[1] Where a rehabilitation company constitutes an oligopolistic stockholder of the pertinent corporation based on the date on which the secondary tax liability is established, whether the status as an oligopolistic stockholder at the time of the establishment of the primary tax liability, which serves as the basis for establishing the secondary tax liability, may be succeeded to the newly incorporated company in accordance with the rehabilitation plan (affirmative)

[2] Interpretation of which rights and obligations are succeeded to the newly incorporated company in the division of the company according to the rehabilitation plan

[1] Article 39(1)2(a) of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201); Article 39(1)2(a) of the same Act provides that an oligopolistic shareholder whose total amount of stocks owned exceeds 50/100 of the total number of outstanding stocks of the pertinent corporation and who actually exercises his/her rights thereto shall have secondary tax liability; and whether the oligopolistic shareholder of the relevant corporation, which is the requirement for establishing secondary tax liability, is determined as of the date

Meanwhile, Article 530-10 of the former Commercial Act (amended by Act No. 13523, Dec. 1, 2015) provides that “A company established following a division or a merger after division or a surviving company shall succeed to the rights and obligations of the divided company in accordance with the terms and conditions of the division plan or the written agreement.” Article 272(1) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”) provides that when a debtor, a stock company, is divided under the rehabilitation plan, or the debtor or any part of the debtor, who is a stock company, is to merge with another company or any part of another company, a division or a merger after division may be made pursuant to the rehabilitation plan, and Article 530-10 of the former Commercial Act does not exclude the application of Article 530-10 of the former Commercial Act in such cases. Thus, a newly incorporated company established through the division of a rehabilitation company, according

As can be seen, the rights and obligations of the rehabilitation company newly established pursuant to the rehabilitation plan shall be deemed to include both private and public law relations, except where transfer is not permitted by nature. Furthermore, Article 280 of the Debtor Rehabilitation Act provides that “When a newly established company under the rehabilitation plan determines to succeed to the tax obligations of the rehabilitation company, the newly established company shall be liable to pay the relevant taxes, and the tax obligations of the rehabilitation company shall be extinguished,” and that the rehabilitation company may determine whether to succeed to the tax obligations of the rehabilitation company, unlike the corporate division under the Commercial Act. Meanwhile, interpreting that the rehabilitation plan may determine whether to succeed to the status or legal effect of the newly established company, if it is possible for the rehabilitation company to be established in the near future, such as partial occurrence of taxation requirements, even if tax obligations of the rehabilitation company are not yet established, accords with the purpose and purport of the rehabilitation system. Therefore, it is reasonable to deem that the status of oligopolistic shareholder as at the time of the establishment of the secondary tax liability as at the time when the secondary tax liability becomes the oligopolistic shareholder of the relevant

[2] Whether a certain right and obligation are succeeded to an newly established company is a matter of interpretation of the rehabilitation plan, an objective meaning should be reasonably interpreted according to the language and text of the rehabilitation plan. However, where the objective meaning is not clearly revealed by the language and text of the rehabilitation plan, and there is an issue of controversy over the interpretation and the intent expressed in the rehabilitation plan, it shall be reasonably interpreted in accordance with logical and empirical rules and the ideology of social justice and equity, in full view of the following: (a) the principle of division and the content of the rights and obligations to be succeeded; (b) the existence of the divided company; (c) the administrator who prepared the rehabilitation plan and the rehabilitation creditors who passed the plan; and (d) the reasonable intent of the interested parties, such as the rehabilitation creditors who passed

[1] Article 39(1)2(a) of the former Framework Act on National Taxes (Amended by Act No. 11124, Dec. 31, 201); Article 39(1)2(a) of the former Framework Act on National Taxes (see current Article 39 Subparag. 2); Article 530-10 of the former Commercial Act (Amended by Act No. 13523, Dec. 1, 2015); Article 272(1) and (4), and Article 280 of the Debtor Rehabilitation and Bankruptcy Act / [2] Article 39(1)2(a) of the former Framework Act on National Taxes (Amended by Act No. 11124, Dec. 31, 201); Article 530-10 of the former Commercial Act (Amended by Act No. 13523, Dec. 1, 2015); Article 280(1)2(a) of the Debtor Rehabilitation and Bankruptcy Act (Amended by Act No. 1352323, Dec. 1, 201, 20153)

