[Defendant-Appellee] K&C Co., Ltd. (Law Firm Sejongyang, Attorney Yoon Jae-hun, Counsel for defendant-appellee)

Samsan Development Co., Ltd. (Law Firm Han River, Attorney Dok-sub, Counsel for the defendant-appellant)

Concom System, Inc.

November 16, 2011

Suwon District Court Decision 2009Gohap541 Decided May 27, 2011

1. The defendant's appeal and the defendant's independent party's claim added in the trial are dismissed, respectively.

2. The costs of appeal between the plaintiff and the defendant shall be borne by the defendant, while the costs of appeal between the plaintiff and the defendant shall be borne by the independent party intervenor.

[Claim]

1. Main elements;

The defendant shall pay to the plaintiff 623,276,00 won with 20% interest per annum from the day following the delivery of a copy of the claim of this case and the application for modification of cause thereof to the day of complete payment.

2. Intervention by an independent party;

The plaintiff and the defendant confirm that their share certificates on the shares listed in the attached list are against an independent party intervenor (hereinafter referred to as the "participating"), (the intervenor has participated in the trial before the trial).

【Purpose of Appeal】

The part of the judgment of the court of first instance against the defendant shall be revoked. The plaintiff's claim corresponding thereto shall be dismissed.

1. Quotation of judgment of the first instance;

The reasoning for this Court’s reasoning is as follows: (a) the pertinent part of the judgment of the first instance is the same as that of the judgment of the court of first instance, except for an additional determination of the parties’ assertion; and (b) thus, (c)

2. Determination on the main claim

A. The plaintiff's assertion

The Plaintiff: (a) received the instant shares from a good mutual savings bank in accordance with a decision to transfer a contract; (b) the Defendant refused to approve the transfer of a security for the instant shares between the Nonparty and a good mutual savings bank; and (c) concluded a sales contract between the Plaintiff and the Defendant by exercising the appraisal right of the instant shares against the Defendant; (b) accordingly, the Defendant asserts that the court is obliged to pay to the Plaintiff the Plaintiff the purchase price of the instant shares (=3,116,380 won per share x 200 shares) and damages for delay.

B. Determination

(1) The defendant's obligation to pay the purchase price of shares

In light of the purport of the provisions of Articles 35-7, 335-2(2) through (4), 335-6, and 374-2(2) through (5) of the Commercial Act that regulate the transfer of shares by the transferee of shares in cases where approval by the board of directors is required for the transfer of shares, the above appraisal right of the transferee of shares is established regardless of whether the company approves by exercising the right to form shares (see Supreme Court Decision 2010Da94953, Apr. 28, 201).

On July 6, 2005, the non-party offered shares of this case as a security for transfer to a good mutual savings bank without the approval of the board of directors of the defendant on July 6, 2005. The plaintiff succeeded to the legal status of a good mutual savings bank in accordance with the procedure of public notice made on the same day as the decision on the transfer of contracts by the Financial Supervisory Commission on March 16, 2007 and received the shares of this case as a security for transfer. In addition, the plaintiff exercised the right to purchase the shares of this case against the defendant around September 9, 2009 by exercising the right to purchase the shares of this case against the defendant on the ground of the defendant's refusal to approve the transfer of a security for transfer, and the court decided the purchase price of shares since the plaintiff and the defendant did not reach an agreement on purchase price of shares, the defendant is obligated to pay the plaintiff the purchase price of the shares of this case (= 623,276,000 won per share 13,16 x 2300 won).

(2) Determination on the assertion by the Defendant and the Intervenor

(A) The Plaintiff’s assertion that it did not meet the requirements as a mortgagee

The Intervenor asserts to the effect that the Plaintiff did not satisfy the requisite for setting up against the Defendant, a company issuing the instant share certificates, such as the Plaintiff’s acquisition of the instant shares as a transfer of a security right, without obtaining the approval of the Defendant’s board of directors, etc., and that the Defendant did not notify the Defendant of the acquisition of the transfer security right. As such, the Intervenor’s gross negligence was attributable to the process of acquiring the instant shares, such as not notifying the Defendant of the acquisition of the transfer security right, etc.

