■ Article 249 (Protection of Creditors who Have Seized Share) If a company has disposed of its properties in violation of Article 247 (4), the creditor who has seized a member's share in the company may demand that the company pay an amount equivalent to the value of such share. In this case, Article 248 shall apply mutatis mutandis. ■ Article 250 (Legal Liquidation) If the method of disposal of the properties of a dissolved company has not been determined pursuant to Article 247 (1), liquidation shall be carried out in accordance with Articles 251 through 265 except for the cases of a merger or a bankruptcy. ■ Article 251 (Liquidator) (1) In case of the dissolution of a company, a liquidator shall be appointed by a resolution of the majority of all the members. (2) When a liquidator has not been appointed, the managing member shall become a liquidator. ■ Article 252 (Liquidator Appointed by Court) In case of the dissolution of a company pursuant to subparagraph 3 or 6 of Article 227, the court shall appoint a liquidator on the application of any member, any interested person or the public prosecutor or ex officio. ■ Article 253 (Registration of Liquidators) (1) The following particulars shall be registered within two weeks at the place of the principal office and within three weeks at the place of each branch office, which periods shall commence to run from the date of appointment of a liquidator if a liquidator has been appointed or from the date of the dissolution if the managing member has become a liquidator: 1. Name, resident registration number and address of the liquidator: Provided, That if a representative liquidator has been appointed from among several liquidators, addresses of liquidators other than the representative liquidators shall be excluded; 2. Name of the representative liquidator if such has been appointed; and 3. Provisions to the effect that two or more liquidators shall jointly represent the company, if so determined. (2) Article 183 shall apply mutatis mutandis to the registration under paragraph (1). ■ Article 254 (Duties and Powers of Liquidators) (1) A liquidator shall have the following duties: 1. To wind up pending affairs; 2. To collect claims and to perform obligations; 3. To dispose of assets for realization; and 4. To distribute surplus assets. (2) In case where there are two or more liquidators, acts in connection with the duties of liquidation shall be determined by a resolution of the majority of the liquidators. (3) The representative liquidator is authorized to do all judicial or extra-judicial acts in connection with the duties mentioned in paragraph (1). (4) Article 93 of the Civil Act shall apply mutatis mutandis to a partnership company. ■ Article 255 (Representation of Company by Liquidator) (1) In case where the managing member has become a liquidator, he shall represent the company as heretofore provided. (2) In case the court appoints two or more liquidators, the court may designate one who is to represent the company or may decide upon joint representation by several of them. ■ Article 256 (Duties of Liquidator) (1) A liquidator shall, without delay after his inauguration, investigate the status of the company's properties, prepare an inventory list and a balance sheet and deliver copies thereof to respective members. (2) A liquidator shall report on the progress of the liquidation at any time that any member requests him to do so. ■ Article 257 (Transfer of Business) In case where a liquidator intends to transfer all or part of the business of a company, a resolution of a majority vote of all the members shall be required. ■ Article 258 (Impossibility of Full Satisfaction of Obligations and Demand for Contribution) (1) If the existing properties of a company are insufficient to fully satisfy its obligations, a liquidator may demand the members to make their contributions irrespective of the time for performance. (2) The amount of contribution in paragraph (1) shall be determined in proportion to the ratio of the share by each member. ■ Article 259 (Performance of Obligations) (1) A liquidator may perform the obligations of the company which have not yet come due. (2) In case of paragraph (1), an obligation in respect of which no interest was stipulated, the amount of the obligation deducted by the legal interest up to the time for performance shall be paid. (3) Paragraph (2) shall apply mutatis mutandis to an obligation in respect of which the stipulated interest is less than the legal interest rate. (4) In case of paragraph (1), conditional obligations, obligations with uncertain duration and any other obligations whose value is uncertain shall be performed according to the valuation of an expert appointed by the court. ■ Article 260 (Distribution of Surplus Assets) A liquidator shall not distribute the properties of the company to its members until all the obligations of the company have been performed completely: Provided, That he may distribute the surplus assets after reserving the properties necessary for the performance of such obligation in dispute. ■ Article 261 (Dismissal of Liquidator) A liquidator appointed by the members may be dismissed by a resolution of a majority vote of all the members. ■ Article 