에버랜드 전환사채 사건

A Study on the ‘Everland Adjudication’ about the Issuance of Convertible Bonds

The convertible bonds can be converted into stock at the option of the holder. In case the convertible bonds are issued to those who are not shareholders of the company, the articles of incorporation do not provide for the amount of the convertible bonds to be issued, conditions of conversion and contents of shares to issued on conversion. This paper reviews the ‘Everland Adjudication’ about the issuance of convertible bonds. The Korean Supreme Court held that the defendant, corporate directors had not breached their criminal fiduciary duties. This paper deals with the several legal issues in relation to directors’ duties related to the convertible bonds. The first question is whether corporate directors have the duty to issue the convertible bonds at a fair market price. There is no legal obligation to issue the convertible bonds at a fair price. But the Korean Supreme Court has decided the convertible bonds be issued at a fair price except the issuance to the existing shareholders. However, the author believes that the Korean Supreme Court made a wrong decision and thinks that it is right that whoever the convertible bonds be issued to, the price of the convertible bonds should be over the face value of a stock. Second issue is that the directors have the fiduciary duties in dealing with the residual convertible bonds for which the existing shareholders had not subscribed. If the original offering price to the existing shareholders is made at a fair price, the non-subscribed convertible bonds could be issued at the same price to non-shareholders. In contrast, the offering to the existing shareholders is made at a discount, the directors should either raise the price of issuance to non-shareholders, or the existing shareholders preemptive rights be applied to the non-subscribed convertible bonds. Third, the author argues that the corporation and existing shareholders shall not be the loser by the inssuance of the convertible bonds at any price over the face value of a stock. Finally, the author suggests that the current commercial law should be revised.