Hello, this is Attorney Park Jong-han of Cheongchul Law Firm.

In this installment, we examine the legal nature of project implementation plan approval, the quorum required at the general assembly to adopt a project implementation plan, and the special quorum required where the plan has been substantially changed, focusing on the key practical issues.

[Question] What kind of administrative disposition is project implementation plan approval, and what quorum is required at the general assembly that adopts or amends a project implementation plan?

[Answer]

A. Legal Nature of Project Implementation Plan Approval

Under Article 50(1) of the Act on the Improvement of Urban Areas and Residential Environments (the "Urban Improvement Act") (도시정비법 제50조 제1항), the project implementer must submit the project implementation plan together with the articles of association and other required documents to the mayor or county governor and obtain project implementation plan approval. This approval is understood as a beneficial administrative disposition and a discretionary act that confers on the project implementer the authority to carry out the improvement project.

In Supreme Court Decision 2007Du16691 (January 10, 2008), the Court held, regarding the nature of the project implementation plan approval, that "where an association prepares a project implementation plan that differs from the content determined in the reconstruction resolution, such defect is a defect in the underlying act of preparing the project implementation plan, and as long as the administrative agency's approval, which is a supplementary act, satisfies the legal requirements of Article 28 of the Act, the approval itself cannot be said to be defective," thereby adopting the supplementary act theory.

Once the project implementation plan approval is publicly notified, effects such as deemed authorizations and permits (concentration effect), expropriation of land in redevelopment projects, the base date for appraising previous land, and the deemed date of abolition of use of state or public land arise.

B. Quorum for General Assembly Resolutions on the Project Implementation Plan

Article 50(5) of the Urban Improvement Act (도시정비법 제50조 제5항) requires the project implementer to obtain a resolution of the general assembly before applying for project implementation plan approval, and the preparation and amendment of the project implementation plan is a matter subject to general assembly resolution under Article 45(1)(ix) of the Act (도시정비법 제45조 제1항 제9호).

Under Article 45(4) of the Urban Improvement Act (도시정비법 제45조 제4항), a general assembly resolution is adopted with the approval of a majority of the association members, provided that "where the project cost increases by 10/100 or more (excluding the portion attributable to producer price inflation and compensation for losses under Article 73), the resolution must be adopted with the approval of at least two-thirds of the association members" (proviso to the same paragraph).

Furthermore, Article 45(10) of the current Urban Improvement Act (도시정비법 제45조 제10항) requires that, at a general assembly resolving on the preparation or amendment of the project implementation plan, at least 20/100 of the association members attend in person (the direct attendance requirement was strengthened by the amendment of December 3, 2024). Accordingly, when convening a general assembly on the project implementation plan, both the direct attendance requirement and the voting quorum described above must be confirmed.

C. Special Quorum Where the Project Implementation Plan Has Been Substantially Changed

However, it is the established position of the Supreme Court that where the content of the project implementation plan has been substantially changed compared with the original reconstruction resolution, to the extent that it materially affects the interests of the association members, a special quorum of at least two-thirds of the association members, equivalent to that required for amending the articles of association, is required.

In Supreme Court Decision 2011Du3692 (March 27, 2014), the Court held, regarding a resolution approving a project implementation plan, that "where matters concerning 'the association's cost burden' or 'the selection of the contractor and designer and the contents to be included in the contract,' which are mandatory items of a reconstruction association's articles of association and are subject to strict amendment procedures, have been substantially changed compared with the original reconstruction resolution to the extent that they materially affect the interests of the association members, Articles 20(3), 20(1)(viii), and 20(1)(xv) of the former Urban Improvement Act (구 도시정비법 제20조 제3항, 제1항 제8호 및 제15호), which prescribe a supermajority consent requirement to protect the interests of the association members, apply by analogy, and the consent of at least two-thirds of the association members is required."

In the same vein, Supreme Court Decision 2012Du5572 (August 20, 2014) held, with respect to a management and disposition plan resolution, that where "matters concerning the qualification of association members" or "the association's cost burden" have been substantially changed, Articles 20(3), 20(1)(ii), and 20(1)(viii) of the former Urban Improvement Act (구 도시정비법 제20조 제3항, 제1항 제2호 및 제8호) apply by analogy and the consent of at least two-thirds of the association members is required. Supreme Court Decision 2010Du13463 (August 23, 2012) further held that "where the articles of association of a reconstruction association provide that matters concerning 'the association's cost burden' or 'the selection of the contractor and designer and the contents to be included in the contract', which materially affect the interests of the association members, may be passed with consent falling short of the two-thirds quorum even though they substantially change the content of the original reconstruction resolution, such quorum provisions in the articles of association are so markedly unreasonable by social norms that their validity is difficult to recognize."

Therefore, in practice, when preparing a general assembly to amend a project implementation plan, it is essential to review in advance whether the proposed changes constitute a "substantial change" as described above.

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