[1] Supreme Court Decision 79Nu81 delivered on June 12, 1979 (Gong1979Ha, 12017) Supreme Court Decision 85Nu405 delivered on December 10, 1985 (Gong1986Sang, 253)

Treatment Industry Development Co., Ltd. (Attorneys Park Ho-ho et al., Counsel for the plaintiff-appellant)

Head of Seocho Tax Office

Seoul High Court Decision 2015Nu44372 decided May 20, 2016

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 39(1)2(a) of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201); Article 39(1)2(a) of the same Act provides that an oligopolistic shareholder whose total amount of stocks held exceeds 50/100 of the total number of outstanding stocks of the relevant corporation and who actually exercises rights thereto shall have secondary tax liability; and whether the relevant corporation is an oligopolistic shareholder who meets the requirements for establishing secondary tax liability is determined as of the date on which the relevant corporation’s tax liability arises (see Supreme Court Decision 85Nu405, Dec. 10, 1985).

Meanwhile, Article 530-10 of the former Commercial Act (amended by Act No. 13523, Dec. 1, 2015) provides that “A company established following a division or a merger after division or a surviving company shall succeed to the rights and obligations of the divided company in accordance with the terms and conditions of the division plan or the written agreement.” Article 272(1) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”) provides that when a debtor, a stock company, is divided under the rehabilitation plan, or the debtor or any part of the debtor, who is a stock company, is to merge with another company or any part of another company, a division or a merger after division may be made pursuant to the rehabilitation plan, and Article 530-10 of the former Commercial Act does not exclude the application of Article 530-10 of the former Commercial Act in such cases. Thus, a newly incorporated company established through the division of a rehabilitation company, according

As can be seen, the rights and obligations of the rehabilitation company newly established pursuant to the rehabilitation plan shall be deemed to include both private and public law relations, except where transfer is not permitted by nature. Furthermore, Article 280 of the Debtor Rehabilitation Act provides that “When a newly established company under the rehabilitation plan determines to succeed to the tax obligations of the rehabilitation company, the newly established company shall be liable to pay the relevant taxes, and the tax obligations of the rehabilitation company shall be extinguished,” and that the rehabilitation company may determine whether to succeed to the tax obligations of the rehabilitation company, unlike the corporate division under the Commercial Act. Meanwhile, it accords with the purpose and purpose of the rehabilitation system by interpreting that the rehabilitation plan may determine whether to succeed to the status or legal effect of the newly established company, if it is possible for the rehabilitation company to be established in the near future, such as partial occurrence of taxation requirements, even if the tax liability of the rehabilitation company is not yet established. Therefore, it is reasonable to deem that the status of oligopolistic shareholder at the time of the establishment of the secondary tax liability can be succeeded to the newly established company, as prescribed by the rehabilitation plan.

In addition, what rights and obligations are succeeded to a newly established company is an issue of the interpretation of the rehabilitation plan, and the objective meaning should be reasonably interpreted according to the language and text of the rehabilitation plan. However, if the objective meaning is not clearly revealed by the language and text of the rehabilitation plan, and there is an issue of the intention indicated in the rehabilitation plan as to the interpretation, it shall be reasonably interpreted in accordance with logical and empirical rules, and the common sense of society and the common sense of transaction, in full view of the principles of division and succession, the contents of rights and obligations of the divided company, the existence of the divided company, the reasonable intent of interested parties, such as the administrator who prepared the rehabilitation plan and the rehabilitation creditors who passed the plan, and the purpose to achieve through the division, the transaction practices,

2. A. Review of the reasoning of the lower judgment and the evidence duly admitted by the lower court reveals the following facts.

(1) On December 12, 2012, the Defendant: (a) on June 1, 2010, deemed that Songin-do Co., Ltd. (hereinafter “ Songin-do”) actually owned a total of 28 parcels of land among each of the instant lands on June 1, 2010, the assessment basis date of comprehensive real estate holding tax for the year 2010; (b) designated Songin-do as the payment deadline on December 31, 2012 and imposed the comprehensive real estate holding tax and special tax for rural development for the year 2010 (hereinafter “principal tax liability”).

(2) As of June 1, 2010, as of the date of establishing the principal tax liability of SongininkinFV, Daewoo Motor Sales Co., Ltd. (hereinafter “Selim Sales prior to division”) owned 80.46% of the shares issued by Songinkin FV (hereinafter “instant shares”).