In light of the above, the transfer of a registered share certificate takes effect by an agreement between the parties and the delivery of share certificate, and the transfer of ownership takes effect as a shareholder. If the transferee fails to obtain approval from the board of directors even though the articles of incorporation stipulate that the transfer of the share certificate shall be approved by the board of directors, the transfer of the share certificate shall take effect between the parties, but the transferee shall not claim the transfer of the share certificate. In addition, the transferee may request the company to approve the transfer of the registered share certificate (Article 335-2 of the Commercial Act), the board of directors may request the company to approve the transfer (Article 335-7 of the Commercial Act), and the company may request the purchase of the share certificate against the company (Articles 335-6 and 336 of the Commercial Act). Even if the Plaintiff failed to obtain the transfer of the share certificate or the board of directors from the Defendant, the Plaintiff cannot freely obtain the transfer of the share certificate in accordance with the decision to transfer the shares, and thus, the Plaintiff cannot accept the Plaintiff’s request to acquire the transfer of the shares in question.

(B) The argument that the Intervenor lawfully succeeded to and acquired the shares of this case

The Defendant and the Intervenor asserted to the effect that the Intervenor lawfully succeeded to and acquired the shares of this case by obtaining the approval of the Defendant’s board of directors regarding the transfer of shares after the transfer of the shares of this case from the Nonparty, and that even if the nullification judgment was revoked, the validity of the new shares re-issued does not immediately become invalid, and even if the revocation of the nullification judgment is retroactively effective, the Plaintiff cannot set up against a bona fide third party, and thus, the Plaintiff cannot exercise its appraisal right with respect to the shares of this case.

On the other hand, if a shareholder loses stock certificates, he cannot request the company to re-issuance of stock certificates unless he obtains the nullification judgment by the procedure of the public summons (see Supreme Court Decision 81Da141, Sept. 8, 1981). Since the cancellation of the nullification judgment is retroactively effective, the stock certificates which are re-issued upon the nullification judgment shall become null and void, and the transferee of his status from the acquisitor of the nullification judgment shall not be protected as the cancellation of the nullification judgment. Accordingly, the validity of the nullification judgment of this case shall retroactively become null and void as it becomes final and conclusive around January 12, 2008, and the validity of the stock certificates of this case shall become null and void as well as that of the re-issued stock certificates under the nullification judgment of this case, even if the intervenor acquired the re-issued stock certificates, it cannot be lawfully succeeded and acquired. Accordingly, the defendant and the intervenor's above assertion are without merit.

(C) The argument that the intervenor acquired the re-issued share certificates in good faith

The Defendant and the Intervenor asserted to the effect that the Intervenor is unable to exercise the appraisal right of this case on the grounds that the Intervenor acquired the share certificates re-issued by acquiring the share certificates re-issued based on the judgment of nullification of this case in good faith and without fault, without knowing the fact that the Nonparty entered into a security transfer contract for the instant shares with a good mutual savings bank.

However, the issuance of share certificates under Article 355 of the Commercial Act refers to the preparation and delivery of a document in the form prescribed in Article 356 of the same Act to the shareholders, and only when the document is delivered to the shareholders (see Supreme Court Decision 9Da67529, Mar. 23, 2000). Thus, even if the company prepared a document representing shareholders' rights and delivered it to a third party who is not the shareholders, the above document has no validity as a share certificate, and the third party can not acquire the share certificates in good faith (see Supreme Court Decision 76Da2755, Apr. 12, 197, etc.). Accordingly, according to the above evidence, the defendant's issuance of share certificates on June 26, 2007, upon the non-party's request for re-issuance of share certificates based on the judgment of nullification of this case, and it does not occur even if the non-party's re-issuance of share certificates was not made to the intervenors.

Even if the defendant delivered the re-issued share certificates to the non-party and then delivered the re-issued share certificates to the defendant compact system, the share certificates should be effective in order to recognize the bona fide acquisition of share certificates. If a lawsuit of objection against a judgment of nullification is filed and the judgment revoking the judgment becomes final and conclusive, the judgment becomes retroactively null and void, and thus the validity of the share certificates invalidated by the judgment of nullification becomes null and void. On the other hand, the share certificates re-issued by the judgment of nullification become null and void as they are illegally issued double, and thus, even if the intervenor acquired the share certificates re-issued by the defendant, they cannot be acquired in good faith.

Therefore, the above assertion by the defendant and the intervenor cannot be accepted.

(D) The Intervenor’s assertion that the Plaintiff cannot exercise the appraisal right on the ground that the Intervenor is in priority as a shareholder with respect to the instant shares.

