SCOJ 2007 No.30 - Supreme Court Decision - Findings

Findings

The following were among the Supreme Court's findings:

(1) The principle of shareholder equality, as codified in Article 109-1 of the Company Law, requires that a company treat shareholders fairly based on the type and number of shares they hold. However, if there is a risk that the acquisition of management control by a particular shareholder would harm the company's interests or the common interests of shareholders, discriminatory treatment of said shareholder aimed at preventing such acquisition is not a violation of the principle of shareholder equality unless said treatment is unreasonable.

(2) The question of whether the acquisition of management control by a particular shareholder harms the common interests of shareholders "should be decided by the shareholders themselves, to whom the company's interests ultimately inure, and that decision should be respected unless the general shareholders' meeting was procedurally unfair, the facts upon which the decision was predicated prove to be nonexistent or false, or are there is some other important fault that renders the decision unjustified."

(3) Steel Partners had the opportunity to express its opinion at the general shareholders' meeting, and it was able to receive compensation that approximated the value of the stock warrants. As such, the stock warrants were not unreasonable or contrary to the principle of shareholder equality.

(4) A takeover defense plan (such as a poison pill) need not be laid out by management prior to a takeover attempt in order to be fair.

(5)Stock warrants that discriminate against certain shareholders with the aim of supporting the company's management or retaining control in shareholders who support said management is blatantly unfair. The present case does not meet that description, however.