[1] Whether Article 7 and Article 30 of the former Securities Investment Trust Business Act that stipulate the obligation to repurchase with the inherent property of a company selling beneficiary certificates is unconstitutional (negative)

[2] Whether Article 2 of the Addenda to the former Securities Investment Trust Business Act (amended on September 16, 1998) that provides for the time when the amended provisions on redemption of beneficiary certificates apply is unconstitutional by violating the principle of clarity or infringing on essential elements of property rights (negative)

[3] In the postponement of redemption under the proviso to Article 7 (4) of the former Securities Investment Trust Business Act, whether a company selling beneficiary certificates must take active measures for postponement of redemption such as disclosing or disclosing that the company selling beneficiary certificates uniformly postpones redemption to all beneficiaries (negative), and whether approval by the Financial Supervisory Commission is the requirement for taking effect of the postponement of redemption (negative)

[1] Articles 7 and 30 of the former Securities Investment Trust Business Act (amended by Act No. 558 of Sep. 16, 1998) imposes a beneficiary certificate selling company a redemption obligation with inherent property. In a securities investment trust, whether to impose a redemption obligation with inherent property on a beneficiary certificate selling company for the protection of beneficiaries falls under a policy decision based on a reasonable discretion of the legislator, and it cannot be said that there is a legislative duty under the Constitution to establish a law so that a selling company does not bear a redemption obligation with inherent property. Thus, the above provision cannot be deemed as unconstitutional due to an omission of legislation. In addition, Article 7 of the former Securities Investment Trust Business Act provides for a truster company and selling company's duty of redemption with inherent property. In ordinary claims for redemption, since it is reasonably interpreted that a truster company or selling company bears a duty to pay a redemption price with inherent property, it cannot be said that the above provision violates the principle of clarity. Moreover, it cannot be said that there is no violation of the trust company's fundamental freedom of trust property or a limited liability selling company's duty to manage inherent property or business.

[2] Article 2 of the Addenda of the former Securities Investment Trust Business Act (amended by Act No. 558 of September 16, 1998) stipulates that "the period of applying the amended provisions on redemption of beneficiary certificates to a truster company at the time of the enforcement of the above amended Act shall be prescribed by the Presidential Decree. However, as long as the provisions on redemption of beneficiary certificates under the former Act on the Trust Business do not infringe on the essential property rights of the above company, the term "the applicable date of the provisions on redemption of beneficiary certificates under the proviso of Article 2 of the Addenda of the amended Act among the Securities Investment Trust Business Act (amended by Presidential Decree No. 558 of Sep. 15, 1999)" clearly provides that "the date prescribed by the Presidential Decree of Article 2 of the Addenda of the amended Act (amended by Act No. 5558 of September 16, 199)" shall be deemed to violate the principle of clarity, Article 2 of the above Addenda shall not be deemed to violate the basic property rights of the above company for one year.

[3] The redemption postponement scheme under the proviso of Article 7 (4) of the former Securities Investment Trust Business Act (amended by Act No. 5558 of Sep. 16, 1998) is intended to realize the principle of performance and dividend as the essence of the securities investment trust and the principle of equality of beneficiaries by allowing the distribution company to repurchase based on justifiable value at the time when the cause is resolved, where there are special circumstances, such as natural disasters, closure, suspension, closure of the securities market, etc. where it is impossible to assess the justifiable value of securities incorporated into the securities investment trust due to unavoidable causes (hereinafter “reasons for postponement”), and where there are such special circumstances as unable to compute the legitimate base value of the securities issued by the relevant securities investment trust (hereinafter “reasons for postponement”), the distribution company’s postponement postponement is limited to failure to comply with a claim for redemption by an individual beneficiary, even if the distribution company did not take active measures such as publicly announcing or publicly announcing that it should be uniformly postponement for all beneficiaries, and thus, it cannot be determined as legitimate and effective due to the circumstance that the above postponement of redemption is unlawful or invalid.

