2016Du30750 Action demanding revocation, including a corrective order

Han-Investment Securities Co., Ltd.

Law Firm LLC (LLC) LLC

Attorney Limited-level et al.

Financial Services Commission

Law Firm Yang Hun-tae, Counsel for defendant-appellant

Attorney Kang-ho et al., Counsel for the defendant

Seoul High Court Decision 2015Nu36623 Decided December 9, 2015

February 27, 2020

The judgment below is reversed, and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. A. The reasoning of the judgment of the court of first instance as cited by the court below and the records are as follows.

(1) On September 18, 2009, the Public Notice Corporation of the Chinese High Island (hereinafter referred to as the "China High Island") listed shares on the Singapore Stock Exchange, and on May 31, 2010, the Securities Depository (hereinafter referred to as the "Securities of this case") holding the shares listed on the securities market operated by the Korea Stock Exchange as the principal shares of Singapore Stock Exchange.

On October 15, 2010, the Republic of Korea filed an application for preliminary examination of the instant securities with the Korea Exchange on October 15, 2010, and the Republic of Korea approved the application on December 9, 2010.

(2) On December 14, 2010, the Chinese High Island entered into a joint supervision agreement with the Plaintiff for the second listing of the Korea Exchange (hereinafter “instant joint supervision agreement”). According to the instant joint supervision agreement, treatment securities and the Plaintiff, as the representative manager of the Chinese High Island, faithfully perform the representative duties under the Financial Investment Services and Capital Markets Act (hereinafter “Capital Markets Act”) and relevant Acts and subordinate statutes, and (Article 6(2). (3) The term “this case’s acquisition of Chinese High School shares” as stated in the instant registration statement with the Financial Supervisory Service (this case’s acquisition of securities), and (4) the data indicated in the instant registration statement (management performance, corporate management, accounting report, taxation, etc.) were submitted (Article 7(1). (2) the term “the instant joint supervision agreement with the Financial Investment Services and Capital Markets Association” was as follows: (1) the Plaintiff’s acquisition of the instant securities as the instant securities and the instant securities, and (2) the term “the Plaintiff’s acquisition of the instant securities as the instant securities and the instant securities as the instant securities management agreement.

(3) The Chinese High Island submitted a registration statement on December 15, 2010 to the Defendant and the corrective registration statement on January 11, 201 (hereinafter referred to as the “instant registration statement”). Accordingly, the assessment of the instant securities was made by 7, and 5, the Plaintiff participated in the company’s actual director, and ② the cash and cash assets on the financial statements as of the 3rd quarter of 2010 of the Chinese High Island were listed on January 25, 201, but the Singapore Stock Exchange was listed on March 21, 201.

Since March 22, 2011, the original state price of the Chinese High Island decreased by about 24%, the Korea Exchange temporarily suspended the transaction of the securities of this case at the request of the Chinese High Island, and on the same day, the Korea Exchange also suspended the transaction of the securities of this case.

As a special auditor, Priceer LP (Priceterhouse Copers LP), which is a special auditor, is 2012.

5.3. In the self-audit report, “The bank balance as of December 31, 2010 of the Chinese High Island is about approximately KRW 97 million” and “The Financial Supervisory Service reported the audit results. The Financial Supervisory Service, on the basis of the balance of the deposit in the inquiry document as of September 2010, 2010, on two bank accounts of the Chinese High Island received from the Chinese High Island (one of approximately 87.4% of the total cash and cash assets of the Chinese High Island as of June 2010).

19. The short-term cash and cash assets were presumed to be KRW 1,01.6 billion. The instant securities were presumed to be the instant securities.

10.4. On October 10, 2013, the Defendant imposed a penalty surcharge of KRW 2 billion on the Plaintiff pursuant to Article 429(1)1 of the Capital Markets Act and Article 25 of the Rules on the Investigation of Capital Markets (hereinafter “instant disposition”). The Defendant’s grounds for imposing a penalty surcharge are as follows: ① the Plaintiff’s failure to conduct a due diligence on the cash and cash assets of the Chinese ancient island (verification of documentary evidence, such as deposit passbook, deposit inquiry, etc.) based on the treatment securities that are the representative company in charge of the duty to inspect on the Chinese High Island; and ② the Plaintiff’s failure to conduct a due diligence on the part of the joint supervising company, such as failing to perform the procedures for confirming the cash and cash assets of the Chinese High Island (verification of documentary evidence, such as deposit passbook, deposit account statement, etc.). The Defendant failed to “prevention of false description of material facts stated in the instant registration statement submitted by the Chinese High Island (hereinafter “instant grounds for disposition 1”; ② The Defendant’s failure to state the requirements for the instant project, etc.

B. The lower court determined that the instant disposition was unlawful on the following grounds. (1) Even if the Plaintiff did not directly state the material fact on the grounds that the issuer of the instant registration statement was not subject to imposition of a penalty surcharge under Article 429(1)1 and Article 125(1)5 of the former Capital Markets Act (amended by Act No. 11845, May 28, 2013; hereinafter the same) and Article 135(2) of the former Enforcement Decree of the Financial Investment Services and Capital Markets Act (amended by Presidential Decree No. 24697, Aug. 27, 2013; hereinafter the same shall apply), the Plaintiff did not state the material fact on the grounds that the Plaintiff would be subject to imposition of a penalty surcharge under Article 45(1)2 of the former Act on the grounds that the issuer was not subject to imposition of a penalty surcharge under Article 5 of the former Securities and Exchange Act, but did not state the material fact on the terms and conditions of underwriting or underwriting of the instant securities by the issuer.

