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

The grounds of appeal are examined.

1. The convertible bonds shall be converted to stocks only when the bondholder exercises the convertible right, having the nature of the bonds at the time of issuance.

In a case where convertible bonds are issued even if a person in charge of the issuance of convertible bonds and an underwriter of convertible bonds conspired in collusion with a third party in order to pay the subscription price for convertible bonds by borrowing an amount equivalent to the subscription price for convertible bonds from a third party and immediately after the completion of the procedure for the issuance of convertible bonds, and actually failed to pay the subscription price for convertible bonds, such issuance was made as a means to achieve the purpose of the issuance of convertible bonds and the subscription price for convertible bonds was actually exercised as soon as the subscription price for new bonds are issued, barring any special circumstance, such as where it is merely a part of the method to pretende the subscription price for new bonds as the issuance of convertible bonds was actually exercised as a consequence of the exercise of convertible rights (see Supreme Court Decision 2011Do8112, Oct. 27, 201). A person in charge of the issuance of convertible bonds shall obtain profits equivalent to the subscription price for the company by obtaining convertible bonds without paying the subscription price for the company, and shall obtain profits equivalent to the subscription price for the bonds, thereby causing losses to the same amount of breach of trust.

In addition, even if an underwriter of convertible bonds has disposed of the convertible bonds and paid part of the price to the company or exercised convertible rights compared to the profits held as bonds and profits held as bonds, and converted convertible bonds into stocks, these ex post facto circumstances may be considered.