Claimant and Appellant and Other 72 others (Attorney Lee Byung-hoon, Counsel for defendant-appellant)

Applicant and appellant 1 and 7 others

Applicant and Other 1 et al.

Suwon Electronic Co., Ltd. (Law Firm Squa, Attorneys Park Jong-soo et al., Counsel for the plaintiff-appellant)

Seoul Western District Court Order 2002 non-conforming9, 12(combined), 14 (Consolidated), 15 (Joint), 17 (Joint), 21 (Joint), 203 non-conforming1 (Joint), 2004 non-conforming32 (Joint) dated November 30, 2004 and 2003 non-conforming4 dated February 11, 2005

All appeals by petitioners are dismissed.

Expenses for appeal shall be borne by each party.

1. Basic facts

According to records, the following facts are recognized.

(a) The instant principal treatment electronic company (hereinafter referred to as “treatment electronic company”) is a company established for the purpose of manufacturing, processing, and selling electrical equipment and electronic parts for household use, and the applicants are minority shareholders of treatment electronic.

B. He was selected as an enterprise subject to the improvement of corporate structure on August 1999 and entered into a corporate restructuring work agreement with creditor financial institutions on January 26, 2000. As part of the structural improvement work, the creditor financial institutions were to make a large-scale conversion of 405 billion won into a large-scale conversion of 52% of the total issued and outstanding shares of treatment electronic financial institutions, and as a result, the creditor financial institutions were to become a major shareholder of 52% of the total issued and outstanding shares of treatment electronic financial institutions. ② On September 10, 2001, after the resolution of the board of directors of the board of directors on the reduction of 5,00 common shares with 1:00 shares free of charge through the consolidation of shares at 1: 2.00 common shares with registered common shares on October 12, 2001; 3.00,000 won per share after the resolution of the board of directors on November 15, 2001.

C. However, the Korea Stock Exchange (the “Stock Exchange”) was suspended from trading on March 15, 2002 by making a decision of delisting on treatment electronic stocks, and the period of delisting was adjusted from March 22, 2002 to March 15, 2002 through the period of suspension of trading between four business days after the listing. During that period, the average share price of treatment electronic stocks was 408 won average, and the closing price was 460 won last day of April 12, 2002, and the closing price was 460 won last day of April 12, 2002.

D. On September 30, 2002, treatment Electric Co., Ltd. entered into a business takeover agreement with the board of directors (hereinafter “the instant business transfer agreement”) to transfer the assets and liabilities of the processing Electric Industries and Video Industry as its subsidiary company to treatment Electric Industries Co., Ltd. (hereinafter “Treatment Electric Professional”). Accordingly, treatment Electric Co., Ltd’s business transfer of the assets and liabilities of the same amount as the total assets of the video business sector, air cooling business sector, ice business sector, and parts related to each of the above business sector (hereinafter “the instant business transfer”).

E. The Daewoo Electronic shall hold a temporary shareholders' meeting on October 25, 2002 (hereinafter "the shareholders' meeting of this case") with respect to the approval of the transfer of the business of this case, and the resolution to approve the transfer of the business of this case was made with the majority of shareholders who attended the general shareholders' meeting on October 25, 2002 with the consent of the transfer of the business of this case from October 10 to 25, 2002 and the consent of the transfer of the business of this case from October 25, 2002 to November 14, 2002, when opposing the above transfer of business.

F. As seen below, the applicants expressed their intent of opposing the transfer of the business in this case at the general meeting of the shareholders in this case. Upon approval of the transfer of the business in this case, they applied for the purchase of shares to Daewoo Electronic pursuant to lawful procedures from the date of the above resolution to November 14, 2002, but they presented the purchase price to 10 won in the process of consultation on the purchase price of shares, and they subsequently raised an objection against this. Ultimately, the applicants did not reach an agreement on the purchase price of shares between the above applicants, and the court of first instance applied for the determination of the purchase price of shares pursuant to Article 374-2 of the Commercial Act.