262 (Idem) If a liquidator is clearly unfit for performing his duties or he has breached his material duties, the court may, upon the application of a member or any interested person, dismiss such liquidator. ■ Article 263 (Termination of Duties of Liquidator) (1) When the duties of a liquidator have been completed, he shall without delay prepare a statement of account and deliver a copy thereof to each member for approval. (2) If a member who has received the statement of account in paragraph (1) has failed to raise an objection thereto within one month, he shall be deemed to have approved it: Provided, That this shall not apply where a liquidator has committed some dishonest act. ■ Article 264 (Registration of Completion of Liquidation) Upon the completion of liquidation, a liquidator shall register such fact within two weeks at the place of the principal office and within three weeks at the place of each branch office from the date of approval of all the members in accordance with Article 263. ■ Article 265 (Mutatis Mutandis Applicable Provisions) The provisions of Articles 183-2, 199, 200-2, 207, 208, 209 (2), 210, 382 (2), 399 and 401 shall apply mutatis mutandis to liquidators. ■ Article 266 (Preservation of Books and Documents) (1) The books and records as well as important documents relating to the business and liquidation of a company shall be preserved for ten years after the completion of liquidation is registered at the place of the principal office: Provided, That the slips or similar documents shall be preserved for five years. (2) In case of paragraph (1), the custodian and the method of preservation shall be determined by a resolution of a majority vote of all the members. ■ Article 267 (Extinction of Member's Liability) (1) A member's liability under Article 212 shall extinguish when five years have elapsed from the date of the registration of dissolution at the place of the principal office. (2) Even after the lapse of the period mentioned in paragraph (1) if there remains surplus assets which have not been distributed, creditors of a company may demand the performance of obligations in respect of such surplus assets. CHAPTER III LIMITED PARTNERSHIP COMPANY ■ Article 268 (Organization of Company) A limited partnership company shall be composed of members with unlimited liability and members with limited liability. ■ Article 269 (Applicable Provisions) Unless otherwise provided in this Chapter, the provisions governing partnership companies shall apply mutatis mutandis to limited partnership companies. ■ Article 270 (Absolute Particulars to Be Entered in Articles of Incorporation) The articles of incorporation of a limited partnership company shall state all the particulars mentioned in Article 179 and shall additionally specify whether the liability of each member is limited or unlimited. ■ Article 271 (Matters to Be Registered) With respect to the registration of incorporation of a limited partnership company, it shall be registered whether each partner's liability is limited or not, in addition to the matters as set forth in Article 180. ■ Article 272 (Contribution by Member with Limited Liability) Members with limited liability shall not contribute personal credits or services. ■ Article 273 (Right and Duty of Management of Affairs) Unless otherwise provided by the articles of incorporation, each member with unlimited liability shall have the right and duty to manage the affairs of the company. ■ Article 274 (Appointment and Dismissal of Manager) The appointment and dismissal of a manager shall be decided by a resolution of a majority vote of members with unlimited liability even where managing members have been designated. ■ Article 275 (Freedom to Engage in Competitive Business by Member with Limited Liability) A member with limited liability may, without the consent of the other members, effect for his own account or for the account of a third person any transaction which falls within the class of business carried on by the company or become a member with unlimited liability or a director of another company whose business purpose is the same kind of business as the company. ■ Article 276 (Transfer of Share of Member with Limited Liability) With the consent of all the members with unlimited liability, a member with limited liability may transfer to another person the whole or part of his share in the company. The same shall apply even where such transfer is to be accompanied by an amendment of the articles of incorporation. ■ Article 277 (Right to Monitor by Member with Limited Liability) (1) A member with limited liability may, at the end of each business year but only during business hours, inspect the account books, balance sheets and other documents of the company and may investigate its business and the state of its property. (2) In case where any material reason exists, a member with limited liability may, with the permission of the court, conduct the inspection and investigation mentioned in paragraph (1) at any time. ■ Article 278 (Prohibition on Management and Representation by Member with Limited Liability) A member with limited liability shall neither manage the affairs of the company nor represent the company. ■ Article 279 (Liability