2. The costs of lawsuit shall be borne by the defendant.

[The purport of each of the entries and arguments in A1-1, A1-2, A1-3, A3, A4, A1-1, B 1-2, B 1-3, and B 1-3]

A. As of March 25, 1997, the Korea Stock Exchange (hereinafter “Korea Stock Exchange”) held a board of directors on March 25, 1997 and decided to issue 10 billion won of bonds with warrants of 5 billion won per 500 million won per right to transfer only the preemptive right pursuant to Article 516-2(2)4 of the Commercial Act. On March 26, 1997, the Korea Stock Exchange issued 10 copies of warrant certificates (hereinafter “instant warrant certificates”) along with bonds (bonds) in accordance with Article 516-5(1) of the Commercial Act. As to one of the above warrant certificates, the right to claim issuance of 243,902 shares of Korea Stock Exchange was granted.

B. On March 26, 1997, 1.5 billion won (in 3 copies of private bonds) is multiple files, and 1.0 billion won (in 2 copies of private bonds) is each acquired by twitning Korea Co., Ltd., and one billion won (in 3 copies of private bonds), respectively.

C. On March 31, 1997, multiple files Co., Ltd. transferred each of the preemptive rights conferred on each of the warrant certificates of this case to Plaintiff 1 and Plaintiff 3 according to the above warrant certificates of this case, each of which was held by them, at KRW 25 million, and on March 31, 1997, Ba bargaining Korea Co., Ltd. transferred to Plaintiff 2 the preemptive rights conferred on each of the warrant certificates of this case to KRW 25 million.

D. After that, on June 15, 1999, Plaintiff 1 transferred to the Nonparty the preemptive rights conferred on the warrant certificates of this case in KRW 1,175,241,800, and Plaintiff 3 transferred the preemptive rights conferred on the warrant certificates of this case in KRW 2,082,293,00 on September 29, 199. Plaintiff 2 transferred the preemptive rights conferred on the warrant certificates of this case in KRW 1,539,021,620, to the Nonparty on May 11, 1999. At the time of each transfer, the Plaintiffs owned more than 5/100 of the shares issued by Korea, and the ratio of the shares issued by Korea in relation to Korea’s shares was more than 10/100.

E. After that, the defendant, on May 1, 200, issued each of the dispositions of this case where he decided and notified the transfer income tax stated in the order to the plaintiffs on December 31, 2004 under Article 94 subparagraph 3 of the former Income Tax Act (amended by Act No. 6292 of Dec. 29, 200, hereinafter the same) and Article 157 (4) of the former Enforcement Decree of Income Tax Act (amended by Presidential Decree No. 16664 of Dec. 31, 199, hereinafter the same).

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

(1) Article 94 subparagraph 3 of the former Income Tax Act and Article 157 (4) of the former Enforcement Decree of the Income Tax Act, which was enforced at the time of each transfer of the preemptive right of this case, have not been included in the preemptive right to transfer income. In full view of the fact that the Income Tax Act adopts the so-called principle of taxation on transfer income, and that the interpretation of tax laws and regulations should be interpreted in accordance with the law, barring any special circumstances, and it is not allowed to expand or analogically interpret without reasonable grounds, the disposition of this case is unlawful since the income from the transfer of the warrant certificates, which are securities separate from the stocks, is not included in the subject of taxation, as long as the income from the transfer of the warrant certificates, is not included in the subject of taxation under Article 94 subparagraph 3 of the former Income Tax Act and Article 157 (4) of the former Enforcement Decree of the Income Tax Act, and thus, the defendant's disposition of this case is unlawful. In addition, since the warrant certificates of this case are not listed at the Korea Stock Exchange at the time of this case.

Article 157 (4) of the former Enforcement Decree of the Income Tax Act, amended by Presidential Decree No. 1664 of December 31, 1999 and enforced from January 1, 200, included a provision that includes preemptive rights to the stocks listed on the Korea Stock Exchange which is subject to capital gains. It is not a creation of the nature of the above revised provision in domestic affairs, but a confirmation is made. Thus, the preemptive rights mentioned here do not mean the warrant certificates issued while issuing bonds with warrant, such as the warrant certificates of this case, but rather, the preemptive rights mentioned above refer to the preemptive rights issued when issuing bonds with warrant, such as the warrant certificates of this case, which are ordinarily accompanied by the issuance procedure of new stocks, and are issued pursuant to Article 420-2 of the Commercial Act and the economic substance of which are similar to the stocks

