[1] Matters to be considered in calculating the appropriate management premium in the case of stock transaction involving management right

[2] The case holding that the crime of breach of trust is not established on the sole basis of the fact that the acquisition amount is much different from the market price in the open market where a major shareholder of a company acquired shares of another stock company issued by him at a higher level than the market price

[3] Whether a person who is not a major shareholder or a person holding stocks can be a principal offender for a violation of the duty to report stocks held in bulk under the Securities and Exchange Act (negative)

[1] The market price refers to an objective exchange price formed through a normal transaction, and if shares are transferred with a right of management, the transaction price in the open market is only reflecting the objective exchange value in cases where only shares are transferred with a right of management, and thus, it cannot be deemed the market price. In most cases, most of the shares transaction involving a right of management are traded outside the open market, and in this case, a certain level of management loss is generally held (this right of management loss is legally recognized by Article 63(3) of the Inheritance Tax and Gift Tax Act). In most cases, the appropriate management loss cannot be claimed by the simple formula of a certain percentage of the existing market price of the existing shares, and it should be determined by comprehensively taking into account the company's present and future value, ripple effects caused by a right of management, expenses incurred in purchasing shares necessary to secure a right of management in the open market.

[2] The case holding that the crime of breach of trust is not established on the sole basis of the fact that the acquisition amount is much different from the market price in the open market where a major shareholder of a company has acquired shares of another stock company issued by him at a higher level than the market price

[3] The obligation to report stocks and the change thereof under the Securities and Exchange Act are owned by the major stockholders, the obligation to report stocks held in bulk and the obligation to report changes thereof are held by the stockholders, and the obligation to report stocks held in bulk and the obligation to report changes can be held by the persons holding the stocks, and if they do not report, the responsibility for the violation of the obligation to report shall be exclusive to the person holding the obligation to report. Such violation shall not be committed by another person, and the person holding the obligation to report shall

[1] Article 63(3) of the Inheritance Tax and Gift Tax Act / [2] Articles 355(2) and 356 of the Criminal Act, Article 3(1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes / [3] Articles 188(6), 200-2(1), and 210 subparag. 5 of the Securities and Exchange Act

Defendant 1 and three others

St. L. L. L.S.

Law Firm Barun, Attorneys Park Ho-ho et al.

Defendant 1 shall be punished by imprisonment with prison labor for two years, by imprisonment for two years, by imprisonment with prison labor for three years, by imprisonment for three years, by imprisonment with prison labor for one year and six months.

As to Defendant 2, 79 days of detention prior to the rendering of this judgment shall be included in the above sentence.

However, with respect to defendants 2 and 3, the execution of each of the above punishment shall be suspended for three years from the date this judgment becomes final and conclusive.

Of the facts charged in this case, Defendant 1, 2, and 3-6 of June 29, 2002, the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust) and the violation of each of the Securities and Exchange Act by Defendant 2 and 3

Criminal facts

① On December 30, 2003, Defendant 4 was sentenced to three years in Seoul High Court to a violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement), etc., and the said judgment became final and conclusive on May 14, 2004. ② Defendant 1 was sentenced to two years and six months in prison from Seoul High Court on November 14, 2003 to a violation of the Securities and Exchange Act, etc., and the said judgment became final and conclusive on November 22, 2003.

1. From June 2001 to December 2001, Defendant 4 served as the representative director of the Promotion Enterprise Co., Ltd. (hereinafter “Promotion Enterprise”). On July 2001, the Promotion Enterprise decided to participate in the Daegu Simdong Apartment Apartment Construction Co., Ltd. as a contractor for the redevelopment project. On July 2001, the Promotion Enterprise withdrawn KRW 1.8 billion from the Promotion Enterprise’s funds to the Denman on July 2001, and lent the said Cosn Construction as land purchase price. However, the other Company was selected as a contractor for the said redevelopment project, and Defendant 4 received KRW 1,837,627,398, including interest on the said loans from the said Cosn Construction, and kept it in custody for the Promotion Enterprise.

Defendant 4 embezzled KRW 1,837,627,398 of the Promotion Company’s funds by using KRW 337,627,398, out of the above money which was under business custody around October 25, 2001 as the payment for the purchase price for the apartment of Nonindicted Party 1, when Nonindicted Party 1 acquired the Promotion Company from Park Young-chul, and required to pay for the acquisition price for the Promotion Company. In collusion with Nonindicted Party 1, the Promotion Company’s funds would be useful for the Promotion Company’s funds, and embezzled KRW 1,527,398 of the above money, which was under business custody, as the payment for the purchase price for the apartment of Nonindicted Party 1.

