Edited by Hwa-Jin Kim
Chapter 3: New Squeeze-out Devices as a Part of Corporate Law Reform in Korea
3. New squeeze-out devices as a part of corporate law reform in Korea* Hyeok-Joon Rho INTRODUCTION I. When the incorporated entity first emerged, the operation of the corporation was based on mutual agreement among its shareholders.1 Because the charter was viewed as a contract among shareholders,2 the management of the corporation was subject to consensus among its shareholders.3 Thus, the nineteenth-century corporate law effectively allowed all shareholders a veto right whenever their corporation wanted to amend its charter or to adopt fundamental changes in its operation.4 A veto right, however, turned out to be an easy tool for minority shareholders to use to block a * This chapter is based upon an article by this author published in the Boston University International Law Journal (29 B.U. Int’l L. J. 41, 2011). For more domestic squeeze-out issues in Korea, including the detailed method of appraisal, readers may refer to the author’s other paper in Korean: Hyeok-Joon Rho, Sosoo-Jooju-Chuckchul-Jedoeu-Doipae-Kwanhan-Yeongoo [Imminent Adoption of Squeeze-out Devices in Korea: What Should be Considered for Balancing Majorities and Minorities?], 26 Com. L. Rev. 231-71 (2008). 1 In other words, shareholders in a corporation would stipulate to their rights and obligations, the governance of the corporation, and other material terms on management in the corporate charter and then operate the corporation pursuant to that charter. 2 See Elliott J. Weiss, The Law of Take Out Mergers: A Historical Perspective, 56 N.Y.U. L. Rev. 624, 627 (1981) (“The basis for this rule was the view that the charter...
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