[1] Articles 7 (see current Article 235 of the Financial Investment Services and Capital Markets Act), 23 (2) (see current Article 192 (5)), and 30 (see current Article 192 (5) of the Financial Investment Services and Capital Markets Act), Article 12 (see current Article 25 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act, Article 11 (1), 15, 23 (2), and 40 of the Constitution / [2] Article 5 of the former Securities Investment Trust Business Act (Amended by Presidential Decree No. 15895, Sep. 22, 1998); Article 25 of the former Enforcement Decree of the Financial Investment Services and Capital Markets Act (Amended by Presidential Decree No. 15895, Sep. 16, 1998); Article 37 (2) of the former Securities Investment Trust Business Act (Amended by Act No. 15657, Oct. 4, 2003; Presidential Decree No. 1585, May 16, 298, 198) of the former Securities Investment Trust Business Act

[1] [2] Supreme Court Decision 2007Da70100 Decided June 12, 2008 / [1] Supreme Court Decision 2002Da19018 Decided December 8, 2006 (Gong2007Sang, 126)

Korea Coal Corporation

Daewoo Securities Co., Ltd. (Law Firm Sejong, Attorneys Yellow-tae et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2004Na21260 decided Dec. 27, 2007

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined.

1. On the first ground for appeal

A. As to the assertion of unconstitutionality due to non-petition legislative omission

Articles 7 and 30 of the former Securities Investment Trust Business Act (amended by Act No. 558 of Sep. 16, 1998; hereinafter “former Investment Trust Business Act”) imposes a beneficiary certificate selling company a redemption obligation with inherent property. In the securities investment trust, whether to impose a beneficiary certificate selling company a redemption obligation with inherent property for the purpose of protecting the beneficiary is belonging to a policy decision based on the reasonable discretion of the legislator, and thus, it cannot be said that the legislative obligation of the Constitution exists to prevent the selling company from imposing a redemption obligation with inherent property. Thus, the grounds for appeal premised on the existence of such legislative obligation are without merit (see Supreme Court Decision 2007Da70100, Jun. 12, 2008).

B. As to the argument that Article 7 of the former Investment Trust Business Act is unconstitutional

(1) On the assertion of violation of the principle of clarity

Since it is technically impossible to clearly regulate all individual legal relations in the legislative process, the court's supplementary interpretation is necessary to a certain extent, and if it can reasonably be supplemented through such interpretation, the law is unconstitutional in violation of the principle of clarity (see, e.g., Supreme Court Order 2004Kaga27, Jul. 28, 2005; Supreme Court Decision 2007Da70100, Jul. 28, 2005).

Article 7 of the former Investment Trust Business Act provides for the obligation to repurchase beneficiary certificates of the management company and the selling company. In this case, the method of paying the redemption price may be presented with the method of paying the trust money as the company's proprietary property and the method of paying the trust money with the funds raised by disposing of trust property after the termination of part of the securities investment trust. It is interpreted that the management company is reasonably liable to pay the redemption price with the trust company or the selling company's proprietary property in case where the redemption claim of beneficiary certificates of the former Enforcement Decree of the Securities Investment Trust Business Act (amended by Presidential Decree No. 15895 of Sep. 22, 1998; hereinafter "former Enforcement Decree of the Investment Trust Business Act") under 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 "former Enforcement Decree of the Investment Trust Business Act") due to a large amount of redemption claim of beneficiary certificates due to the reasons for termination of part of the redemption claim (see, e.

In the same purport, the court below is just in holding that Article 7 of the former Investment Trust Business Act does not violate the principle of clarity, and there is no error of law by misunderstanding legal principles as to the unconstitutionality of Article 7 of the former Investment Trust Business Act, as argued in the Grounds for Appeal

(2) As to the assertion of violation of the principle of self-responsibility

In light of the fact that the selling company of beneficiary certificates does not merely serve as an agent of a truster company in a securities investment trust, but directly explain the securities investment trust and sell beneficiary certificates at its own responsibility, and receives sales commission, etc. for it, and that the selling company can sell the beneficiary certificates again after redeeming the beneficiary certificates with its own property, and where it is difficult to do so, it can recover the redemption price by requesting a truster company to partly terminate the trust for the part of the trust (Article 12 of the former Enforcement Decree of the Investment Trust Business Act) (Article 12 of the former Enforcement Decree of the Investment Trust Business Act), it cannot be said that the selling company bears the obligation to redeem the beneficiary certificates with its own property, thereby going against the principle of self-responsibility (see the above Decision 2007Da70100).