2. Defendant 1 was detained in the so-called “use shop” case around January 2002, among the Dos, which had promoted the acquisition of the promotion company from Nonindicted 1. Defendant 1 was detained. Defendant 1 was detained in the custody, and Defendant 2 was working as the representative director of the promotion company from March 5, 2002 to August 16, 2002, and was working as the representative director of the promotion company from August 16, 2002 to the name of Defendant 2 and Defendant 3 (hereinafter “Promotion EFD”).

When Defendant 1, 2, and 3 received a demand from Nonindicted 1 to pay the intermediate payment of the acquisition price of the promotion enterprise, Defendant 1, 2, and 3 offered to use the corporate funds, and embezzled by withdrawing KRW 1,720,000 from the promotion enterprise’s deposit at the location after the Japanese bank, the Japanese branch around March 16, 2002, and then paying to Nonindicted 1 as the intermediate payment of the acquisition price of the promotion enterprise.

3. When funds for acquiring additional shares of the ice Electronic Co., Ltd. are needed, Defendant 1 had a mind to sell shares of the Ethyian Co., Ltd. (hereinafter “Ethyian”) which he owned to the promotion company at a high price.

Defendant 1 and Defendant 2, in collusion with Nonindicted 2, etc., prepared a resolution of the board of directors as if the board of directors were to have made a normal resolution by the board of directors, such as without holding the board of directors on December 18, 2002 and arbitrarily sealing the seals of Defendant 3 with only the registration of directors after the retirement of the company, and then leaving the promotion company purchase 2,100 won per share of 6.5 billion won, despite that Ethtiia’s share price is less than 6.50 won per share price of 1720,000 won per share of 1720,000 won per share of 1720,000 won. Accordingly, Defendant 1 had Defendant 1 gain monetary profits equivalent to the difference between the acquisition price and the market price, and had the promotion company inflict damages equivalent to the same amount.

4. A major shareholder of a stock-listed corporation (a) shall report to the Securities and Futures Commission and the Korea Stock Exchange on the ownership status of the relevant corporation owned on his own account, regardless of in whose name the major shareholder becomes, and on the 10th day of the month following the month in which the change in the ownership status of the stocks occurs, if there is any change in the ownership status of the relevant corporation, the details thereof shall be reported to the shareholder and the Korea Stock Exchange, respectively.

(1) On June 17, 2002, Defendant 1 acquired the said company’s shares 2,797,177 shares (20.10% of the total number of shares issued by the same company) from the Park Young-do, etc., all of the major shareholders of the promoting company on his own account, and had the major shareholders acquired, Defendant 1 filed a report on the shares held in the name of the promoting F&D, and Defendant 1, the actual owner, was not reported to the Securities and Futures Commission and the Korea Stock Exchange on June 27, 2002 (attached Form 1).

(2) On August 6, 2002, Defendant 1: (a) provided the promotion company’s shares held in its own name or in the name of Promotion F&D; and (b) borrowed funds from the Korea National Bank to acquire 1,785,720 shares each of the forfeited shares of the above company incurred from the promotion company’s capital increase in the name of Promotion F&D and Kim Jaeat; and (c) held 4,582,897 shares including the shares held by the existing promotion company (14.97% of the total number of issued shares) including the shares held by the existing promotion company; (b) did not report the change in the number of shares in the name of the Korea Securities and Futures Commission and the Korea Securities and Futures Commission until September 10, 202; and (c) did not report the change in the number of shares held in the name of Defendant 1, the actual owner and the Korea Securities and Futures Commission; and (d) did not report the change in the number of shares held in attached Form 13 or 44.

(b) A person who comes to hold stocks, etc. of a listed corporation in bulk (referring to a case where the total number of stocks, etc. held by the principal and his/her specially related persons is 5/100 or more of the total number of the relevant stocks, etc.) shall report the changes in the holding status within five days from that date, and where the holding ratio is changed in excess of 1/100 of the total number of stocks, etc. of the relevant corporation, he/she shall report the changes to

(1) On June 17, 2002, Defendant 1 acquired shares of an promoting company on its own account and reported to the Financial Supervisory Commission and the Korea Stock Exchange in the name of the actual holder by June 22, 2002 (attached Form 2 violation No. 1).