2. Determination on the legitimacy of the petition

(a) Procedural requirements to seek a decision on the purchase price of stocks from a court;

In order for a shareholder who objects to a resolution of the general meeting of shareholders to seek a determination of the purchase price of shares in a court under Article 374-2 of the Commercial Act, ① a shareholder who objects to the resolution stipulated in Article 374 of the Commercial Act has notified the company in writing prior to the general meeting of shareholders that he objects to the resolution; ② a shareholder has requested the company to purchase his shares in writing, specifying the kind and number of shares, within 20 days from the date of resolution of the general meeting of shareholders; and ③ a company has not reached an agreement on the purchase price between the company and the parties, etc.

B. Determination on the appeal filed by the applicant (appellant) 1, the applicant (appellant) 2, the applicant (appellant) 3, the applicant (Appellant) 4, the applicant (Appellant) 5, the applicant (Appellant) 6, the applicant (Appellant) 7, and the applicant (Appellant) 8

The court of the first instance rejected the above applicants' applications on the grounds that the above applicants failed to meet the above procedural requirements and were not qualified to be a party.

However, the above applicants only submitted a written appeal seeking the cancellation of the first instance court's decision while dissatisfied with the first instance court's decision, and did not submit specific grounds for appeal, and ex officio examination does not contain any error of law in the first instance court's decision. Thus, the above applicants' appeal is without merit.

C. Determination on the assertion of treatment electronic

(1) The applicant (appellant and the other party) did not express his opposing opinion to the resolution of the general meeting of shareholders of this case. Thus, the above applicant’s application is unlawful. However, according to the records, the above applicant (appellant and the other party) is recognized as having exercised the appraisal right for treatment electronic through the point where the securities company traded. Thus, the above assertion is rejected.

(2) The applicant(s) 17, applicant(s) 54, applicant(s) 57, applicant(s) 57, applicant(s) 24, applicant(s) and 30 expressed opposing intent to the resolution of the general meeting of shareholders, but the applicant(s) did not file a written claim for purchase of shares with respect to treatment electronic documents within 20 days from the date of the resolution of the general meeting of shareholders. Thus, the above applicant’s claim is unlawful. However, according to the records, the above applicant’s claim is rejected since it is recognized that he/she exercised the claim for purchase of shares with respect to treatment electronic documents.

(3) The applicant(s) 1, the applicant(s) 11, the applicant(s) 43, the applicant(s) 14, the applicant(s) 16, the applicant(s) 59, the applicant(s) 26, and the applicant(s) 70 expressed the opposing intent to the resolution of the general meeting of shareholders in this case, but agreed 10 won of the share purchase price presented by the Daewoo Electronic, and received the share purchase price. Thus, the above applicant’s application is unlawful. However, in light of all other circumstances indicated in the record, it is difficult to view that the above applicant consented 10 won of the share purchase price as above while filing the application for the determination of the share purchase price in this case. In light of all other circumstances, the securities company and the Korea Securities Depository traded between the applicant and the Korea Securities Depository, and it is difficult to accept the aforementioned applicant’s claim that the aforementioned applicant received the share purchase price in this case.

3. Determination of purchase price of stocks;

(a) Criteria for determining purchase price of stocks;

(1) Relevant provisions

Article 374-2(5) of the Commercial Act provides that "where the court determines a purchase price of shares, it shall calculate it at a fair price taking into account the company's property status and other circumstances" with respect to the decision of purchase price of shares following the transfer of business, etc. of

Article 191 of the Securities and Exchange Act shall apply in preference to the above provisions of the Commercial Act in cases where appraisal rights of stock-listed corporations or KOSDAQ-listed corporations are exercised. In such cases, the purchase price of stocks shall be calculated in such a manner as determined by Article 84-9 of the Enforcement Decree of the Securities and Exchange Act on the basis of “market price of stocks transacted on the securities market or KOSDAQ market before the date of resolution of the board of directors”: Provided, That

