Whether a person who has become an oligopolistic stockholder after the commencement of reorganization proceedings falls under a “excess stockholder” under the provisions of the former Local Tax Act.

When a decision to commence reorganization proceedings has been made pursuant to the Company Reorganization Act, the right to manage and dispose of the company's business and the property shall be exclusively owned by the receiver, and the receiver shall not be a representative of the reorganization company and a public trustee, who is a manager of an interested organization composed of the reorganization company and its creditors and shareholders, can exercise his/her right to shareholders as an oligopolistic shareholder only after the commencement of reorganization proceedings. Thus, the oligopolistic shareholder cannot exercise his/her right to shareholders as an oligopolistic shareholder only after the commencement of reorganization proceedings. Therefore, the oligopolistic shareholder does not constitute the requirements of oligopolistic shareholder under Article 105 (6) of the former Local Tax Act (amended by Act No. 4269 of Dec. 31, 190) which is deemed to have acquired the property, and thus does not constitute the requirements of oligopolistic shareholder under Article

Article 105 (6) of the former Local Tax Act (amended by Act No. 4269 of Dec. 31, 1990); Articles 53 and 129 of the Company Reorganization Act

Supreme Court Decision 78Nu33 delivered on December 26, 1979 (Gong1980, 12552) 88Nu10961 delivered on July 25, 1989 (Gong1989, 1309)

Plaintiff 1 and five others Plaintiffs’ clinical Hun-Ga, Counsel for the defendant-appellant)

Sungnam City

Seoul High Court Decision 91Gu15517 delivered on May 29, 1992

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

We examine the grounds of appeal.

According to the main sentence of Article 105(6) of the Local Tax Act (amended by Act No. 4269, Dec. 31, 1990; hereinafter the same), when a person becomes an oligopolistic stockholder pursuant to Article 22(2) by acquiring stockholders or equity shares of a corporation from stockholders or employees, the oligopolistic stockholder shall be deemed to have acquired the real estate, vehicle, heavy period, standing timber, or aircraft of the corporation concerned. As such, the imposition of acquisition tax on an oligopolistic stockholder of the corporation shall be deemed to have been done by acquiring the company's property, and it is not much different from the actual possession of the company's property directly because the oligopolistic stockholder actually disposes of or is in a position to manage and operate the company in question if he is an oligopolistic stockholder, and therefore, in order to impose acquisition tax on the oligopolistic stockholder, the oligopolistic stockholder must meet the formal requirements of Article 22 subparag. 2 of the Local Tax Act and shall be in a position to substantially control the operation of the corporation concerned (see Supreme Court Decision 97Nu37, Dec. 37, 1997).

According to the facts established by the court below, the reorganization procedure has already been initiated under the Company Reorganization Act on July 19, 1989 with respect to the non-party company, and the plaintiffs became oligopolistic stockholders of the non-party company only after additional acquisition of the shares from other shareholders on September 11 of the same year. When the decision to commence reorganization proceedings under the Company Reorganization Act has been made, the right to manage and dispose of the company's business and the property shall be exclusively held by the receiver, and the receiver shall not be held by the receiver, but shall be a kind of public trustee, who is the manager of the reorganization company, the reorganization company and its creditors and the interested parties of the company. Thus, the plaintiffs who became oligopolistic shareholders only after the commencement of reorganization proceedings shall not exercise the rights of oligopolistic shareholders as the representative of the reorganization company, the execution of its business and the management of property, etc., and therefore, they do not constitute the requirements for oligopolistic shareholders who are deemed to acquire the assets.

Although the legal principles of oligopolistic shareholders are different, the court below did not stipulate the de facto control over the company property of oligopolistic shareholders as a taxation requirement of acquisition tax, and where the reorganization program of the reorganization company is implemented in the form not premised on the reduction of capital or the issuance of new stocks, if the reorganization program is implemented in the form not premised on the issuance of the new stocks, the oligopolistic shareholder of the company can recover the right to manage and operate the company's property which is normally operated while maintaining the ownership ratio of the existing company. It cannot be said that the court below erred in holding that the plaintiff satisfied the requirements of oligopolistic shareholder solely on the ground that the reorganization program is implemented in the form not premised on capital

There is reason to point this out.

Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Jeong Jong-ho (Presiding Justice)