(2) On August 6, 2002, Defendant 1 acquired 1,785,720 shares of forfeited stocks for capital increase (5.83% of the total number of outstanding stocks) issued by an advancement company under the name of the Promotion F&D and Kim Jae-at, and held 4,582,897 shares (14.97% of the total number of issued shares). However, Defendant 1 merely reported that the shares acquired under the name of the Promotion F&D, which was reported to hold in bulk, were owned as Promotion F&D (no shares are reported). Defendant 1, who was the actual holder of the Promotion F&D and the Korea Stock Exchange until August 12, 2002, did not report the contents of the contents of the violation of the duty to report in attached Form 2, 2, and 4, and did not report the contents of the shares owned over three occasions, such as attached Table 2, 2, and 4.

Summary of Evidence

1. The defendants' legal statement (the defendants 1, 2, and 3's partial statement)

1. The witness regular statement, the excursion ship equipment and the leapbing legal statement;

1. Each prosecutor's interrogation protocol against the Defendants (including each substitute part)

1. Detailed rules, leaps (including the part of gender trial statements), each prosecutor's protocol of statement on the excursion ship equipment;

1. A copy of the gold-free question and answer letter to male leapment;

1. Each investigation report (the report on attachment of the stock price and trading volume of Ethiopia (the two copies of investigation records, 513 pages), the attachment of the details of violation of duty to report, and the attachment of the repreparation of the details of violation of duty to report (the third page of investigation records, 1432 pages), and the attachment of stock price by date at the time when Defendant 1 purchased Ethiopia stocks (the third page of investigation records) by each

Application of Statutes

1. Article applicable to criminal facts;

A. Defendant 1

Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Articles 356, 355 (1), and 30 (Embezzlement) of the Criminal Act, Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Article 356, Article 355 (2), and Article 30 (2) of the Criminal Act, Article 210 subparagraph 5 of the Securities and Exchange Act (amended by Act No. 6987 of Oct. 4, 2003), Article 18 (6) (amended by Act No. 7114 of Jan. 29, 2004), Article 188 (6) of the Securities and Exchange Act (amended by Act No. 7114 of Jan. 29, 2004), Article 210 subparagraph 5 of the Securities and Exchange Act, Article 200-2 (1) of the Securities and Exchange Act (amended by Act No. 7114 of Jan. 29, 2004 of the above amendment).

B. Defendant 2

Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Articles 356, 355 (1), and 30 (Embezzlements) of the Criminal Act, Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Article 356, Article 35

C. Defendant 3

Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Articles 356, 355 (1), and 30 of the Criminal Act

D. Defendant 4

Article 3 (1) 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, Articles 356, 355 (1), and 30 of the Criminal Act

2. Handling concurrent crimes (as to the defendant 1 and 4);

The latter part of Article 37 and Article 39(1) of the Criminal Act

Defendant 1’s violation of the Securities and Exchange Act of the first head of the crime for which the judgment became final and conclusive, and the crime of Defendant 4’s violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) of the first head

3. Aggravation of concurrent crimes (as to the defendant 1 and 2):

Article 37 (former part), Article 38 (1) 2, and Article 50 of the Criminal Act

Defendant 1’s each of the above crimes, the aggravation of concurrent crimes with punishment prescribed in the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation), each of the above crimes committed by Defendant 2, and the aggravation of concurrent crimes with punishment prescribed in the Act on the Aggravated Punishment

4. Discretionary mitigation;

Articles 53 and 55(1)3 of the Criminal Act

5. The inclusion of the number of days pending trial (the defendant 2):

Article 57 of the Criminal Act

6. Suspension of execution (as to the defendant 2, 3)

Article 62(1) of the Criminal Act

Judgment on the defendants' and defense counsel's arguments

1. The defendants and defense counsel's assertion

A. As to the crime No. 2, ① Defendant 1 and 2 do not have a public offering of embezzlement, and there is no intent to obtain unlawful acquisition. ② Defendant 3 provided sufficient security and did not use it for himself/herself, so there is no intent to obtain unlawful acquisition, and the lending of an executive of a company to an executive is not embezzlement.

B. As to the facts constituting the crime paragraph 3, Defendants 1 and 2 did not participate in the determination of price at the time of acquiring shares of the promoting company, and 2. The value of shares accompanied by the management right is higher than the market price and thus did not cause damage to the promoting company.

C. As to the crime No. 4, Defendant 1 was unaware of the fact that he acquired the shares in the name of Kim Jae-heat, and ② there is no obligation to report the shares in the name of Promotion F&D.

