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[Main Issues and Holdings]
In a case where Company A, which operates a non-ferrous metal refining business, stipulated in its articles of incorporation that third-party allotment of new shares is permissible in cases including “when the company issues new shares to a foreign joint venture due to business necessity,” and where Company A issued new shares through a third-party allotment to Company B, a foreign corporation established under Delaware law, Company C, the largest shareholder of Company A that was engaged in a management dispute with Company A’s management, sought the invalidation of the new share issuance on the grounds that the “business necessity” required under the Commercial Act and the articles of incorporation for the third-party allotment was not established, and that Company B did not qualify as a “foreign joint venture” as defined in the articles of incorporation for such a third-party allotment, the Court held that, while the new share issuance was recognized as being based on Company A’s “business necessity” in light of the circumstances, Company B could not be deemed a “foreign joint venture” as defined in Company A’s articles of incorporation as it was not a joint venture in which Company A participated as an investor, so the new share issuance was invalid as it materially violated the articles of incorporation and infringed upon existing shareholders’ subscription rights
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