Article 157 (4) of the former Enforcement Decree of the Income Tax Act, which was amended on December 31, 1999 and enforced on January 1, 200, includes not only certificates of preemptive rights but also certificates of preemptive rights, thereby imposing tax on the transfer margin from the transfer of the warrant certificates of this case, which was made in 199, constitutes a retroactive taxation.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

In light of the principle of no taxation without law, the requirements for taxation, non-taxation, or tax exemption, and the interpretation of tax laws shall be interpreted in accordance with the text of the law, barring any special circumstance, and it shall not be extensively interpreted or analogically interpreted without reasonable grounds (see Supreme Court Decision 92Nu18603, Feb. 22, 1994, etc.). The Income Tax Act stipulates that all income provided for in this Act shall be imposed on a resident (see Supreme Court Decision 92Nu18603, Feb. 22, 1994, etc.). In addition, the Income Tax Act confirms the principle of no taxation without law by stipulating that the scope of income subject to taxation shall be set by the Act, and the income shall be classified as the type of income subject to taxation, and the so-called listed method shall be excluded from the income subject to taxation under the Income

However, as seen in the above related Acts and subordinate statutes, Article 94 subparagraph 3 of the former Income Tax Act and Article 157 (4) of the former Enforcement Decree of the Income Tax Act, which was enforced at the time of each transfer of the preemptive right of this case, stipulate only the income accruing from the transfer of stocks or equity shares listed on the Korea Stock Exchange (hereinafter “stocks, etc.”) which meet certain requirements, and do not have any provision regarding the preemptive right, and only when the Enforcement Decree of the Income Tax Act was amended by Presidential Decree No. 16664 on December 31, 199, Article 157 (4) includes income from the transfer of the preemptive right of stocks, etc. listed on the Korea Stock Exchange, which is subject to capital gains tax. It is examined whether each transfer of the preemptive right of this case can be seen as including the preemptive right of stocks, etc. as stipulated in Article 94 (3) of the former Income Tax Act and Article 157 (4) of the former Enforcement Decree of the Income Tax Act.

Article 416 of the Commercial Act provides, “If a company issues shares after its establishment, the board of directors shall determine the following matters unless otherwise provided for in the articles of incorporation.” subparagraph 5 provides, “The preemptive rights of shareholders shall be issued only upon the request of shareholders” in subparagraph 6, and Article 418(1) provides, “The shareholders shall have the right to receive allotment of new shares in proportion to the number of shares they hold,” and Article 420-2(1) provides, “in the event that the company has prescribed matters prescribed in subparagraph 5 of Article 416, the company shall issue preemptive rights to new shares in accordance with the provisions of Article 419(1) of the Securities and Exchange Act; Article 416 of the same Act provides, “in the event that the company has issued new shares after its establishment, the company shall issue preemptive rights to new shares in accordance with the provisions of Article 419(1) of the same Act; Article 420-3(1) provides, “The company shall issue preemptive rights to new shares in accordance with the provisions of Article 4216 of the same Act.”

As seen in the above provisions, as a matter of principle, the preemptive right of a shareholder in the ordinary procedure for the issuance of new shares refers to the right to receive a preferential allotment of new shares in proportion to the number of shares held by the shareholder, which can be transferred independently from the shareholders' rights. The preemptive right to bonds with warrants is not a right granted on the basis of shareholders' rights since a company issued new shares and granted the right to acquire shares. A person holding each of the above preemptive right is not a right granted on the basis of shareholders' rights. A person acquiring the above preemptive right is qualified as a shareholder only after payment of the subscription price or issue price of the new shares. The holding of such preemptive right is prohibited from exercising any right as a shareholder against the company. In full view of the fact that the nature of the preemptive right is different from each other, it is difficult to view that the securities market is equal to that of the shares representing the rights as a financial shareholder. Accordingly, the Defendant’s disposition is unlawful even if it is included in the “stocks” prescribed in Article 94 subparag. 3 of the former Income Tax Act and Article 157(4) of the former Enforcement Decree.

3. Conclusion

Therefore, the plaintiffs' claims of this case are with merit, and each of them is accepted, and it is so decided as per Disposition.

Judges Clerks (Presiding Judge)