Seoul Administrative Court 2007Guhap38097 ( July 24, 2008)

Whether the price of the Internet subscription can be deemed as the market price at the time of acquisition of forfeited stocks due to capital increase

If public offering is made through the Internet within three months from the date of acquisition of forfeited stocks, and if an investor has acquired stocks, it is reasonable to view the acquisition price at the market price.

The contents of the decision shall be the same as attached.

Article 29 (Calculation Method, etc. of Value Deemed Donation upon Capital Increase or Capital Reduction)

Article 49 of the Enforcement Decree of the Inheritance and Gift Tax Act

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. The defendant shall revoke each disposition of imposition of KRW 11,857,240 and KRW 9,881,040 of the gift tax reverted to the plaintiff in 1999 against the plaintiff on January 13, 207.

The reasoning for this Court’s explanation is as follows: “22,80 shares” of No. 16 of the judgment of the court of first instance shall be read as “28,00 shares”; “228,00 shares” shall be used as additional evidence submitted at the court of first instance, which is insufficient to recognize the Plaintiff’s assertion, and the reasoning for the judgment of the court of first instance shall be the same, except for rejection of each description of No. 13-1, No. 13-2 of the evidence submitted at the court of first instance, which is insufficient to recognize the Plaintiff’s assertion; therefore, it shall be cited as

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2007Guhap38097, 2008)]

1. The plaintiff's claims are all dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s imposition of KRW 11,857,240 and KRW 9,881,040 against the Plaintiff on January 13, 2007 shall be revoked.

1. Details of the disposition;

A. On July 28, 199, a corporation incorporated for the purpose of online marriage intermediary business (hereinafter “non-party corporation”) owned 19,000 shares of common shares of 5,000 won per face value at the time of its establishment, and the Plaintiff, a representative director, owned 19,00 shares of 5,00 shares of common shares of 5,000 won at the time of its establishment (38%) 20,000 shares of a company, 5,000 shares of directors, and 5,00 shares of directors, and 6,000 shares of auditor.

B. On September 1, 1999, the non-party company decided to hold a board of directors to offer new shares with the price of KRW 440,000 per share of KRW 5,000 per share to be allocated to the non-party company each shareholder of the non-party company and the third party to the OO Co., Ltd. (hereinafter the resolution of this case), but NO and Gangwon did not accept new shares allocated by the above resolution. The plaintiff acquired 227,40 shares [52,80 shares (27,400 shares-40,000 shares) exceeding the plaintiff's share ratio (7,000 shares (740 shares)] with the acquisition price of the shares of this case, and paid for the acquisition price of KRW 10,100,000 per share (740 shares) on October 25, 205, 1992 (7400 shares), and paid for each share of KRW 10,100,000 per share (70 shares).

C. On January 13, 2007, the Defendant: (a) deemed that at the time of capital increase by issuing new shares, the Plaintiff received the allotment of the preemptive right waived by NOO or Gangwon and received the instant shares at a par value lower than the market price; and (b) applied Article 39(1)1(a) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6048, Dec. 28, 199; hereinafter the same shall apply); (c) Article 29(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 1660, Dec. 31, 199; hereinafter the same shall apply); and (d) Article 19(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 16660, Dec. 31, 199; hereinafter the same shall apply); and (e) deemed the value assessed per share before the capital increase by the Nonparty’s stocks as the gift price of this case to the Plaintiff.

D. On March 29, 2007, the Plaintiff filed a request for a national tax trial against the Plaintiff’s objection, but the National Tax Tribunal dismissed the request on August 23 of the same year.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 6, Eul evidence 1 to 3, the purport of the whole pleadings

2. Whether the disposition of imposition is lawful.

A. The plaintiff's assertion

(1) The non-party company decided to issue new shares of 440,000 shares through the resolution of this case. However, the non-party company decided to issue new shares of 60,000 shares on October 2, 199 as the shareholders did not subscribe to new shares due to poor financial conditions. The plaintiff deposited KRW 1,100,000 with the non-party company as the share price of 220,000 shares on April of the same month. However, the non-party company, who did not pay the share price of 60,000 shares, decided to issue new shares of 1,10,000 shares on May 15, 199, to substitute the above 1,100,000 shares with the share price of 22,80 shares (=60,000 shares) as a matter of course, the plaintiff acquired the share price of 20,200 shares among them.

Therefore, Article 39(1)1(b) of the Act shall apply to the acquisition of the instant shares merely because the acquisition of forfeited shares does not fall under the case of acquisition of forfeited shares, but only some of the shareholders having a special relationship with the Plaintiff renounce their preemptive rights.

(2) The instant disposition considered the assessment value per share prior to the increase of the capital of the instant shares as KRW 10,000,000, which was the general public offering price of October 27, 1999. However, the said general public offering price, when the Internet site members of the Nonparty company take over 50 share shares, determined a higher price than the actual amount by taking into account the benefits that the online member of the Nonparty company would receive a discount of KRW 35,000 or annual fee of KRW 350,000 or KRW 550,000,000, and at the time, the management status of the Nonparty company was very weak.

Therefore, the market price of the shares in this case should be less than 5,00 won, and even if it is not so, since the shares in this case fall under the case where the market price is unclear, it should be determined by the supplementary method of assessment.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The resolution of this case was held by both the Plaintiff, NoOO, and KangO, an executive officer of the non-party company, and the main contents of the resolution of this case were allocated 20,000 shares out of 440,000 shares to the non-party company, and the Plaintiff allocated 240,00 shares to the non-party company and 180,000 shares to the non-party, but the remaining 129,00 shares out of 51,00 shares among them are disposed of by the non-party 129,00 shares as well as 20,000 shares to the non-party 129,00 shares forfeited by the well-known group.