The defendant and the intervenor generally protect the status of the bona fide acquisitor even though there is a conflict between the theory of priority and the theory of priority of the bona fide acquisitor with respect to the status of the person who acquired the share certificates prior to the nullification judgment. The plaintiff is merely a secured party to whom the status of the mortgagee with respect to the shares of this case was transferred from the good mutual savings bank, which is an insolvent financial institution. On the other hand, the plaintiff purchased the shares of this case from the non-party before the transfer of the status as the holder of the share certificates pursuant to the decision of transfer and the validity of the public notice, and acquired the status as the purchaser of the shares of this case from the non-party before the transfer of the status as the holder of the share certificates of this case, and constitutes an interested party under Article 14-2 (3) through (5) of the Act on the Structural Improvement of the Financial Industry (hereinafter the "Financial Industry Act"), and thus

On the other hand, the above argument by the defendant and the intervenor can only be established under the premise that the intervenor succeeded to or acquired the right to the share certificates of this case or bona fide acquired the re-issued share certificates of this case. The intervenor acquired the shares of this case from the non-party before the judgment of nullification but acquired the shares re-issued after the judgment of nullification, and the re-issued share certificates become null and void as the judgment cancellation was rendered on January 12, 2008 and became final and conclusive around that time. Thus, the above argument by the defendant and the intervenor is without merit.

In addition, an interested party as stipulated in Article 14-2 (3) through (5) of the Financial Industry Act means a person who has a new interest in the stock certificates and stocks on the premise that re-issued stock certificates are valid, and does not include a person who has a interest in the stock certificates based on invalid stock certificates. Even if the intervenor succeeded to or acquired the right to the stock certificates of this case, such as the defendant and the intervenor's assertion, the plaintiff acquired the right to transfer the stock certificates of this case as of July 6, 2005 by being succeeded to the right of a good mutual savings bank, which is the previous creditor, through a decision to transfer a contract, and the intervenor acquired the right to transfer the stock of this case as of November 4, 2006, but since the intervenor acquired the stock certificates of this case on June 26, 2007, it is merely a person who acquired the stock certificates again issued on June 26, 2007.

Therefore, the above assertion by the defendant and the intervenor cannot be accepted.

(e) Preliminary claim on the computation of purchase price of shares

The defendant asserts to the effect that even if appraisal right is admitted to the plaintiff, since the defendant and the non-party agreed to allow the purchase of the shares of this case only within the limit of KRW 400 million, the purchase price of shares shall be set within the limit of KRW 400 million, and that the purchase price of shares determined by the court is excessive

According to the evidence No. 3-1, the defendant and the non-party agreed that the limit of KRW 400 million, the issue price of the shares of this case, may be claimed. However, the above agreement between the defendant and the non-party is not a party to the agreement, but merely a security interest in the transfer of the shares of this case, and the court's decision on the purchase price of shares can only be asserted as an immediate appeal pursuant to Articles 86-2 (3) and 86 (4) of the Non-Contentious Case Litigation Procedure Act. Although the court's district court decided the purchase price of shares of this case as KRW 3,116,380 per share in the case of applying for the above decision on the purchase price of shares, the above decision became final and conclusive around that time because the defendant did not raise an immediate appeal. Thus, the defendant's above argument cannot be asserted against the court's decision on the purchase price of shares of this case.

C. Sub-committee

Therefore, the Defendant is obligated to pay the Plaintiff KRW 623,276,00 for the purchase price of the instant shares (the Plaintiff claimed damages for delay in payment of KRW 623,276,00 for the purchase price. However, upon the conclusion of the sales contract for the instant shares, the Plaintiff’s obligation to deliver the instant share certificates and the Defendant’s obligation to pay the purchase price are in a simultaneous performance relationship. However, there is no evidence to prove that the Plaintiff performed the obligation to deliver the instant share certificates against the Defendant or offered performance, and thus, the Plaintiff’s obligation to pay the purchase price is not in a state of delay of performance. Therefore, the Plaintiff’s

3. Judgment on the Intervenor’s claim

A. Intervenor’s assertion

The intervenor asserts that the intervenor legally succeeded to and acquired the shares of this case by taking over the shares of this case from the non-party and obtaining the approval of the board of directors of the defendant with respect to the transfer of shares, and by acquiring the shares re-issued based on the judgment of this case. Even if not, the intervenor acquired the shares of this case by acquiring the re-issued share certificates before the cancellation of the judgment of nullification, so the plaintiff and the defendant have the obligation to confirm that the

B. Determination

As seen earlier, the Intervenor did not acquire the shares of this case by succession or by re-issuance of the shares of this case in good faith. Therefore, the Intervenor’s above assertion on the premise of inconsistency is without merit.

4. Conclusion

Therefore, the plaintiff's claim against the defendant is justified within the above scope of recognition, and the remaining claims are dismissed as it is without merit. Since the part against the defendant in the judgment of the court of first instance is just in conclusion, the defendant's appeal is dismissed, and the plaintiff's claim added in the trial of the court of first instance is dismissed as it is without merit.

[Attachment]

Judges Park Jong-nam (Presiding Judge)