Gift tax taxable objects where acquiring, etc. from an underwriter who issued convertible bonds, etc. in excess of the number entitled to allocation in proportion to the number of stocks;

In case where convertible bonds, etc. are acquired from a person other than an underwriter under the Securities and Exchange Act, if the corporation or underwriter who has issued the convertible bonds, etc., acquires them in excess of the number entitled to be allocated under equal conditions in proportion to the number of

Article 2 of the Inheritance Tax and Gift Tax Act

2015Guhap54384

Kim*

*The Director of the Tax Office

October 23, 2015

November 6, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On January 9, 2014, the defendant revoked the rejection disposition against the plaintiff's claim for correction of gift tax of KRW 0,000,000 against the plaintiff.

1. Details of the disposition;

(a) Co., Ltd.****** (hereinafter referred to as "***") was incorporated on July 29, 2002 for the purpose of the development, manufacture, and sale of materials, parts, and related equipment for display, and listed on the KOSDAQ market around October 2007. The Plaintiff is the largest shareholder of****** (16.26%) and 0,000,000 shares out of total shares (0,000 shares) and the representative director.

B.***** on September 18, 2008, issued ‘the bonds with preemptive right to private placement in the fourth separation form of interest coupons' (hereinafter referred to as ‘the bonds of this case') and the contents thereof are as follows:

Classification

Details

Total face value of jurisdiction

10 billion won

Issuance Price

per face value of bonds 100%

The surface interest rate

0.0% by mass

Maturity ( Repayment Date)

3 years ( September 18, 201)

Method of Repayment

Temporary repayment with maturity of 115.4321% of total face value of corporate bonds

The acquiring company

Co. * Bank

The exercise ratio of warrant certificates

100% of the face value of issuance

The initial exercise price

7,965 won: Provided, That the reasons specified in the contract for the issuance of new shares, such as ex post facto increase, free of charge, stock dividends, split or consolidation of shares, etc.

If any event occurs, the price can be adjusted.

******* on September 18, 2008, after entering into an underwriting contract for the bonds of this case with * Bank* Bank, Co., Ltd.* Bank held the bonds of this case separately from the total amount of the bonds of this case, and * Bank held the bonds of this case as they are, after acquiring the bonds of this case, the shares shares at the time before the issuance of the bonds with preemptive rights to new shares separate from the bonds of this case 1).****** securities (500,000 won per each sheet) sold ****** Securities Co., Ltd. ** on the same day, the total face value of the bonds of this case (50,000,000 won per sheet) out of the face value of the bonds of this case to the Plaintiff, and again sold 8 billion won (500,000,000 won per sheet) out of the total value of the bonds of this case to the Plaintiff (300,000,00 won per sheet).

C.***** paid 0,00,000 shares free of charge on November 7, 2008, and adjusted the exercise price of the warrant right as of December 2, 2008 to KRW 2,811 as of December 2, 2008. The Plaintiff exercised the warrant right of KRW 4 billion on November 13, 2009 and converted 0,000,000 shares into shares. On February 28, 2010, the Plaintiff reported and paid gift tax on the interest arising from the conversion of shares to the Defendant on February 28, 2010, converted the exercise price of the warrant right of KRW 0,000,000 to shares on November 15, 201, and converted the exercise price of the warrant right of KRW 0,000,000,000 to shares, and reported and paid 00,0000,000 shares to the Defendant on February 28, 2011.

D. On November 11, 2013, the Plaintiff filed a claim for correction against the Defendant for the second exercise of gift tax amounting to KRW 0,000,000,000, on the ground that the Plaintiff did not acquire the warrant certificates of this case from an underwriter under the Securities and Exchange Act, but the developments leading up to the acquisition of the new shares certificates of this case, which are the new shares, did not constitute the subject matter of gift tax, on the ground that they were normal transactions rather than transactions to reduce tax burdens. Accordingly, on January 9, 2014, the Defendant issued a disposition of refusal against the Plaintiff’s request for correction (hereinafter “instant refusal disposition”), and the Plaintiff filed a request with the Tax Tribunal on April 3, 201 of the same year, but was dismissed on November 17 of the same year.

