[1] The method of determining the amount of losses in breach of trust with respect to the sale of unlisted stocks

[2] Where a representative director, etc. of a corporation, who is the largest shareholder of an unlisted company, manipulates accounting documents at lower than net value of net assets and calculates sales price and sells stocks based on the appraised value of net profit and loss, the amount of property damage suffered by a corporation, which is a seller of stocks due to

[3] In a case where a beneficiary who benefits from the commission of the crime of occupational breach of trust actively participated in the act of occupational breach of trust by an executor, whether the beneficiary constitutes a joint principal offender of the crime of occupational breach of trust (affirmative)

[4] Whether an act of an executive officer or a person in charge of accounting of a corporation to purchase company's shares and to provide company funds to a purchaser of shares who intends to become a major shareholder in advance as a loan to a major shareholder constitutes a crime of occupational breach of trust (affirmative in principle)

[1] In the crime of occupational breach of trust, "if property damage is inflicted on a person's property status" means a case where the representative director, etc. of a company sells stocks of another company held by the company at low price in violation of his/her duty, the amount of damages incurred by the company is equivalent to the difference between the market price and the sales price of such stocks. In the case of trading unlisted stocks, if there is a normal example of transaction that reflects the objective exchange value properly, the transaction price shall be deemed the market price as the proper price. However, if there is no such example of transaction, the proper price of stocks may be assessed in accordance with the method of assessment under Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177 of Dec. 30, 2003) which is one of the methods generally accepted, taking into account the situation of the relevant unlisted corporation and the transaction party at the time of the transaction, and the characteristics of the pertinent business type.

[2] In assessing the value of unlisted stocks pursuant to Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003); where net profit and loss (the rate prescribed by the Ordinance of the Ministry of Finance and Economy, taking into account the weighted average amount of net profit and loss for the last three years ± average interest rate formed in the financial market) falls short of net asset value (the net asset value ± total number of issued stocks of the relevant corporation) the net asset value per share. In fact, the net asset value per share is assessed. Despite the net asset value of unlisted stocks exceeds the net asset value of the relevant unlisted stocks, the representative director, etc. of the relevant unlisted company, who is the largest shareholder of the relevant unlisted company, calculated the net asset value lower than the net asset value by manipulating the accounting documents of the unlisted company, and sold stocks based on the net asset value assessed on the average net asset value, at least an adequate amount calculated on the basis of the net asset value appraised (the largest shareholder under Article 63(3(3) of the Inheritance Tax and Gift Tax Act); and Gift Tax Act, if transferred assets to persons other than the above 30%.

[3] In a case where a beneficiary who benefits from the crime of occupational breach of trust is passively taking advantage of the act of occupational breach of trust, and without taking advantage of the act of occupational breach of trust, and aids and abets the act of breach of trust or participates in the whole process of the act of breach of trust, and thereby actively participated in the act of breach of trust of an occupational breach of trust, the

[4] An act of an executive officer or a person in charge of accounting of a corporation to make a purchase price of shares by granting the company fund to a person who intends to be a major shareholder after purchasing the company's shares in advance under the name of a major shareholder lending and causing the company's insolvency. Thus, barring special circumstances such as where the act of lending was evident that the act of lending was intended for the company's interest and it was going through a normal decision-making procedure within the company, and there was no difficulty in managing the company's funds and thereby securing sufficient security for collecting the loan, it constitutes an occupational breach of trust crime (i.e., occupational embezzlement). In addition, if a person who becomes a major shareholder in such a manner actively participated by inducing another person to commit a breach of trust by an executive officer, etc. of the company or participating in the entire process of the

[1] Articles 355(2) and 356 of the Criminal Act / [2] Articles 355(2) and 356 of the Criminal Act, Article 63(3) of the Inheritance Tax and Gift Tax Act, Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177 of Dec. 30, 2003), Article 35 of the Enforcement Decree of the Corporate Tax Act / [3] Articles 30 and 356 of the Criminal Act / [4] Articles 3(1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Articles 30 and 356 of the Criminal Act

[1] [2] Supreme Court Decision 2005Do856 Decided April 29, 2005 (Gong2005Sang, 902) / [3] Supreme Court Decision 99Do1911 Decided July 23, 199 (Gong199Ha, 1832) / [4] Supreme Court Decision 2004Do8963 Decided March 24, 2005

Defendant

Defendant

Attorney Lee Ho-ho

Busan High Court Decision 2005No458 delivered on December 29, 2005

The appeal is dismissed.

