How should the articles of incorporation amendment procedure be carried out?

Hello. This is an attorney specializing in corporate matters at Daeryun Law LLC.

Because the articles of incorporation are the company's basic norm and a document like a constitution for organizational operation, the articles of incorporation amendment procedure requires strict conditions.

In principle, an amendment of the articles of incorporation must be made through a special resolution of the shareholders' meeting, and it does not take effect by a resolution of the board of directors alone.

A special resolution usually requires the attendance of a certain ratio or more of the total number of issued shares and the approval of a certain ratio or more of the attending shareholders, so it is important to check the voting rights structure and shareholder composition in advance.

In particular, where minority shareholders exist or interests among shareholders are sharply opposed, the possibility that a procedural defect may lead to a future dispute cannot be ruled out.

The subsequent procedure also varies depending on what the content of the articles of incorporation amendment is.

For example, adding a business purpose, changing the trade name, changing the method of public notice, newly establishing the basis for issuing convertible bonds, and introducing provisions for issuing classified shares are subject to amendment registration, so you must apply for amendment registration with the registry office having jurisdiction over the location of the head office within a certain period after the resolution of the shareholders' meeting.

In addition, if it is an amendment of the articles of incorporation premised on attracting investment, you must not merely add provisions but comprehensively review the consistency with future shareholders' agreements, whether there is a conflict with existing articles of incorporation provisions, and even the effect on the management control structure.

In particular, provisions related to classified shares or convertible bonds can bring about considerable changes to the company's governance structure depending on the details, such as dividends, voting rights, and the method of adjusting the conversion price.

When carrying out the articles of incorporation amendment procedure, it is advisable to organize the purpose and scope of the amendment, check in advance whether the special resolution requirements are met, distinguish whether it is subject to amendment registration, and then also review its linkage with future investment and management structures.

Once the articles of incorporation are amended, they have a continuous effect on the company's overall operation, so it is safe to proceed after checking the legal risks in advance.

Our firm provides corporate-tailored advice, covering not only advice on the overall articles of incorporation amendment procedure but also the design of investment-attraction structures, the design of classified shares, and legal review related to the issuance of convertible bonds.

For the prevention of disputes and the design of a stable structure, we recommend that you receive a prior review.