[Invest&law] Reform of Yuryubun, Business Community Breathes a Sigh of Relief

If 'Contribution to Asset Increase' is Legislated
Owners May Also Be Affected by Lawsuits

After the Constitutional Court's ruling that the statutory provisions on reserved portions under the Civil Act are unconstitutional, business owners who had been closely monitoring the decision seem to be somewhat relieved. This is because none of the companies currently involved in inheritance disputes are directly related to the reserved portion regulations for siblings, which the Constitutional Court declared unconstitutional.

The most prominent reserved portion case currently underway in the courts involves the BYC family. In December 2022, Kim, the spouse of the late former chairman Han Young-dae and mother of Han Seok-beom, chairman of BYC, along with her other children, filed a lawsuit against Chairman Han demanding the return of the reserved portion of inheritance property from the late chairman Han Young-dae. Since this case concerns a reserved portion dispute between the eldest son who inherited the property from the father and the mother and other children, it is largely unrelated to the Constitutional Court's decision.

Chief Justice Lee Jong-seok of the Constitutional Court and the justices are entering the Grand Bench of the Constitutional Court in Jongno-gu, Seoul, on April 25 to deliver a ruling on the constitutional review of Article 1112 of the Civil Act and the forced heirship system, as well as a constitutional complaint.

On that day, the Constitutional Court ruled that the "forced inheritance to siblings" is unconstitutional under the forced heirship system. [Image source=Yonhap News]

In the business community, it is anticipated that Jo Hyun-moon, former vice president of Hyosung and the second son of the late Jo Seok-rae, honorary chairman of Hyosung who passed away last month, may file a reserved portion return claim if he is excluded from the inheritance. This case also involves a reserved portion claim among children regarding their father's property, and thus is distant from the unconstitutional provisions.

However, if new arguments arise concerning the Constitutional Court's ruling of constitutional inconsistency on the legislature's omission (Article 1118) to apply Article 1008-2 of the Civil Act, which pertains to contributions and is applied analogously to reserved portions, the cases could become more complicated. In particular, if legislation is enacted regarding family members who contributed to the increase of property, lawsuits demanding the return of reserved portions among parties claiming such reasons could increase significantly.

During the National Assembly's legislative discussions, if the system is revised concerning gifts for public interest purposes or for business succession purposes, it could emerge as a new issue in management rights disputes led by reserved portion claims.

Legal Times reporters Han Su-hyun and Park Soo-yeon

※This article is based on content supplied by Law Times.

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