In the same purport, the court below is just in holding that Article 7 of the former Investment Trust Business Act does not violate the principle of self-responsibility, and there is no error of law by misunderstanding legal principles as to the unconstitutionality of Article 7 of the former Investment Trust Business Act, as alleged in the ground of appeal.

(3) As to the assertion that the legislative discretion was exceeded

In a securities investment trust, whether or not to impose a redemption obligation on a truster or selling company for its own property is a matter of policy decision based on the rational discretion of the legislator, and the management or selling company bears the redemption obligation with its own property, and there is no change in the trust property held in trust by the truster company to the trustee company. Thus, contrary to what is alleged in the grounds of appeal, it cannot be said that there is a violation of the principle of separate management of trust property or the essential content of limited liability (see the above Decision 2007Da70100).

In the same purport, the court below is just in holding that Article 7 of the former Investment Trust Business Act does not deviate from the discretion of the legislative formation authority, and there is no error in the misapprehension of legal principles as to the unconstitutionality of Article 7 of the former Investment Trust Business Act, as alleged in the ground of appeal.

(4) As to the assertion that property rights, freedom of business, freedom of choice of occupation, and prohibition of excessive restriction are violated

In light of the fact that the selling company can re-sale the beneficiary certificates after repurchase of the beneficiary certificates with its proprietary property, and in cases where it is difficult to resell them, the selling company can recover the redemption price by requesting partial termination of the trust for the part thereof, and in cases where redemption of the beneficiary certificates is not possible due to large amount of claims for redemption of the beneficiary certificates, it can be paid the redemption price by receiving a repayment by requesting partial termination of the trust to the management company in advance (Article 12 of the former Enforcement Decree of the Investment Trust Business Act). In light of the fact that imposing an obligation on the selling company for redemption by proprietary property is contrary to the principle of excessive prohibition, thereby infringing on the essential contents of the property right or infringing on the essential contents of the freedom of business or freedom of occupation selection (see the above Decision 2007Da70

In the same purport, the court below is just in holding that Article 7 of the former Investment Trust Business Act does not violate the principle of excessive prohibition and thus infringe on the company's property rights, freedom of business and freedom of occupation. In so doing, the court below did not err by misapprehending the legal principles on the unconstitutionality of Article 7 of the former Investment Trust Business Act, as alleged in the ground of appeal.

(5) As to the assertion of violation of the principle of equality

The selling company of beneficiary certificates is an independent party that sells beneficiary certificates in a securities investment trust and bears the duty of redemption based on its own responsibility. Thus, it cannot be deemed that there is an unreasonable discrimination against the selling company with the selling company on its own. Furthermore, depending on which beneficiary certificates have been purchased from a certain selling company, the intrinsic contents of the right of redemption does not vary depending on the size of its proprietary property, but the contents of the right of redemption borne by the selling company depending on the size of its proprietary property do not change. However, there is only a difference in the possibility of execution. This difference is because beneficiary selects the selling company according to free will and the selling company sells beneficiary certificates to the beneficiary according to free will, it does not constitute an unreasonable discrimination against the beneficiary or the selling company. Furthermore, since Article 7 of the former Investment Trust Business Act and the Trust Business Act differ from the purpose and regulation subject matter of the Securities Investment Trust Business Act, while Article 7 of the former Investment Trust Business Act impose the duty of redemption on the selling company's own property, it cannot be viewed as unreasonable discrimination with the absence of such provisions in the Trust Business Act (see the above Decision 2007Da71000).

In the same purport, the court below is just in holding that Article 7 of the former Investment Trust Business Act does not violate the principle of equality, and there is no error of law by misunderstanding legal principles as to the unconstitutionality of Article 7 of the former Investment Trust Business Act, as alleged in the ground of appeal.