of Member with Limited Liability) (1) A member with limited liability shall be liable to perform the obligations of the company to the extent of the amount of his contribution deducting the amount which has been already paid. (2) If any dividends have been distributed, notwithstanding the fact that the company accrued no profit, such amount shall be added in determining the liability for performance. ■ Article 280 (Liability in Case of Decrease in Contribution) In case where the contribution of a member with limited liability has been reduced, he shall not be relieved of the liabilities under Articles 279 with regard to any obligation of the company which has been incurred prior to the registration of such reduction at the place of the principal office, for the period of two years after such registration. ■ Article 281 (Liability of a Self-Styled Member with Unlimited Liability) (1) In case where a member with limited liability has acted in a manner to induce others to misconceive him as a member with unlimited liability, he shall assume the same liability as if he were a member with unlimited liability against any person who has effected a transaction with the company due to such misconception. (2) Paragraph (1) shall apply mutatis mutandis where a member with limited liability has acted in a manner to mislead others as to the extent of his liability. ■ Article 282 (Liability of Member whose Liability Has Been Changed) Article 213 shall apply mutatis mutandis where a member with limited liability has become a member with unlimited liability and Article 225 shall apply mutatis mutandis where a member with unlimited liability has become a member with limited liability. ■ Article 283 (Death of Member with Limited Liability) (1) Upon the death of a member with limited liability, his successor shall succeed to the share of the deceased in the company and shall become a member. (2) Where, in case of paragraph (1), there are two or more successors, they shall appoint from among themselves one person who shall exercise the right of the member. If there is no such appointment, the company's notice or peremptory notice made upon any one of the successors shall be effective upon all the successors. ■ Article 284 (Incompetence of Member with Limited Liability) A member with limited liability shall not be subject to retirement, even if he is adjudged incompetent. ■ Article 285 (Dissolution and Continuance of Company) (1) A limited partnership company shall be dissolved if either all the members with unlimited liability or all the members with limited liability have retired from the company. (2) The members, either with unlimited liability or with limited liability, remaining in case of paragraph (1), may, with the unanimous consent among themselves, continue the company by admitting a member with limited liability or a member with unlimited liability. (3) Articles 213 and 229 (3) shall apply mutatis mutandis to the cases under paragraph (2). ■ Article 286 (Change of Organization) (1) With the consent of all the members, a limited partnership company may transform its organization to a partnership company and continue to exist. (2) In case where all the members with limited liability have retired from the company, the members with unlimited liability may, with the unanimous consent among themselves, transform its organization to a partnership company and continue to exist. (3) In cases of paragraphs (2) and (3), the registration of dissolution shall be effected by the limited partnership company, and the registration of incorporation shall be effected by the partnership company, within two weeks at the place of the principal office and within three weeks at the place of each branch office. ■ Article 287 (Liquidator) A liquidator of a limited partnership company shall be appointed by a resolution of the majority of the members with unlimited liability. If there is no such appointment, the managing member who has been in charge of the management shall become a liquidator. CHAPTER IV STOCK COMPANY SECTION 1 Incorporation ■ Article 288 (Promoters) In order to incorporate a stock company, the promoters shall prepare the articles of incorporation. ■ Article 289 (Preparation of Articles of Incorporation, Absolute Particulars to Be Entered Therein) (1) Each promoter shall prepare, write his name and affix his seal or sign on, the articles of incorporation, in which the following particulars shall be contained: 1. Purpose; 2. Trade name; 3. Total number of shares authorized to be issued; 4. Par value per share; 5. Number of shares to be issued at the time of incorporation; 6. Place of principal office; 7. Method of public notice; 8. Name, residence registration number and address of each promoter; and 9. Deleted. <by Act No. 3724, Apr. 10, 1984> (2) The number of shares to be issued at the time of incorporation shall be no less than a fourth of the total number of shares authorized to be issued by the company. (3) Public notices by a company shall be given by inserting them in the Official Gazette or in a daily newspaper in which matters relating to current events are published. ■ Article 290 (Particulars of Abnormal Incorporation) The following matters shall be effective by being