[Ground of recognition] Unsatisfy, Gap evidence Nos. 1 to 8 (including paper numbers), the whole pleadings

2) If the exercise price of warrant certificates was not adjusted even if the person had been free of charge, and the price of the exercise price of warrant certificates was fixed at the initial exercise price, even if the company issuing warrant certificates has reduced without compensation the value of one share to exercise the preemptive right at the price of the initial exercise price higher than the time of issuance of warrant certificates, the underwriters would have caused unfair consequences to underwriters.

조정후 행사가격 = 조정전 행사가격 × [ }기발행주식수 + (신발행주식수 × 1주당발행가격 / 시가) � / (기발행주식수 + 신발행주식수)]의 취지

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff's assertion

1) The provisions of Article 40 (1) 2 (b) of the Inheritance Tax and Gift Tax Act cannot be the basis for taxation on the profits arising from the conversion of the shares of this case, since * Banks or** Securities Co., Ltd. cannot be seen as underwriters under the Securities and Exchange Act.

2) The Plaintiff’s purchase of warrant certificates of this case was urgently required******** the Plaintiff’s purchase of the warrant certificates of this case to escape from the risk burden of the bonds of this case ** the Plaintiff’s purchase of the bonds of this case * the bank and the issuance of the bonds of this case ** the issuance of the bonds of this case * the interests of the securities corporation are in conflict with the interests of the securities corporation ** the bypass transaction to reduce the gift tax unfairly. Therefore, the provisions of Articles 2(4) and 40(1)2(b) of the Inheritance Tax and Gift Tax Act cannot be the basis for taxation

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 40(1)2(b) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 201; hereinafter “former Inheritance Tax and Gift Tax Act”) provides the basis for determining whether the Plaintiff constitutes the person who subscribed to the instant warrant certificates (i) the Act, which applies at the time of conversion of shares of the warrant certificates of this case, is the largest shareholder of the corporation that issued convertible bonds or warrant certificates, etc.

A person who has a special relationship with him and is entitled to receive convertible bonds, etc. from the corporation in excess of the number of shareholders entitled to receive the allocation under equal conditions in proportion to the number of his stocks (capital

(1) Any person who has received or acquired the shares from an underwriter pursuant to Article 9(12) of the Market and Financial Investment Services and Capital Markets Act;

was issued or issued under convertible bonds or warrant certificates, etc. as the case has been included)

any profit by exceeding the conversion value, etc. of the shares to be delivered, such profit

of the amount equivalent to such amount shall be deemed to be the value of donated property of the person who acquired such profits.

section 1.

Meanwhile, the former Financial Investment Services and Capital Markets Act (amended by Act No. 10063, Mar. 12, 2010)

Before the enactment of the former Capital Markets Act (hereinafter referred to as the "former Capital Markets Act") on August 3, 2007 and February 4, 2009

The former Securities and Exchange Act (Article 2 of the Addenda to the Capital Markets Act (Act No. 8635 of Aug. 3, 2007) entered into force.

The repeal of the former Capital Markets Act (No. 8635, August 3, 2007);

Article 44(1) of the former Securities and Exchange Act at the time this Act enters into force (hereinafter the same shall apply)

or, if there is a provision corresponding to this Act, if there is such provision, before

this Act or any corresponding provision of this Act shall be deemed to have been quoted in lieu of the provisions of this Act.

The former Financial Investment Services and Capital Markets Act provides for a separate transitional provision on the application of the underwriter's provision under Article 9 (12).

There was no statement.

(2) In full view of the aforementioned relevant provisions, an underwriter under Article 40(1)2 (b) of the former Inheritance Tax and Gift Tax Act, which applies at the time of the conversion of shares of the instant warrant certificates, is stipulated as an underwriter under the former Capital Markets Act. However, considering the following circumstances, an underwriter under Article 40(1)2 (b) of the former Inheritance Tax and Gift Tax Act, which applies at the time of the conversion of shares of the instant warrant certificates, shall be deemed to mean an underwriter under the former Securities and Exchange Act, who is not an underwriter under

① As the former Capital Markets Act was enacted on August 3, 2007 and enforced on February 4, 2009, the provisions on underwriters under Article 9(12) do not have any separate transitional provisions. Thus, the former Capital Markets Act’s provisions on underwriters under the former Capital Markets Act are applied since February 4, 2009, which was enacted and enforced under the said Act, and the former Securities and Exchange Act’s provisions apply thereafter.

