The earlier case law held that "a shareholders' resolution electing an auditor is merely an internal company decision to make the appointee the company's auditor, so the appointee does not acquire the position of auditor merely because the shareholders' meeting passed a resolution; only when the company's representative offers an appointment contract under the resolution and the appointee accepts does the appointee take office and become able to perform the auditor's duties, so a person who was merely elected by the meeting but has not concluded an appointment contract with the company has not yet acquired the position of auditor." That followed the majority view that, beyond the shareholders' resolution, a separate appointment contract with the CEO is needed to acquire the position.

A company is a legal person formed for commercial or other profit-making purposes, so it has its own legal capacity, but as a social entity it needs organs to make decisions, carry out business and express its decisions outward. In a general partnership, a kind of personal company, each partner in principle has the power to manage and represent the company, and even when managers and representatives are appointed they must be chosen from among the partners, so organs and members coincide. A stock company, however, is a capital company, and apart from the shareholders' meeting made up of the shareholders who invest in and own the company, being an organ of the company does not require being a shareholder. Among the organs of a stock company, the shareholders' meeting is the key body through which shareholders decide the company's will on its basic structure and important management matters. Article 361 of the Commercial Act provides that "the shareholders' meeting may resolve only matters provided for in this Act or the articles of incorporation," and matters that the act assigns to the shareholders' meeting cannot be delegated to another organ or a third party even by the articles or a shareholders' resolution. Articles 382(1) and 409(1) also provide that "directors and auditors shall be elected at the shareholders' meeting." The purpose of these provisions is to reflect the separation of ownership and management in a stock company by giving the shareholders' meeting, the shareholders' only channel for taking part in management, exclusive power to elect directors and auditors.

Nonetheless, recognizing the position of a director or auditor only when a separate appointment contract is concluded with the CEO, regardless of the shareholders' resolution, contradicts the original purpose of the Commercial Act, which makes electing directors and auditors the exclusive power of the shareholders' meeting and a matter of collective decision by the shareholders. And while the CEO represents the company and has authority over all judicial and extrajudicial acts concerning its business, electing directors or auditors clearly does not fall within that authority. The position of director or auditor should therefore be regarded as acquired when there is an election resolution by the shareholders' meeting and the consent of the person elected.

Under the Commercial Act, a director is a member of the board and has the power to take part in decisions on the company's business.

To add: this decision was handed down by the en banc Supreme Court on March 23, 2017, and on the same day the en banc court, in decision 2015Da248342, changed its case law to hold that only shareholders listed on the shareholder register can exercise voting and other shareholder rights against the company. Both decisions reflect a move to handle corporate relationships uniformly as matters of collective organization. In the paper's statement of facts, one date for the shareholders' meeting is given as 2013, but according to the judgment the correct date is December 1, 2014. Directors' terms and pay are set by the articles or a shareholders' resolution (Commercial Act Articles 383 and 388), and once in office their relationship with the company follows the rules on mandate (Article 382(2)).