stated in the articles of incorporation: 1. Any special benefits to be received by promoters and names of such promoters; 2. Name of the person who is to make a contribution in kind, the type, quantity and value of the subject-matter of such contribution in kind and the class and number of shares to be given in consideration thereof; 3. The class, number and value of the property which has been agreed to be transferred to the company after its incorporation and the name of the transferor; and 4. The expenses for incorporation which are to be borne by the company and the amount of promoter's compensation. ■ Article 291 (Determination of Matters Concerning Issuance of Shares at Time of Incorporation) Unless otherwise provided in the articles of incorporation, the following matters in connection with the shares to be issued at the time of incorporation shall be determined with the unanimous consent among the promoters: 1. Class and number of shares; and 2. If the company is to issue shares at the price higher than the par value, the number of such shares and the price. ■ Article 292 (Authentication of Articles of Incorporation) The articles of incorporation shall take effect upon authentication by a notary public. ■ Article 293 (Subscription of Shares by Promoters) Each promoter shall subscribe for shares in writing. ■ Article 294 Deleted. <by Act No. 5053, Dec. 29, 1995> ■ Article 295 (Payment of Subscription Price and Performance of Contribution in Kind in Promotion of Incorporation) (1) In case where the promoters have subscribed for all of the shares to be issued at the time of incorporation, they shall without delay make full payment of the subscription price. In this case, they shall designate the bank or other financial institution at which the subscription price is to be paid and the place of payment. (2) A promoter who is to make a contribution in kind shall, without delay, on the date fixed for the payment of the subscription price, deliver the pertinent property and, if registration, recording or the creation or transfer of a right is required, the promoter shall completely prepare the documents thereon and deliver them to the company. ■ Article 296 (Appointment of Officers in Promotion of Incorporation) (1) When the payment of subscription price and the performance of contribution in kind have been completed in accordance with Article 295, the promoters shall without delay appoint the directors and auditors by a majority vote. (2) The promoters shall have one vote per each share which they have subscribed for. ■ Article 297 (Preparation of Minutes by Promoters) The promoters shall prepare and write their names and affix their seals or sign on the minutes of the meeting, in which the proceedings of deliberation and the results thereof shall be entered. ■ Article 298 (Investigation and Reporting by Director and Auditor, and Request for Appointment of Inspector) (1) The director and auditor shall, without delay after their appointment, investigate whether or not all matters concerning the incorporation of the company have complied with the relevant acts, subordinate statutes and the articles of incorporation, and report the results thereof to the promoters. (2) Any director and auditor who was a promoter, or is now a contributor in kind or a party to a contract whereby the company is to take over a property after its incorporation shall not participate in the investigation and reporting mentioned in paragraph (1). (3) If all of the directors and auditors are subject to paragraph (2), the directors shall have a notary public make the investigation and reporting mentioned in paragraph (1). (4) In case where the articles of incorporation provide for any matter set forth in Article 290, the directors shall request the court to appoint an inspector for the purpose of conducting the investigation on such matter: Provided, That this shall not apply to the case of Article 299-2. ■ Article 299 (Investigation and Reporting by Inspector) (1) The inspector shall investigate any matter set forth in Article 290 and whether or not the contribution in kind has been performed pursuant to Article 295 and shall report the results thereof to the court. (2) The inspector shall, without delay after he has prepared a report of investigation under paragraph (1), deliver a copy of it to each promoter. (3) Where any statement in the report of investigation is contrary to the true fact, the promoters may submit an explanatory note thereon to the court. ■ Article 299-2 (Certification of Contribution in Kind, etc.) With respect to the matters set forth in subparagraphs 1 and 4 of Article 290 the investigation and reporting by a notary public may substitute for the investigation of the inspector mentioned in Article 299 (1) and with respect to the matters set forth in subparagraphs 2 and 3 of Article 290 and the performance of contribution in kind pursuant to Article 295, the appraisal by a certified appraiser may substitute for the investigation of the inspector mentioned in Article 299 (1). In this case, the notary public or appraiser shall report on the results of the investigation or appraisal to the court. ■ Article 300 (Disposition of Alteration by Court) (1) If the court has found any