JaAn Bio Violates Board Procedures... Temporary Shareholders' Meeting Prohibited

[Asia Economy Reporter Kwangho Lee] The court has issued a provisional injunction prohibiting the holding of the extraordinary general meeting of shareholders of the KOSDAQ-listed company JaAn Bio, which was scheduled for the 13th of last month. Despite attempts to expand its business, the company has been unable to escape the crisis due to successive adverse events.

According to the industry on the 13th, the 10th Civil Division of the Ansan Branch of Suwon District Court decided on the 12th of last month to prohibit JaAn Bio from holding the extraordinary general meeting of shareholders that was scheduled to be held at the company's headquarters at 10 a.m. on the 13th of last month.

According to the court, "Article 24 of JaAn Bio's Articles of Incorporation stipulates that 'the convocation of the general meeting of shareholders shall be convened by the representative director upon resolution of the board of directors, except as otherwise provided by law.' In case the representative director is unable to perform duties, Article 38 of the Articles of Incorporation shall apply accordingly," and explained, "JaAn Bio's existing inside and outside directors intend to dismiss the current representative director by resolution of the board and hold the shareholders' meeting through an executive officer."

It further stated, "However, it is difficult to recognize the validity of that board resolution, and even if the board resolution is lawful, according to Article 24 of JaAn Bio's Articles of Incorporation, when the representative director is unable to perform duties, a director must act on behalf of the representative director. Therefore, the convocation of the shareholders' meeting must also be done by a director. The notice of convocation made by a person who is not a director is thus improper."

Additionally, "If the extraordinary general meeting is held, it could cause considerable confusion regarding its validity. Even if the holding of this extraordinary general meeting is prohibited, JaAn Bio can hold another shareholders' meeting by following the proper procedures stipulated in the Commercial Act and the company's Articles of Incorporation. There is also no evidence that the agenda items of this shareholders' meeting require urgent handling. Considering these factors comprehensively, the necessity of preservation to prohibit the holding of this extraordinary general meeting by provisional injunction is also demonstrated," the court concluded.