② As seen earlier, the term “subscriber” under the former Securities and Exchange Act or the former Capital Markets Act refers to a person who performs a certain act as stipulated in the laws and regulations at the time of issuance of the pertinent securities, and is defined as at the time of issuance, etc. of the securities in light of its nature. As seen earlier, the instant bonds were issued on September 18, 2008, which was before the enactment and enforcement of the former Capital Markets Act, and were issued on the same day as the same day * Bank acquired this date ***** the instant securities company acquired again and transferred the instant warrant certificates to the Plaintiff on the same day. As such, the instant warrant certificates were issued, transferred, and acquired before the enforcement of the former Capital Markets Act.

③ In a case where both the phrase “an underwriter” under Article 40(1)2(b) of the former Inheritance Tax and Gift Tax Act is interpreted as is, it would result in the retroactive application of the provisions on underwriters under the former Capital Markets Act to the extent that the said Act was enacted and enforced before February 4, 2009.

(3) Therefore, in applying Article 40(1)2(b) of the former Inheritance Tax and Gift Tax Act to the benefit arising from the conversion of shares of the warrant certificates of this case, the issue of whether the purchaser is "in applying Article 40(1)2(b)

B) Whether a stock company* Bank,** Securities Company is an underwriter under the former Securities and Exchange Act.

(1) Examining the contents of the relevant Acts and subordinate statutes, Article 2 (6) and (7) of the former Securities and Exchange Act provides that "the underwriter of securities" means an issuer of securities for the purpose of underwriting and sale, and Article 2 (4) of the former Securities and Exchange Act and Article 2-4 (2) of the Enforcement Decree of the former Act (amended by Presidential Decree No. 20947 of July 29, 2008; hereinafter referred to as the "former Enforcement Decree of the Securities and Exchange Act") provides that "the purchaser of securities shall be 50 or more persons who will receive an offer to sell or invite an offer to sell securities outside the securities market or KOSDAQ," and Paragraph (3) of the same Article provides that "the purchaser shall be 50 or more persons who will receive an offer to sell or invite an offer to sell securities for the same purpose" and Paragraph (2) of the same Article provides that "the purchaser shall be 50 or more persons who will acquire or invite an offer to sell securities for the same purpose without the invitation to buy or sell such securities:

(2) In light of the above provisions, the above facts are as follows: ①*********** has issued 100% of the bonds of this case to the bank,** the Bank divided the warrant certificates and transferred 100% of them to ************* has transferred 80% of the warrant certificates to the plaintiff who is the largest shareholder of******************* has issued the bonds of this case,******* Bank****the Bank, ** the Bank and ** the Bank *** * the Bank cannot be deemed to have acquired the bonds of this case or the warrant certificates of this case with the approval of the Financial Supervisory Commission about the acquisition or sale of the bonds of this case from 50 or more personal investors,**the Bank*** is difficult to be considered to have acquired the bonds of this case *** the securities company under the old Securities and Exchange Act?

C) Therefore, since the Plaintiff did not acquire the instant preemptive right from the underwriter, Article 40(1)2 (b) of the former Inheritance Tax and Gift Tax Act does not serve as the basis for taxation on the profits accrued from the conversion of shares into the warrant certificates.

2) Whether Article 2(4) and Article 40(1)2(b) of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 2501, Jan. 2, 2006) constitute a taxation basis

A) Article 2(4) of the former Inheritance Tax and Gift Tax Act provides that where it is recognized that an inheritance tax or gift tax has been unjustly reduced by indirect or indirect method via a third party, or by a method involving two or more acts or transactions, such act or transaction shall be deemed to have been made directly by the party concerned, or a continuous one act or transaction. In order to apply Article 2(4) of the former Inheritance Tax and Gift Tax Act, “an act of unreasonably reducing the inheritance tax or gift tax” should be recognized as “an act of unfairly reducing the inheritance tax or gift tax”. The above provision aims to realize equality by regulating the act of tax evasion in order to avoid or reduce the burden of inheritance tax or gift tax by taking into account the form of transaction involving the third party or another act or transaction between the third party and the third party, and it shall be determined based on whether the general public does not take a rational transaction form. Meanwhile, Article 40(1)2(b) of the former Inheritance Tax and Gift Tax Act provides that “the largest shareholder, regardless of whether the largest shareholder, etc. of the corporation that issued convertible bonds, etc., acquires shares or profits acquired from the corporation and the transfer price of stocks.