The grounds of appeal are examined.

1. The defendant's occupational breach of trust against the victim non-indicted 1 corporation

In the crime of occupational breach of trust, property damage means a case where the representative director, etc. of a company inflicts property damage on the company at a low price due to the company's violation of his/her duty, the amount of damage inflicted on the company is equivalent to the difference between the market price and the sales price of the stocks. In the case of trading unlisted stocks, if there is a normal transaction example which reflects the objective exchange value properly in the transaction value, the transaction value should be deemed the appropriate market price as the proper price. However, if there is no such transaction example, the proper price of stocks can be assessed in accordance with the method of assessment under Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, one of the various methods generally accepted at the time of the transaction (see Supreme Court Decision 2005Do856, Apr. 29, 2005, etc.).

Furthermore, in the event that the value of unlisted stocks is appraised pursuant to Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 30, 2003; hereinafter the same), the net value of profit and loss (the average of net profit and loss in the last three years ± average interest rate formed in the financial market) is below the net asset value (the net asset value ± total number of issued stocks of the relevant corporation ± the net asset value per share). In fact, although the net asset value of unlisted stocks exceeds the net asset value of the relevant unlisted company exceeds the net asset value, the representative director, etc. of the relevant unlisted company, who is the largest shareholder of the relevant unlisted company, calculated the net asset value lower than the net asset value by manipulating the accounting document of the unlisted company, sold stocks by calculating the sales amount based on the net asset value and at least an adequate value calculated based on the normal net asset value appraised, and after calculating the difference between the sale price and the net asset value of the relevant corporation to a person other than the above 30% of stocks.

On the other hand, in case where a beneficiary who benefits from the crime of occupational breach of trust is passively taking advantage of the act of occupational breach of trust and has instigated the act of breach of trust or actively participated in the act of breach of trust by participating in the whole process of the act of breach of trust, he shall be deemed as a joint principal offender of the crime of occupational breach of trust (see Supreme Court Decision 9Do1911 delivered on July 23, 199, etc.).

Examining the records in light of the above legal principles, the court below determined that the first instance court, the president of the non-indicted 1 corporation, did not err in the misapprehension of the legal principles as to the transaction of non-indicted 2 corporation's inventory assets at the time of selling the above shares to the defendant around July 1, 2003, Article 63 of the Inheritance Tax and Gift Tax Act, Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and Article 35 of the Enforcement Decree of the Corporate Tax Act, at least 2,332,085,00 won (on the basis of net asset value at the time, at the increase of 15% under Article 63 (3) of the Inheritance Tax and Gift Tax Act and at 30% discount under Article 35 of the Enforcement Decree of the Corporate Tax Act), and it was just in the judgment of the non-indicted 1 corporation to have consultation with the non-indicted 2 corporation's accountant in charge of the non-indicted 2 corporation, or in calculating the difference between the defendant and the non-indicted 1 corporation's property value at the same time.

2. The victim non-indicted 2 corporation's violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation)

Unless there are special circumstances, such as the act of lending funds to a person who intends to purchase the company's stocks and to pay the purchase price of the company in advance to the person who intends to become a major shareholder, the act of inducing personal interests of the person who intends to become a major shareholder and causing the company's insolvency. Thus, it constitutes a crime of occupational breach of trust (see Supreme Court Decision 2004Do8963, Mar. 24, 2005; 2004Do8963, Mar. 24, 2005; 2004Do8963, Mar. 24, 2005). In addition, if a person who becomes a major shareholder by such a method actively participates in the process of inducing an executive officer, etc. to commit occupational breach of trust or participating in the process of such act, etc., he/she shall be deemed a joint principal offender of occupational breach of trust.

As to this part, the court below held that when the defendant purchases all of the shares of the non-indicted 2 corporation, the amount of KRW 1.36 billion out of the purchase fund was insufficient, the defendant is deemed to have actively participated in the non-indicted 3's act of breach of trust with the intention of breach of trust. In light of the above legal principles and the records of this case, the fact finding and decision of the court below are justified in light of the legal principles as seen earlier, and the records of this case, and there is no violation of the rules of evidence or misapprehension of legal principles as to the rules of evidence, contrary to what is alleged in the grounds of appeal, there is no violation of the rules of evidence against the rules of evidence.

3. Conclusion

Therefore, the appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Hwang-sik (Presiding Justice)