(3) Meanwhile, on August 10, 201, prior to the Defendant’s imposition of the above disposition, the sales of the Daewoo Motor was decided to commence rehabilitation procedures pursuant to the Debtor Rehabilitation Act by the Seoul Central District Court 201Mo105, August 10, 201. In the rehabilitation procedures, the rehabilitation plan submitted by the administrator of the Daewoo Motor Sales on December 9, 201 was authorized (hereinafter “instant rehabilitation plan”).

(4) According to the instant rehabilitation plan, the treatment automobile sales were to be divided by the remaining, new, and artificial division. Among the business of the treatment automobile sales, the bus sales division and the construction division were separated and the service division were newly established, and the treatment automobile sales company, a bus sales company, and the Plaintiff, a construction company, respectively. The treatment automobile sales company and the Plaintiff, a newly incorporated company, have been transferred the assets and liabilities of the treatment automobile sales company and the Plaintiff, and the remaining company continued to conduct the treatment automobile sales business by changing the trade name into the treatment automobile development company, and the instant shares, which were assets owned by the treatment automobile sales company related to the construction business division were transferred to the Plaintiff.

(5) However, on December 31, 2012, the due date for payment of the principal tax liability, the consignor did not perform the tax liability. Accordingly, on June 23, 2014, the Defendant issued the instant disposition imposing the comprehensive real estate tax and special tax for rural development for the year 2010 upon the Plaintiff on June 23, 2014 following the review and decision by the Board of Audit and Inspection of Korea.

B. Examining the following circumstances, i.e., the purpose of corporate division, the principle of division, and circumstances revealed in the instant rehabilitation plan, along with such factual basis, in light of the legal doctrine as seen earlier, it is reasonable to deem that the status as an oligopolistic shareholder of the Daewoo Motor Sales, which is the basis for establishing the secondary tax liability, was succeeded to the Plaintiff by acquiring the instant shares in accordance with the instant rehabilitation plan, although the instant rehabilitation plan is not explicitly stipulated in the instant rehabilitation plan.

(1) The purpose of the instant corporate division was to divide the automobile sales business division and the construction business division in order to promote the rehabilitation of treatment vehicle sales through the concentration of business capacity and the improvement of the financial structure through investment attraction, and the surviving company after the division was to achieve the business normalization based on the improved financial structure by concentrating in the Songdo Development Project division.

(2) With respect to the method of establishment of the newly incorporated company, the instant rehabilitation plan provided that, with regard to the method of establishment of the newly incorporated company, the entire real estate related to the existing car sales sector of Daewoo Motor Sales and the assets and liabilities related to bus sales will be transferred to the newly incorporated Daewoo Motor Sales Co., Ltd., and most of the construction assets and liabilities related to the construction business except the transmission-do development business will be transferred to the Plaintiff, the instant rehabilitation plan provided the principle of division that transfers assets and liabilities related to each business to the newly incorporated

(3) In accordance with the instant rehabilitation plan, the Plaintiff received a transfer of total of 48 construction businesses and defect repair businesses and current assets, inventory assets, current assets, and investment assets related to the business of the said construction business. Of the construction businesses transferred by the Plaintiff, the Plaintiff was located in the “PF business of Pyeongtaek-si Housing Site Tax” which is one of the construction businesses transferred by the Plaintiff, and the instant shares were transferred as investment assets to conduct the “PF business of Pyeongtaek-si Housing Site Tax.”

(4) With respect to the division of liabilities, the instant rehabilitation plan provides that a rehabilitation security right shall be transferred to the company to which the new company is transferred if it is established in the assets subject to the transfer of the new company, and that tax liabilities and public-interest claims, which are rehabilitation claims, shall be transferred in full to the newly incorporated company and the surviving company, depending on the terms and conditions of the investment contract of the newly incorporated company, business relevance, and the nature of claims. In other words, in principle, the existing liabilities of Daewoo Motor Sales are comprehensively transferred to the newly incorporated company

(5) In addition, the instant rehabilitation plan does not limit the obligation that is transferred from the sale of Daewoo Motor to the Plaintiff prior to the division into rehabilitation claims or public-interest claims, or limited to the obligation already established at the time of the division of the instant company.

C. Therefore, the lower court is justifiable to have determined that the Defendant’s instant disposition was lawful. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the scope of succession to rights and obligations in the company division under the rehabilitation plan, the effect of authorization

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)