B) Determination

(1) 다툼 없는 사실, 갑 제7호증의2, 갑 제11호증의 각 기재에 의하면 #####은 Dual Brightness Enhancement Film3) 제품 개발을 하고 있었고, 위 제품의 양산을 위해 추가자금이 필요하였는바, 차입금 및 사채의 합계액이 2008년에는 482억 원이었고, 2009년에는 약 448억 원이었으며, 유형자산 취득금액이 2008년에는 약 106억원, 2009년에는 150억 원이었던 사실, *****은 이 사건 사채 발행 이후 2008. 10.처음으로 월매출 150억 원을 달성한 사실을 인정할 수 있다.

(2) Comprehensively taking into account the following circumstances known from the above facts, the plaintiff in the early fluorical film films, which continuously enhances the luminous efficiency of b.e., b. light that does not pass the light board by anti-luminous film, **************** as the plaintiff acquired the warrant certificates in this case in the economic substance of the company ******* as the third person acquiring the warrant certificates in this case ********* by indirect method of acquiring the warrant certificates in this case ************* by direct method of acquiring the warrant certificates in this case 2 (4) and Article 40 (1) 2 (b) of the former Inheritance Tax and Gift Tax Act shall apply to the benefit arising from the conversion of the shares in this case.

① The Plaintiff was planned to acquire the preemptive right of this case separated from the bonds prior to the issuance of the bonds of this case, and this was the largest shareholder and the representative director.*******'s will.

② In fact, the Plaintiff acquired the preemptive right to the instant bonds from the securities company****

③ In light of the fact that Article 40(1)2(b) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 1011, Jan. 2, 2011) is naturally applicable to the situation where the corporation issues warrant certificates, etc. for its financing, and that the above provision imposes tax without asking the largest shareholder, etc. for the purpose or cause of acquiring and acquiring warrant certificates, etc. in excess of the share ratio owned by the preemptive right, etc., even if the bonds were issued ****** in a situation where the financing is required, such circumstance is difficult to be considered as an important matter to determine whether Article

④ Article 40(1)2 (b) of the former Inheritance Tax and Gift Tax Act, which is at issue as to whether Article 2(4) of the same Act applies, provides that a person in a special relationship with the corporation, including the largest shareholder, obtains profits equivalent to the difference between the market price of shares and the acquisition price of shares by acquiring preemptive rights, etc., and thus, imposes gift tax where such gains exist regardless of whether such gains are the result from the acquisition of preemptive rights, etc. to the exercise of the rights to new stocks, etc. and from the exercise of the rights, the risk of stock price fluctuations. As such, whether the Plaintiff obtained profits equivalent to the difference between the market price and the acquisition price of shares by taking the risk of stock price fluctuations during a period of two years after the Plaintiff acquired the warrant certificates of this case, is difficult to be deemed to be an important factor in

⑤ On the other hand, the plaintiff seems to have been in the position of leading participation as the largest shareholder and representative director************'s decision-making, and could have anticipated that the value of shares increases****** due to large-scale investment.

6. In addition, due to the issuance of the bonds of this case, the existing shareholders have fallen in their shares ratio. The plaintiff who is the largest shareholder can be deemed to have intentionally acquired the preemptive right of this case for the purpose of maintaining or increasing shares ratio.

7) The Plaintiff purchased the warrant certificates of this case from **** Securities Co., Ltd. 21,000,000 won per sheet and traded in violation of the empirical rule that sold the preemptive rights of this case to 16,000,000 won per sheet (as to this, the Plaintiff was so doing).

as a whole, the interest of KRW 10,000,000 as a whole, because the securities corporation received fees.

** Securities Company may obtain transfer marginal profits in addition to fees.

It is understood that even if it was easily given up and purchased, it was sold to the Plaintiff at low prices.

of this section).

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so ordered as per Disposition.

shall be ruled.