Whether a final and conclusive judgment without a resolution of a general meeting of shareholders or board of directors is legitimate and effective

Even though a judgment of a general meeting of shareholders or a lawsuit confirming the absence of a resolution by the board of directors or a resolution of the board of directors becomes final and conclusive, if the judgment was filed as if it did not exist due to collusion between the parties, it may not affect the disposition of imposing gift tax.

Donation due to capital increase under Article 39 of the Inheritance Tax and Gift Tax Act

1. All appeals filed by the plaintiffs are dismissed.

2. The plaintiffs are responsible for total costs of the lawsuit after the filing of the appeal.

The judgment of the first instance shall be revoked. Each disposition of KRW 46,196,080 on the Plaintiff’s Seocho-○ who made November 10, 2003 by the Defendant as of November 10, 200, KRW 46,196,080 on the gift tax on the Plaintiff’s Seo-○○, KRW 88,971,850 on the gift tax on the Plaintiff’s Kim○, and KRW 187,347,370 on the gift tax on the Plaintiff’s Kim○, shall be revoked.

1. Details of the disposition;

A. The ○○○○○○○ (hereinafter “○○○”) was established on June 26, 1995 on a computer-related monthly publication and a short-down publication, etc. The Plaintiff Kim○ was the representative director of the Nonparty Company, Plaintiff Seo-○, the wife of the Plaintiff ○○, and the wife of the Plaintiff Seo-○, the Plaintiff Seo-○, the wife of the Plaintiff ○○, and the wife of the Defendant ○○, the shareholder of the Nonparty Company, and the Plaintiff Kim○, the son-○, the son of the Nonparty Company, was the shareholder of the Nonparty Company and the director of the Nonparty Company, and the Kim○ was actually managing the Nonparty Company on behalf of the Kim○

B. At the time of the incorporation of the non-party company, the Plaintiffs and U.S. ○○ held 1,500 shares of 10,000 shares (each 15%) among the total number of shares issued by the non-party company, and the non-party company held 1,00 shares (10%) (1,00 shares) and the non-party company held 50 shares (each 5%).

C. On December 27, 2001, when filing a corporate tax return for the business year of 2001, the non-party company issued 60,000 new shares with capital increase (hereinafter “the capital increase in this case”), and submitted a list of the changes in stock and a list of shareholders to the effect that the plaintiff ○○○, the non-party ○○○, and the 12.50 shares each of 12.50 shares, the plaintiff ○○, the 15,000 shares, the 19,50 shares, and the 500 shares each acquired by the ○○○.

D. The defendant takes over the following shares in excess of the number of shares that the plaintiffs could have been allocated under equal conditions in proportion to the number of shares held by them (each 9,000 shares) shall be deemed to fall under the deemed donation under Article 39(1)(c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003), and thus, 62,492 won calculated by multiplying the assessed value per share by the number of shares acquired by the plaintiffs exceeding 67,492 won, less 5,000 won of the subscribed value per share, and then notified the deemed donation value of new shares as the tax base, and then imposed each gift tax on the plaintiffs on Nov. 10, 2003 as stated in the claim(hereinafter referred to as the "disposition of this case").

Stockholders

The appraised Value per share after the capital increase;

Si Price per each Si (cost)

Shares acquired in excess of the shares (ownership)

Amount of constructive donation (cost)

○ Kim

67,492

5,000

6,000

374,952,000

west ○

67,492

5,000

3,500

218,722,00

○ Kim

67,492

5,000

10,500

656,166,00

west ○

67,492

5,000

3,500

218,722,00

Total

23,500

1,468,562,000

[Ground of Recognition] Facts without dispute, Gap evidence 1-1 to 4, Gap evidence 2, 3, Eul evidence 1 to 4-1, 2, Eul evidence 6 through 10, Eul evidence 1, 12-1 to 3, Eul evidence 13-1 to 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiffs' assertion

On December 17, 2001, the capital increase in this case was actually conducted by Kim○○, who operated the non-party company without the consent of the directors and shareholders, prepared the extraordinary shareholders’ meeting minutes and the minutes of the board of directors, entered them in the corporate register through the most recent payment procedure, and submitted a detailed statement of the change of stocks at the time of reporting the non-party company’s corporate tax in 2001. The ○○○○ District Court 2003Kahap15762 decided April 8, 2004, which was brought against the non-party company by the ○○○○○ District Court 2003Kahap15762, which became final and conclusive around that time.