of the matters falling under Article 290 to be improper after examining the investigation reports by an inspector or notary public or the results of appraisal by an appraiser and an explanatory note by the promoters, it may alter such matters and notify each promoter thereof. (2) A promoter who disagrees to an alteration under paragraph (1) may revoke the subscription of his shares. In this case, the procedures for the incorporation may be continued by amending the articles of incorporation. (3) If no promoter revokes the subscription of his shares within two weeks after receiving the notification from the court, the articles of incorporation shall be deemed to have been amended in accordance with the notification. ■ Article 301 (Offer of Shares in Case of Subscriptive Incorporation) Where the promoters do not subscribe for all the shares issued at the time of incorporation, they shall offer shares for subscription. ■ Article 302 (Offer of Share Subscription and Particulars to Be Entered in Subscription Form) (1) A person who intends to subscribe for shares shall complete two copies of subscription form, in which the class and number of shares for which he is to subscribe and his address are stated, and shall write his name and affix his seal or shall sign thereon. (2) The promoters shall prepare the subscription form, in which the following particulars shall be stated: 1. Date on which the articles of incorporation were authenticated, and the name of the notary public; 2. Matters set forth in Articles 289 (1) and 290; 3. Duration or reasons for dissolution of the company, if determined; 4. Class and number of shares subscribed by promoters; 5. Matters set forth in Article 291; 5-2. A provision that transfer of shares shall be subject to the approval of the board of directors, if so determined; 6. Distribution of interest prior to the commencement of business, if determined; 7. Redemption of shares out of profits to be distributed to shareholders, if determined; 8. A statement to the effect that the subscription of shares may be cancelled if the inaugural general meeting is not closed by a fixed date; 9. Bank and any other financial institution in charge of the payment of the subscription price and the place of payment; and 10. Name, address and business office of a transfer agent, if any. (3) The proviso of Article 107 (1) of the Civil Act shall not apply to the offer of share subscription. ■ Article 303 (Duties of Subscribers) A person who has subscribed for shares shall be responsible for the payment of the subscription price in accordance with the number of shares allotted to him by the promoters. ■ Article 304 (Notice or Peremptory Notice to Subscribers, etc.) (1) Any notice or peremptory notice to a person who has subscribed for shares or who has applied for subscription for shares may be delivered to his address stated in the certificate of the share subscription or the subscription form for shares or to the address notified to the company by such person. (2) The notice or peremptory notice under paragraph (1) shall be deemed to have delivered at the time when it would normally have arrived. ■ Article 305 (Payment of Subscription Price for Shares) (1) When all the shares to be issued at the time of incorporation have been subscribed for, the promoters shall without delay have the subscription price be fully paid by the subscribers. (2) The payment under paragraph (1) shall be made at the place as prescribed in the subscription form for shares. (3) Article 295 (2) shall apply mutatis mutandis to the cases under paragraph (1). ■ Article 306 (Change of Depository, etc. of Payment) A change of the depository at which the subscription price shall be kept and of the place of payment shall be subject to approval of the court. ■ Article 307 (Procedures for Forfeiture of Subscriber's Rights) (1) In case where a person who has subscribed for shares fails to make the payment in accordance with Article 305, the promoters shall fix a certain date and shall, before two weeks prior to such date, give such person a notice to the effect that such person's right shall be forfeited if he fails to make the payment by such date. (2) If the person who has received the notice under paragraph (1) fails to perform the payment by such date, his rights shall be forfeited. In this case, the promoters may again offer such shares for subscription. (3) Paragraphs (2) and (3) shall not affect any claim for damages against the person concerned who has subscribed for shares. ■ Article 308 (Inaugural General Meeting) (1) In case where the payment pursuant to Article 305 and the performance of the contribution in kind have been completed, the promoters shall without delay convene an inaugural general meeting. (2) Articles 363 (1) and (2), 364, 368 (3) and (4), 368-2, 369 (1), 371 (2), 372, 373, 376 through 381 and 435 shall apply mutatis mutandis to the inaugural general meeting. ■ Article 309 (Resolutions at Inaugural General Meeting) At the inaugural general meeting, resolutions shall be adopted by affirmative votes of at least two-thirds of the total votes of attending subscribers and also by affirmative votes representing a majority of the total number of shares which have been subscribed.