'Bylaws, Not Civil Act, Set Quorum for Amending Incorporated Association's Articles'

2024.07.06. The Fair Economy — An administrative appeal ruling has found it unlawful and unjust for authorities to deny approval for an incorporated association's amendment to its articles of incorporation on the grounds that it failed to meet the Civil Act's voting quorum, even though the association's own articles set out a quorum for such amendments.

The Central Administrative Appeals Commission under the Anti-Corruption and Civil Rights Commission said on the 4th that it revoked a local government's decision to return the application of incorporated association A to amend its articles, citing failure to meet the requirements under the Civil Act.

To amend its articles, an incorporated association must hold a general meeting resolution and obtain approval from the competent authority. Accordingly, A held a general meeting and resolved to approve the amendment by majority vote, with about 600 of its roughly 800 members attending and about 390 voting in favor.

Association A then applied to the local government, the competent authority, for approval of the amendment, attaching the minutes of the general meeting. However, the local government rejected the application, citing Article 42 of the Civil Act, on the grounds that only about 390 members had voted in favor, which it said fell short of the required voting quorum.

Article 42 of the Civil Act provides that the articles of an incorporated association may be amended only with the consent of at least two-thirds of all members, but its proviso states that if the articles contain a different provision on the quorum, that provision shall apply instead.

The Central Administrative Appeals Commission noted that under Article 17 of Association A's articles, "matters concerning amendment of the articles" are listed among the items the general meeting is to deliberate and resolve, and that Article 19 sets the general meeting's voting quorum as "attendance by a majority of the general meeting's members and approval by a majority of those present." The commission determined that this amounted to a quorum provision for amending the articles set out in the association's own articles, and that it therefore fell under the proviso to Article 42 of the Civil Act.

The commission noted that while amending articles is generally an important decision that modifies an organization's fundamental rules, the fact that the articles do not set a special quorum for amendments but instead apply the general meeting's ordinary quorum does not mean no quorum was established. It held that the quorum can be weighted or relaxed differently from the Civil Act's requirement, based on the autonomous will of the association's members.

Park Jong-min, chair of the Central Administrative Appeals Commission, said, "This ruling is significant as it establishes a standard for interpreting quorum requirements for amending the articles of incorporated associations, with few comparable precedents."