2. Determination:

A. (1) According to each of the above evidence, Defendant 3 made a statement in advance with Defendant 1,20,000 at the time of withdrawal of KRW 1,720,00,000 of the Promotion Company’s funds, and Defendant 2 made a statement that Defendant 3 had been aware of the fact that Defendant 3 would withdraw the Company’s funds at the direction of Defendant 2 (as investigation record 430 pages) and Defendant 2 would also withdraw the funds of the Promotion Company. According to these statements, Defendant 1, 2 recognized that Defendant 3 conspired to embezzlement with Defendant 3, and that Defendant 1,720,000,000 of the Promotion Company’s funds were withdrawn to be used as the acquisition price of the Promotion Company’s funds, which is the personal use of Defendant 1’s funds. ② According to each of the above evidence, Defendant 3’s representative director withdrawn funds to an officer with the intent to use the funds as a loan or a loan to an officer, and thus, Defendant 3 did not have the intent of unlawful acquisition.

B. (1) According to each of the above evidence, Defendant 3 stated that Etiti’s acquisition of shares was not necessary at the time of the promotion company at the time (i.e., one right 427 pages), Defendant 2 stated that there was no prior knowledge of purchase in the price-fixing process at the time of the acquisition of shares (i.e., one right 426 pages), Defendant 2 retired from Defendant 3 on August 16, 200 and worked as the vice president of the promotion company (i.e., two right 498 pages), Defendant 2 had no prior notice of the acquisition of shares at the time of the promotion company at 0.m. on June 29, 200, and Defendant 1 had no prior notice of 2380,000 won per share (i.e., one right 200,000 won per share). The promotion company had no prior notice of the acquisition of shares at the time of 200,000 won per share.

According to these facts of recognition, the acceptance of shares on December 18, 2002 was made due to Defendant 1’s need to dispose of shares and secure cash in accordance with the proposal of Defendant 1 and 2. The decisions of the above Defendants, the acquirer of the promotion company at the time, were executed as they are because other officers could not oppose, and KRW 2,100 per share, which is the acquisition price, was also determined in accordance with the intent of the above Defendants. Thus, Defendant 1 and 2 directly involved in the acquisition of shares on December 18, 2002 and its price determination.

② The above recognition facts and the remaining shares were not scheduled at the time of the acquisition of shares by Defendant 1 at the time of the acquisition of shares on June 29, 2002, and there was no need to acquire shares in entirety (the fact that Defendant 3, who led to the acquisition of shares on June 29, 2002, did not know before receiving contact with the general team, and that there was no need to acquire shares at the price higher than the market price for the acquisition of shares by Defendant 1 at the time of the acquisition of shares. In light of the fact that the acquisition of shares by December 18, 2002, there was no need to secure cash, and that there was no need to acquire shares at the price higher than the market price for the acquisition of shares by Defendant 1 at the time of the acquisition of shares by the aforesaid company at the price higher than the market price for the acquisition of shares by 2380,000 shares at the time of the acquisition of shares at the price higher than the above market price for the acquisition of shares by the company.

C. (1) According to the above evidence, the Promotion F&D acquired 2,797,177 shares of the Promotion Company on June 17, 2002 (20.10%) and Defendant 2 and 3 stated that Defendant 1 is the subject of calculation as a substantial master (i.e., 208 pages, 208, 485, 486 pages), Defendant 3 was given definite answer from Defendant 1 to participate in the capital increase in the capital increase of the Promotion Company on August 6, 2002, and forfeited stocks under the name of the Promotion F&D and Kim Jae-at, and Defendant 2 was decided in consultation with Defendant 2.

In light of these facts and the fact that Defendant 1 actually operated the promotion company through Defendant 2 and 3, Defendant 1 seems to have known that he acquired the forfeited stocks of the promotion company in the name of Kim Jae-at.

(2) A major shareholder who holds not less than 10/100 of the total number of issued and outstanding stocks shall have the duty to report the stock holding status or changes in the ownership of the relevant corporation on his own account regardless of in whose name the name it holds (Article 188(6) of the Securities and Exchange Act before this amendment). In addition, a person who comes to hold stocks in bulk shall have the duty to report the changes in the holding status and the total number of stocks, etc. of the relevant corporation (Article 200-2(1) of the Securities and Exchange Act before this amendment). In this case, the term "holding" means a case where a person owns stocks, etc. on his own account in whatever name [Article 21(1) of the Securities and Exchange Act (amended by Act No. 7114 of Jan. 29, 2004)].

As seen above, Defendant 1 owned the company shares on its own account, and thus, Defendant 1 has a duty to report.

D. Both the Defendants and the defense counsel’s arguments are rejected.

Reasons for sentencing

The punishment shall be determined in consideration of each sentencing condition in the attached sentencing condition table.