Therefore, even though the profit from the capital increase in this case is not vested in the plaintiffs and the above provision on deemed donation cannot be applied, the defendant's imposition of this case on the premise that the capital increase in this case is effective, is in violation of the principle of substantial taxation and the principle of basis taxation, and is unlawful.

(2) The defendant's assertion

Although the capital increase in this case was originally effective, the plaintiffs filed a lawsuit as if there was no resolution of the general meeting of shareholders and the resolution of the board of directors in collusion with ○○ in order to avoid tax burden due to the capital increase in this case and received the above judgment. Thus, the above disposition is legitimate.

(b) Related statutes;

○ former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003)

Article 39 Presumption of Donation due to Capital Increase

(1) Where a corporation issues new stocks or equity shares (hereafter in this Article, referred to as "new stocks") for the purpose of increasing its capital (including the amount of investment; hereafter in this Article and Article 39-2, the same shall apply), a person who gains benefits falling under any of the following subparagraphs shall be deemed to have received a donation of the amount equivalent to such benefits:

1. In case where new stocks are issued at a price lower than the market price (referring to the price assessed under Articles 60 and 63; hereafter in this paragraph and Article 40 the same shall apply), the benefits falling under any of the following items:

(c) Profits acquired by a person who is not a stockholder of the relevant corporation by directly obtaining an allocation of new stocks from the relevant corporation (including the case of directly accepting and acquiring the relevant new stocks from an underwriter under the Securities and Exchange Act; hereafter in this paragraph, the same shall apply), or by directly obtaining an allocation of new stocks in excess of the number entitled to be allocated under equal conditions in proportion to the number

(c) Fact of recognition;

(1) At the time of incorporation, the non-party company was 10,000 shares issued in its articles of incorporation, and the non-party company was issued 60,000 shares issued in accordance with the resolution of the temporary general shareholders' meeting and the resolution of the board of directors listed in the separate list on December 17, 201 (hereinafter "resolution of this case"). The remaining shareholders, other than the plaintiffs, among the shareholders of the non-party company, renounced all and part of shares allotted (OO) on December 27, 2001 and accepted them by the plaintiffs.

Accordingly, the status of changes in stocks shall be as listed in the following table:

Stockholders

Original

The capital increase of this case

After the capital increase in this case

Number of Stocks

(%) Equity (%)

Amount (,000 won)

Number of Stocks

Number of Stocks

(%) Equity (%)

○ Kim

1,500

15.00

75,000

15,000

16,500

23.58

west ○

1,500

15.00

62,500

12,500

14,000

20.00

○ Kim

1,500

15.00

97,500

19,500

21,000

30.00

west ○

1,500

15.00

62,500

12,500

14,000

20.00

○○

1,500

15.00

2,500

500

2,000

2.86

○ ○

1,000

10.00

1,000

1.43

○ Kim

500

5.00

500

0.71

○ Kim

500

5.00

500

0.71

Ma-○

500

5.00

500

0.71

Total

10,000

100.00

300,000

60,000

70,000

100.00

(2) On December 28, 2001, with respect to the capital increase of this case, KRW 300 million was fully paid, and on the same day, the total number of shares to be issued by the non-party company was withdrawn on the same day, and on the same day, registration was completed to change the total number of shares to be issued by the non-party company into KRW 1,000,000, total number of shares issued, and total amount of shares to KRW 350 million.

(3) Meanwhile, at the time of the capital increase in this case, the non-party company refunded the existing loan to ○ bank (the non-party company obtained a loan of KRW 300 million from ○ bank on June 29, 2000 with a maturity of KRW 300 million on June 29, 2003, and obtained a loan of KRW 70 million on July 19, 2000 with a maturity of KRW 19,700 on July 19, 200, and received an additional loan of KRW 200 million from ○ bank on September 13, 2002 after the capital increase in this case.

(4) In addition, the non-party company submitted a list of changes in stocks and a list of shareholders that changed from the capital increase in this case, and filed a corporate tax for the business year 2001 and 2002 business year. The non-party company did not submit any supporting materials even though it received from the head of ○○ Tax Office on September 1, 2003 the submission of supporting documents on the change in stocks, etc.

