[1] Whether a selling company is obligated to pay a redemption price directly in response to a beneficiary's claim for redemption of beneficiary certificates under the former Securities Investment Trust Business Act (negative)

[2] The case holding that if an investment trust company which received a beneficiary's claim for redemption under the former securities investment trust business did not respond to redemption on the date of the claim for redemption in order to resolve the difference between the market value and the book of accounts under the supervisory regulations, and responded to redemption on the following day, even if the rate of return on trust property decreased as much as the market value assessed, the

[1] Article 7(2) and (4) of the former Securities Investment Trust Business Act (amended by Act No. 558 of Sep. 16, 1998; see current Article 62(2) and (4) of the Indirect Investment Asset Management Business Act (see current Article 63(1) of the current Indirect Investment Asset Management Business Act); Article 30(1) of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Presidential Decree No. 15895 of Sept. 2, 1998; see current Article 12 subparag. 2 and 3, and Article 12 subparag. 4 of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Presidential Decree No. 15895 of Sept. 2, 1998); Article 7(2) of the former Securities Investment Trust Business Act (amended by Act No. 5558 of Oct. 4, 2003; see current Article 62(3) and (5) of the Indirect Investment Asset Management Business Act (see current Article 62(3) of the Indirect Investment Asset Management Business Act);

Samcheon Co., Ltd. (Law Firm Hannuri, Attorneys Kim Young-young et al., Counsel for the defendant-appellant)

(1) The term “the term “the term” means “the term” means “the term or “the term” means “the term or “the term”

Teaching Investment Trust Operation Corporation

Seoul High Court Decision 2002Na45590 delivered on June 24, 2003

The part of the lower judgment against Defendant Teaching Rights Co., Ltd. is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff’s appeal against Defendant Teaching Investment Trust Operation Co., Ltd. is dismissed. The costs of appeal incurred between the Plaintiff and Defendant Teaching Investment Trust Operation Co.

1. As to the appeal by Defendant C&L Co., Ltd. (hereinafter “Defendant C&L”)

In light of the reasoning of the judgment of the first instance, the lower court: (a) based on the following facts: (b) Defendant Educational Investment Trust Business Act (hereinafter “Defendant Educational Investment Company”) was a juristic person engaged in an investment trust management business, etc.; (c) Defendant Educational Guarantee Right falls under a selling company under the Securities Investment Trust Business Act; (d) Defendant Educational Investment Trust Business Act on July 1, 1997; (e) concluded an investment trust agreement with Defendant Educational Investment Trust Co., Ltd. to sell the beneficiary certificates of the said securities investment trust; (e) from that point of time, the Plaintiff sold the beneficiary certificates of the said securities investment trust; (e) the Plaintiff opened the beneficiary certificates account (Account Number: 01-80-3068); (e) the Plaintiff purchased the beneficiary certificates of the said case from Defendant Educational Investment Trust Company on February 28, 2001; and (e) the Plaintiff’s right to purchase the beneficiary certificates on March 23, 2001 to 30 billion won; and (e) the Plaintiff’s share of the beneficiary certificates of the instant trust (M No. 25.3000 billion.

However, we cannot accept the above decision of the court below for the following reasons.

Article 7 of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Act No. 558 of Sep. 16, 198; hereinafter the “former Securities Investment Trust Business Act”) shall request a selling company to redeem the beneficiary certificates concerned: Provided, That where the selling company is unable to comply with the request for redemption due to dissolution, etc., a person liable to comply with the provisions of paragraphs (2) and (2) shall repurchase them within 15 days at the latest after receiving the request for redemption (the main sentence of paragraph (4)). Article 30 shall provide that a truster company may repurchase beneficiary certificates with its own property (paragraph (1)), while Article 12 of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Presidential Decree No. 15895 of Sep. 22, 1998; hereinafter the “former Enforcement Decree”) shall also require a selling company for redemption under the provisions of Article 58 of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Act No. 972 of the Securities Investment Trust Business Act). 970 of the Act.

Where entrusting the selling company with the selling company for beneficiary certificates, the management of the trust property is in charge of the selling and repurchase of beneficiary certificates, and the selling company is not able to prepare the redemption price by cancelling a part of the trust even if the beneficiary's claim is filed. Therefore, in the case of beneficiary certificates purchased from the selling company, the selling company is obligated to respond to the beneficiary's claim for redemption with its own property. This is not permissible against the provisions of Article 7 (5) of the amended Securities Investment Trust Business Act, which provides that the selling company shall respond to the beneficiary's claim for redemption only in cash created by the partial termination of the trust, and in light of the contents of the amendment of the Securities Investment Trust Business Act and the Enforcement Decree thereof, and the purport of the amended Securities Investment Trust Business Act and the amended Enforcement Decree of the Securities Investment Trust Business Act, the selling company under the amended Securities Investment Trust Business Act, which applies to the redemption of beneficiary certificates of this case, shall only require the truster company to respond to redemption, and shall pay the redemption price received from the truster or the trustee company to the beneficiary.

Nevertheless, the court below held that the defendant Telecommunication Guarantee Co., Ltd., the selling company of the beneficiary certificates of this case, is liable to pay the redemption price in response to the plaintiff's claim for redemption. Thus, the court below erred in the misapprehension of legal principles as to the redemption obligor under the revised Securities Investment Trust Business Act, and it is obvious that such

2. As to the Plaintiff’s appeal

citing the reasoning of the judgment of the court of first instance, the Plaintiff filed a claim for redemption of beneficiary certificates of this case amounting to 37% of the trust property on April 26, 2001, and the Defendants, upon responding to the Plaintiff’s claim for redemption, decided to pay the redemption price calculated at the base price after marketization by realizing the appraisal losses of the trust property of this case, as the account book under the Securities Investment Trust Business Supervision Regulations concerns that the disparity rate of market price assessment is more than 1% but more than 1.13%, which is the permissible standard. Accordingly, the Defendant’s right to guarantee the payment of redemption money was notified to the Plaintiff on the date of claim for redemption, and requested the Plaintiff to conduct marketization work for redemption on April 26, 201, and the Defendant’s report sold part of the securities incorporated into the trust property of this case to resolve the disparity rate under the above supervisory regulations, and rejected the Plaintiff’s claim on April 27, 2001 on the following day, without complying with the Plaintiff’s claim for redemption money reduction in the market price of trust property.

In light of the records, the above measures of the court below are just and acceptable, and there is no error of law such as misunderstanding of legal principles as to Article 7 (4) of the amended Securities Investment Trust Business Act or illegal act, contrary to what is alleged in the grounds of appeal.

The Supreme Court precedents cited in the grounds of appeal are not appropriate to invoke the instant case, since they differ from the matter.

3. Conclusion

Therefore, without further proceeding to decide on the remainder of the grounds of appeal by the Defendant Educational Guarantee Right, the part of the lower judgment against the Defendant Educational Guarantee Right is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The Plaintiff’s appeal against the Defendant Educational Guarantee is dismissed. The costs of appeal between the Plaintiff and the Defendant Educational Guarantee are assessed against the losing party. It is so decided as per Disposition by the assent of

Justices Kim Ji-hyung (Presiding Justice)