The acquittal portion

1. Summary of the facts charged

A. Defendant 1, 2, and 3 conspired with Defendant 1, etc. to pay that amount by proxy to the company instead of deducting the funds of the promotion company for private use from the acquisition price by Defendant 1, etc., but, on June 2002, it was impossible to cover the above amount due to the lack of cash held by the promotion company despite the close-term settlement period for the first half of the promotion company, the promotion company was unable to pay the above amount to the company. On June 29, 2002, Defendant 2 and the promotion company’s officers against Defendant 3’s request for the purchase of shares on the ground of cash liquidity and price unfairness. Although the above shares were 7.60 won per share price per share at the time, the promotion company had the promotion company purchase the above shares at a higher price than 2.1 billion won per share price exceeding 2.3 billion won per share price per share, thereby making it more than 1.3 billion won per share to purchase the shares at a higher price than 1.3 billion won per share.

B. Defendant 2 and 3 did not make a report on the status of the ownership and the change in stocks as stated in paragraph 4 of the crime, in collusion with Defendant 1, and did not make a report on the change in stocks held in bulk.

2. Determination:

A. The “market price” refers to an objective exchange price formed through a normal transaction, and where shares of a company are transferred along with the management rights, the transaction price in the open market is only reflecting the objective exchange value in cases where only shares are transferred, and thus, it cannot be deemed the market price. In most cases, where shares are traded in the open market, most of them are traded outside the open market, and in such cases, where a certain level of management rights is held (this kind of management rights is legally recognized by Article 63(3)9 of the Inheritance Tax and Gift Tax Act). The appropriate management rights premium cannot be claimed in the simple way that is a certain percentage of the existing market price of shares, and it should be determined by comprehensively taking into account the company’s current and future values, ripple effects through the acquisition of management rights, necessary expenses, etc. when the shares are purchased in the open market.

According to each of the above evidence, witness's statement and evidence Nos. 1 and 2, defendant 1 acquired 4,100,000 won per share with management rights premium of 4,100 won per share on July 201. The promotion company acquired 2,50,000 won per share on the KOSDAQ market, 2,100 won per share on June 29, 200, 2380 won per share on the KOSDAQ market, 760 won per share on the same day, 3,000 won per share, 2,000 won per share on the stock market, 3,000 won per share on the stock market, 1,000 won per share on the stock market, 2,000 won per share on the stock market, 3,000 won per share on the stock market, 2,100 won per share on the stock market, 3,000 won per share value per share on the stock market.

According to these facts, Ethalian shares acquired on June 29, 2002 by Ethalian company with the management right of Ethalian, and the value of Ethalian shares can be assessed differently depending on how to choose any stock value assessment method, and the price per stock of Ethalian may also be close to or exceed KRW 2,100, the acquisition price of Ethalian company with the acquisition price added to the assessment method and the management right premium.

Whether to choose a method of appraisal of the value of shares at the time of acquiring shares and to determine the price of shares with a certain degree of management premium is ultimately a matter to be determined by the parties to the contract in consideration of the above circumstances, and the fact that the acquisition amount is much different from the market price in the open market cannot be readily concluded that the promotion company has suffered loss solely on the ground that all the evidence submitted by the prosecutor submitted by the prosecutor is insufficient to deem that KRW 2,100 per share was damaged by the promotion company.

B. The obligation to report stocks and the obligation to change them under the Securities and Exchange Act are owned by the major shareholder, the obligation to report stocks held in bulk and the obligation to report changes thereof are held in possession by the person holding the stocks in possession, and if the person holding the obligation to report is not required to do so, the responsibility for the violation of the obligation to report shall belong exclusively to the person holding the obligation to report. The violation of the obligation to report shall not be committed by any other person, and the person holding the obligation to report shall not be punished by any other person. Since it is apparent that it is not the major shareholder or the person holding the stocks in possession, it shall not be deemed that the above Defendants are subject to the obligation to report, and it shall not be a joint principal offender of Defendant 1 who violated the obligation to report ( even if Defendant 3, etc. reported in the name of another person, this does not violate the obligation of Defendant 1 to report, and the obligation of Defendant 1 is still liable for the violation of the obligation to report

C. Thus, since each of the facts charged constitutes a case where there is no proof of criminal facts, all of the facts charged should be acquitted under the latter part of Article 325 of the Criminal Procedure Act.

Judges Kim Jong-dae (Presiding Judge) early heat

9) Article 63(3) of the Inheritance Tax and Gift Tax Act provides that the largest shareholder, etc. shall be added by 20/100, but where the largest shareholder, etc. holds more than 50/100 of the total number of outstanding shares of the relevant corporation, 30/100 shall be added.