2. A. According to Article 429(1)1 of the former Capital Markets Act, the Financial Services Commission shall make a false description or representation of a material fact in the statement, statement, or other documents submitted by a person falling under any subparagraph of Article 125(1) as stated in Article 119, 122, or 123 as stated in the said Article.

Article 125(1)5 of the former Enforcement Decree of the Financial Investment Services and Capital Markets Act provides that a penalty surcharge may be imposed up to 3/100 of the amount of public offering or sale written on the relevant registration statement (or two billion won if the amount exceeds two billion won). Article 125(1)5 of the former Enforcement Decree of the Financial Investment Services and Capital Markets Act provides that "any person who has entered into a contract to underwrite the securities (referring to any person specified by Presidential Decree, if there are two or more persons who have entered into an underwriting contract)" refers to an underwriter who directly requests an issuer or seller to acquire the securities and determines the terms and conditions of underwriting.

Meanwhile, the Regulations on Issuance and Public Disclosure of Securities (Notice No. 2010 - 37, 2010 of the Financial Services Commission Notice)

11. 8. Partial Revision) 2- Article 12.1 of the Act refers to a financial investment company which is commissioned by an issuer or seller of securities publicly offered or sold and determines the terms and conditions of underwriting and takes charge of the affairs related to the public offering or sale in question. In addition, according to Article 2. 5 of the Regulations on the Underwriting of Securities (amended by the Korea Financial Investment Association and the Korea Financial Investment Association, August 20, 2010), the term "major company" means a financial investment company which determines the underwriting company on behalf of the underwriting company and the underwriting company and takes charge of the affairs related to underwriting and subscription, and other affairs provided for in this provision, the term "representative company" means a financial investment company which represents the issuing company, and the term "representative company" means a company which represents the underwriting company and takes charge of the affairs related to underwriting and sale in question, and the term "representative company" means a company which represents the underwriting and underwriting company and the major company in charge of the financial investment business.

B. In order to enhance the fairness, reliability, and efficiency of the capital market and to protect investors, the Financial Investment Services and Capital Markets Act has established a system that allows an issuer of securities to promptly and accurately disclose the details of an investor’s investment decision, such as the content of the securities or the company’s assets, management status, etc. The issuing market is difficult to assess the value of the securities in the first place in the market, and there are many cases where the information necessary for investment decision is insufficient. As a result, investors are difficult to have conviction in the trust and investment in the securities market. Accordingly, the public offering of securities is ordinarily intended to sell securities through an underwriter rather than directly offering by the issuing company. The reason is that the issuing company is not only likely to success in the public offering by the underwriter, but also that investors are expected to play the role of an insurer who bears risks caused by interference with the public offering, and investors are required to obtain information from the underwriter (Article 5(1)1 of the Financial Investment Services and Capital Markets Act or 4 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act, and thus, investors are able to easily obtain information from the underwriter’s or 7(1).

In full view of the language, purport, etc. of the penalty surcharge provision on violation of disclosure in addition to the position of underwriter and the content of disclosure regulations in the market for issuance, the person who directly receives a request for underwriting of securities from an issuer of securities under Article 135(2) of the former Enforcement Decree of the Financial Investment Services and Capital Markets Act shall be deemed to be subject to penalty surcharge in cases where “an underwriter who determines the terms and conditions of underwriting” of the registration statement or investment prospectus prepared by the issuer and submitted by him/her, intentionally or by gross negligence, fails to make a false description or representation of a material fact or to prevent acts

Based on these legal principles, the court below reviewed the judgment of the court below. Article 429 (1) 1 of the former Capital Markets Act was premised on the premise that the provision of Article 429 (1) 1 of the same Act applies only to the plaintiff who is not an issuer of the securities of this case and is not an underwriter, only when the plaintiff directly makes a false statement or representation concerning the material facts in the column of "written underwriter's opinion" or does not state or indicate material facts, but also determined that the above provision does not apply to the plaintiff in this case, notwithstanding the title of the "major company", since the plaintiff did not perform its business in fact, and even if there was a false statement concerning material facts

However, according to the reasoning of the judgment of the court of first instance cited by the court below, the plaintiff acquired the status as a principal company for the issuance of the securities of this case under the joint management contract of this case and the underwriting contract of this case. Here, the principal company constitutes "an underwriter who is requested to acquire securities directly from an issuer of securities under Article 135(2) of the former Enforcement Decree of the Financial Investment Services and Capital Markets Act and decides the underwriting conditions, etc." It is clear that the judgment below that the plaintiff is not subject to a penalty surcharge because the plaintiff did not actually perform the business as a principal company regardless of the regulatory content of the capital market law is erroneous. In addition, the judgment that the plaintiff may impose a penalty surcharge only when the plaintiff made a false statement on the "in the opinion of the underwriter" column of the registration statement of this case is also unlawful. The defendant's grounds of appeal Nos. 1 and 2 pointing

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jung-hwa

Justices Kwon Soon-il

Justices Lee Ki-taik

Justices Kim Jong-soo