Seoul High Court 2012Nu27093 (2013.02.06)

2011 Heavy 1312 ( October 26, 2011)

The deemed public offering of securities under Article 2-4 (4) of the Enforcement Decree of the former Securities and Exchange Act is also the method of securities offering.

deemed public offering also constitutes a securities public offering method that is exempt from gift tax on acquisition of forfeited stock price, and is deemed public offering when meeting the criteria for possibility of resale even without solicitation of subscription.

Article 39 of the Inheritance Tax and Gift Tax Act and Article 2-4 of the Enforcement Decree of the Securities and Exchange Act

2013Du5012 Revocation of Disposition of Imposition of Gift Tax

IsaA

port of origin

Seoul High Court Decision 2012Nu27093 Decided February 6, 2013

March 13, 2014

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

The grounds of appeal are examined.

1. Article 39 (1) 1 (c) of the former Enforcement Decree of the Securities and Exchange Act (amended by Act No. 828 of Dec. 31, 207; hereinafter referred to as "the former Securities and Exchange Act") provides that if a person who is not a shareholder of the corporation obtains profits from the issuance of new stocks through the offering of new stocks for the reasons that such new stocks were issued within 0 years before the issuance of new stocks, the former Securities and Exchange Act (amended by Presidential Decree No. 4065, Jan. 29, 2004; hereinafter referred to as "the former Securities and Exchange Act") provides that the former Securities and Exchange Act (amended by Presidential Decree No. 40657, Jan. 29, 200; hereinafter referred to as "the former Securities and Exchange Act") provides that the former Securities and Exchange Act shall not apply to the issuance of new stocks for the reasons that the new stocks were issued within 0 years after the issuance of new stocks and the issuance of new stocks shall not be deemed to be the value of the new stocks.

In light of the legislative purport of Article 2(4) of the former Enforcement Decree of the Securities and Exchange Act, if a listed corporation issues new stocks according to the method of offering of new stocks, it shall not only disclose the matters regarding the issuance thereof, but also follow strict regulations such as the issuance price close to the securities market. (Articles 53 and 57 of the former Enforcement Decree of the Securities and Exchange Act) and the fact that it is inevitable for a listed corporation to raise funds through public offering of new stocks through the securities market, etc., the lower court’s determination that the issuance price of new stocks is lower than their market price can not be imposed on the Plaintiff’s profits by uniformly determining that the issuance price of new stocks is lower than their market price pursuant to the method of offering of new stocks under Article 2-4(4) of the former Enforcement Decree of the Securities and Exchange Act. In so doing, the lower court’s determination that the issuance price of new stocks may not be deemed as the method of offering of new stocks under Article 2(3) of the former Enforcement Decree of the Securities and Exchange Act and thus, cannot be interpreted as one of the terms and conditions of the former Securities and Exchange Act.