(2) On October 9, 199, the non-party company decided to offer new shares with 10,000 won per share by public offering. The non-party company received the subscription for new shares on the Internet from 27th of the same month to 11th of the same year after the non-party company announced it on its website, etc. The 19,000 shares were accepted by 91 general individuals, and the remaining 80,900 shares were disposed of as forfeited on November 21, 199. The non-party company may join the non-party company as a member, but a majority of the above 91 shares per share were 50-1,010 shares. After that, the non-party company acquired the shares for each of the above 90-1,000 shares for each of the 10-1,010 shares for each of the above 90-1,010 shares for each of the 10-10th of December 10, 199.

(3) Meanwhile, the Seoul Regional Tax Office conducted a tax investigation with respect to the non-party company from June 21, 2006 to September 14, 2006, and the Plaintiff stated that the non-party company acquired part of 240,000 shares of the non-party company according to the resolution of this case, who was asked questions about the process of acquiring 220,00 shares of the non-party company. In the course of the tax investigation, the Plaintiff submitted the minutes of each board of directors' meeting as of November 9, 199; the date of the tax investigation; November 3, 1999; the date of November 9, 199; the date of November 21, 199; the date of each board of directors' resolution other than the resolution of this case; and all the contents related to the issue of new shares by means of public offering.

On October 4, 1999, the minutes of the board of directors (Evidence A No. 3-1), the minutes of the board of directors on October 15, 1999 (Evidence A No. 8), and the minutes of the board of directors on October 4, 1999 that the Plaintiff paid KRW 1,100,000,000 for shares on October 4, 199, to the existing shareholders of the instant lawsuit.

[Ground of recognition] Facts without dispute, Gap evidence 3-2, Eul evidence 4-7, 10-11, and the purport of the whole pleadings

D. Determination

(1) The plaintiff asserts that Article 39 (1) 1 (b) of the Act shall apply only to the non-party company's acquisition of the shares of this case allocated by the resolution of the board of directors on October 15, 199, because the shares of this case did not have been cultivated by waiver of the preemptive right allocated by NAO or GangwonO by the resolution of this case, but only to the non-party company's waiver of the preemptive right. However, the plaintiff stated to the effect that the plaintiff acquired the shares of this case allocated by the resolution of this case at the time of investigation of the non-party company, and that the plaintiff submitted the evidence Nos. 3-1, 8, and 9 of the evidence No. 3-1, 8, and 9, and the testimony of the witness Kim Jong-tae was insufficient to believe that the testimony of the non-party company No. 3-1, 8, and 9 and that there was no other evidence to acknowledge it. Thus, the plaintiff's assertion that the non-party company properly accepted the shares of this case by the resolution of the board of directors.

Therefore, it is reasonable to view that some shareholders of the non-party company, such as NoO and KangO, have acquired the instant shares in excess of their share ratio as shares that have waived their preemptive rights, according to the resolution of this case. Thus, the disposition of this case made by the defendant to acquire the instant shares by applying Article 39(1)1 (a) of the Act and Article 29(1) of the Enforcement Decree of the Act

(ii)Determination on the evaluation value per share before capital increase;

(A) According to Article 39(1) of the Act and Article 29(2) of the Enforcement Decree of the Act, the value of deemed donation (the total number of issued stocks before capital increase) + (the number of issued stocks before capital increase) + (the total number of issued stocks before capital increase + the number of issued stocks increased by capital increase) ± (the number of issued stocks before capital increase + the number of issued stocks increased by capital increase) ± (the total number of issued stocks before capital increase + the number of issued stocks increased by capital increase) shall be calculated by multiplying the number of new stocks of a person who is allocated in excess of the number of issued stocks under equal conditions by the number of issued stocks. Article 49(1) of the Enforcement Decree of the same Act provides that with respect to the method of appraisal on the value of each stock before capital increase, the term “those recognized as market price under the conditions as prescribed by the Presidential Decree such as expropriation, public sale price, appraisal price, etc.” in Article 60(2) of the same Act provides that the transaction price exceeds the value of the concerned property from three months before the appraisal base date.

(B) In full view of the above provisions, the assessment value per share before and after the date of donation may be based on the transaction amount if there is a fact of trading the relevant shares for three months before and after the date of donation. The fact that the shares of the non-party company was transferred to the general public by means of public offering of 10,000 won from October 27, 1999 to October 27, 1999 when the share price of the instant shares was paid from October 27, 1999 to October 27, 199, when the shares of the non-party company were not more than three months after the date of donation. As seen above, it is legitimate to view that the defendant had traded the relevant shares on the date nearest date of donation as of the base date of appraisal, and thus, it is reasonable to assess the price per share before the capital increase by such amount.

(C) On this basis, the Plaintiff asserted that the above KRW 10,00 is the price taken into account the benefits of discounting the membership fee of the non-party company when acquiring the 50 shares of the non-party company, and that it cannot be deemed as the market price since the situation of the non-party company was inferior at the time. However, the Plaintiff’s assertion that the testimony of the evidence Nos. 4-1 through 3, 5, 10, and 11 and the witness Kim O is insufficient to recognize it, and there is no other evidence to acknowledge it. Rather, there is a large number of the underwriters, and the number of shares acquired per person is diverse from 50 to 1,010 shares, and the number of shares acquired per person is 50 to 1,000 shares of the non-party company, which is an institutional investor at the time of the above general public offering. Therefore, it is reasonable to deem that the above assertion by the Plaintiff also is 10,000 won per share price.

3. Conclusion

그렇다면, 원고의 이 사건 청구는 이유 없으므로 이를 모두 기각하기로 하ㅕ 주문과 같이 판결한다.