C. As to the assertion on the unconstitutionality of Article 2 of the Addenda to the former Securities Investment Trust Business Act (amended by Act No. 5558, Sep. 16, 1998; hereinafter “Revised Investment Trust Business Act”)

Article 2 of the Addenda to the amended Investment Trust Business Act provides that "The provisions of Articles 7 (4) through (7) and 30 shall apply from the redemption of beneficiary certificates issued for the first time after this Act enters into force (limited to the extension of the trust period; hereafter the same shall apply in this Article) in accordance with the trust terms and conditions which were first enacted or amended after this Act enters into force: Provided, That the redemption of beneficiary certificates to trust companies at the time of the enforcement of this Act shall be applied from the date prescribed by the Presidential Decree within one year from the enforcement date of this Act, but it shall be applicable from the redemption of beneficiary certificates issued in accordance with the trust terms and conditions established or amended after the enforcement date of this Act, and the provisions of the amended Investment Trust Business Act concerning redemption shall be applied to trust companies at the time of the enforcement of the amended Investment Trust Business Act, which shall be entrusted to the Presidential Decree. However, since the provisions concerning redemption of beneficiary certificates under the proviso of Article 2 of the Addenda to the amended Investment Trust Business Act, which infringe on the trust Company's obligation of redemption for the above 10-year Act, it shall not be applied.

In the same purport, the court below is just in holding that Article 2 of the Addenda to the amended Investment Trust Business Act does not violate the principle of clarity or infringe on the essential contents of property rights, and there is no error of law by misunderstanding the legal principles as to the unconstitutionality of Article 2 of Addenda to the amended Investment Trust Business Act, as

2. On the second ground for appeal

A. According to the facts found by the court below, ① on June 28, 199, the Defendant sold 9,294,89,670 units of beneficiary certificates of Spain 20 securities investment trust (hereinafter “instant investment trust”) operated by the Co-Defendant Seoul Investment Trust Co-Defendant 2 (hereinafter “Seoul”) on June 28, 199. ② Article 16(2) of the terms and conditions of the investment trust of this case shall repurchase the beneficiary certificates at the base price for the redemption claim and pay the redemption price in cash at the selling company’s business office: Provided, That the Defendant may pay the redemption price within 15 days from the date of redemption claim; ② Article 16(3) of the Securities Investment Trust Act provides that 29% of the outstanding bonds issued by the Plaintiff shall be subject to 97 percent redemption delay with the approval of the Seoul Investment Trust Co., Ltd.’s 199.

B. The proviso of Article 7(4) of the former Investment Trust Business Act provides that “The redemption may be postponed upon approval by the Financial Supervisory Commission, in the event of natural disasters, natural disasters, closure, suspension, or closure of the securities market, or other extenuating circumstances,” and Article 16(3) of the terms and conditions of the instant investment trust also provides that “The redemption deferment system is the same as that of the instant investment trust.” The aforementioned system provides that where there are special circumstances, such as natural disasters, closure, suspension, or closure of the securities market, which are incorporated under a securities investment trust due to which it is impossible to assess the justifiable value of the securities, and there is a lack of calculating the reasonable base price of the relevant securities investment trust (hereinafter “reasons for postponement”), the distribution company will postpone redemption until the cause is resolved and make it possible to repurchase at the reasonable value at the time when the cause is terminated, thereby, without complying with individual measures such as postponement of redemption, even if the distribution company uniformly gives public notice or announcement to all beneficiaries.

In addition, such postponement of redemption is a judicial legal relationship between an individual beneficiary who claimed redemption and a selling company, and whether it is lawful and effective, it is not determined depending on whether there exists a cause for postponement of redemption, and it cannot be determined depending on whether or not the Financial Supervisory Commission approves it. Thus, the postponement of redemption cannot be deemed unlawful or not, solely on the fact that it has not been approved by the Financial Supervisory Commission, and the plaintiff and the defendant agreed to the same purport that approval of the Financial Supervisory Commission was made as a legitimate or effective requirement for postponement of redemption in accordance with Article

C. Nevertheless, the court below rejected the defendant's assertion that the postponement of redemption was made with respect to non-treatment debt portion on the ground that there is no evidence to acknowledge that the defendant expressed his intention to postpone redemption objectively and uniformly without examining whether there exists any ground for postponement of redemption, and there is no evidence to acknowledge that the defendant expressed his intention to postpone redemption outside, and that there was not approved by the Financial Supervisory Commission. The court below erred in the misapprehension of legal principles as to the requirements for postponement of redemption and the nature of approval of postponement of redemption by the Financial Supervisory Commission

3. Conclusion

Therefore, the part of the lower judgment against the Defendant is reversed, and that part of 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 Yang Sung-tae (Presiding Justice)