(5) On November 10, 2003, the Defendant: (a) deemed that the Plaintiffs were deemed to have received excess allotment as deemed donation by an influorous person; and (b) accordingly, the ○○○○○, a director and shareholder of the non-party company, filed a lawsuit against the non-party company seeking confirmation of the non-existence of the instant resolution, on November 11, 2003, by ○○○○ District Court 2003Gahap15762, the non-party company did not call or hold a temporary shareholders’ meeting and a board of directors’ meeting on December 17, 2001, inasmuch as the non-party company did not have convened or held the temporary shareholders’ meeting listed in the separate sheet and the minutes of the board of directors’ meeting as of December 17, 2001.

(6) In the process of the above lawsuit, the Plaintiff submitted as evidence a document to the effect that Kim○○ prepared the minutes of the general meeting of shareholders and the minutes of the board of directors in a false manner without regard to the representative director or other shareholders (Evidence No. 10) and did not file a complaint by forging private documents, etc., and the Defendant Nonparty Company appointed an attorney-at-law and responded to the suit, but did not actively perform the lawsuit without submitting only one reply.

(7) Accordingly, the said lawsuit was concluded on the date of the first pleading and rendered a favorable judgment on April 8, 2004. The said judgment became final and conclusive on May 6, 2004, and the total number of shares issued, the total number of outstanding shares, and the total amount of capital to be issued by the non-party company upon a request for the registration of the court on the 15th of the same month was restored to the state of capital increase.

[Reasons for Recognition] The facts without dispute, Gap evidence 4 through 9, Eul evidence 11-1, 2, 3, Eul evidence 5-1 through 6, Eul evidence 6 through 10, Eul evidence 1, 12-1, 2, 3, Eul evidence 13-1, 2, 14, 15, 16, Eul evidence 17-1 through 4, Eul evidence 18, 19, 20, 21-1, 22, Eul evidence 22, Eul evidence 1, 23-1, 23-2, Eul evidence 23-2, Eul evidence 6 through 11, and Eul evidence 12-1, 14, 15, 16, Eul evidence 17-1, 18, 19, 20, Eul evidence of the first instance trial, and the purport of the whole testimony and arguments.

[Evidence Evidence] 10 Evidence No. 10, and increase in part of ○○○ of the witness of the first instance trial

D. Determination

(1) Article 39(1)1(c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003) provides that the reason for taxation of deemed donation occurs due to excess allocation of new shares, and thus, the judgment in favor of the general meeting of shareholders or the lawsuit confirming the absence of a resolution of a resolution of a resolution of a resolution of a board of directors or the resolution of the board of directors regarding the increase of capital becomes final and conclusive after the disposition of imposing gift tax is issued, and thereby the judgment was restored to the state of transfer of capital, if the judgment was filed as if it did not exist even though there was no resolution of a general meeting of shareholders or the resolution of the board of directors, in collusion between the parties, and if the judgment was received as if it did not exist, it does not affect the disposition of imposing gift tax (see, e.g., Supreme Court Decisions 9Du10377, Mar. 2

(2) The following circumstances acknowledged by the above facts are that the capital increase in this case was normally made in appearance, and there was no objection from other shareholders, as well as about two years until the disposition of gift tax in this case is imposed. If ○○○ et al. waives the preemptive right to new shares and allocates the new shares to the Plaintiffs, and there is no reason to alter the stockholding ratio among the shareholders. It is not only the act of benefit to the Plaintiffs, but also the act of allocating the new shares to the Plaintiffs on the ground that ○○ et al. renounced gave up preemptive right to new shares, and there is no reason to avoid this fact. Meanwhile, the above act of ○○○○ is no choice but to avoid this issue by inspection of corporate register, and it is difficult to view that the above act was conducted with respect to the crime of forging documents, etc. by Nonparty 1, ○○○○○○○○○○○, etc., which is a non-party company’s representative director, director, ○○○ and ○○○○, etc., without an explicit resolution of this case.

Therefore, even if the decision of this case related to the increase of the capital of this case was rendered and finalized, it cannot affect the disposition of this case. Thus, the disposition of this case is lawful.

3. Conclusion

Therefore, the plaintiffs' claim of this case shall be dismissed in its entirety due to the lack of its reason. The judgment of the court of first instance with the same conclusion is just and reasonable, and all appeals of the plaintiffs are dismissed. It is so decided as per Disposition.