On the other hand, although the legislative purpose is different, according to Article 54 of the Inheritance Tax and Gift Tax Act, which provides for the method of assessing the value of unlisted stocks for the purpose of imposing unlisted stocks not listed on the Korea Stock Exchange, the value of unlisted stocks shall, in principle, be calculated by the weighted average value of net profit and loss per share and net asset value per share in 3 and 2

(b) elements to determine the purchase price of stocks;

㈎ 주식의 재산가치

Article 374-2(5) of the Commercial Act provides that the “property of a company” shall be taken into account when determining the purchase price of shares pursuant to the provisions of Article 374-2(5) of the Commercial Act. Since the value of shares includes profits that can be realized by shareholders through the liquidation procedures of the company without separately disposing of the shares, the property value of the shares of the relevant company shall be taken into account as factors determining the purchase price of shares. The property value of the shares shall be calculated by dividing the net asset value calculated by subtracting the total liabilities from the total assets of the relevant

㈏ 주식의 시장가치

The purpose of institutionalization of appraisal rights under the Commercial Act is to guarantee the rights of minority shareholders so that minority shareholders who oppose the matters determined by majority shareholders can realize the interests of shareholders and leave their status. Thus, the market value of shares that can be realized when shareholders dispose of shares in the market should be taken into account: Provided, That Article 191 of the Securities and Exchange Act shall apply to listed corporations among stock companies, and Article 374-2 (5) of the Commercial Act shall apply to unlisted corporations, so there are many cases where it is difficult to compute the objective market value of the shares, and in such cases, the amount calculated by reflecting the stock price of the listed corporations of the type of business similar to the company in question, the amount calculated by reflecting the stock price of the listed corporations at the final time when the transaction price was formed, and the amount estimated from the market value at the time when the

㈐ 주식의 수익가치

In general, shareholders are in possession of stocks after reviewing the growth and profitability of the company, and in cases where the company continues its business and creates profits, they may take into account the profit value of the stocks in calculating the stock value as “other circumstances” stipulated in Article 374-2(5) of the Commercial Act. However, there may be various methods to calculate the profit value of the stocks. However, the representative is to calculate the “net profit value per share” by dividing the “net profit value of the last three years’ net profit and loss per share (the interest rate determined and publicly announced by the Commissioner of the National Tax Service in consideration of the rate on distribution of the company with a maturity of three years’s maturity, which is guaranteed by the financial institution)” (see Article 54(1) of the Inheritance Tax and Gift Tax Act): Provided, That the valuation of the company’s stocks in progress or it is deemed difficult to continue its business should not reflect the profit value of the stocks (see Article

(3) Date of determining the purchase price of shares

In light of the fact that the determination of the purchase price of shares by a shareholder who requests purchase of shares in opposition to the transfer of business should not be taken into account the situation in which the company’s value changes by the transfer of business, so it is necessary to calculate the fair price of shares based on the objective value before affected by the decision on the transfer of business, and that Article 191(3) of the Securities and Exchange Act, which applies to the stock-listed corporation, provides that the purchase price of shares shall be determined based on the date preceding the date when the board of directors passes a resolution which causes appraisal rights, is set as the base date, it is most fair to calculate the determination factors such as net asset value per share and market value on the date preceding the date when the board

B. Calculation of purchase price of the stocks of this case

(1) Method of computation

In the first instance court, it judged that it is necessary to guarantee the increase of the market value of treatment electronic stocks in calculating the purchase value of the stocks of this case, and calculated the weighted average value of stocks in proportion to 1 :1 : the market value, the net asset value per share, and the profits value per share, respectively.

However, as seen earlier, treatment electronics seems to be difficult to create profits while continuing its business by transferring all assets of the business sector that can calculate profits through the transfer of the business in this case to treatment Bosch Rexroth, and in light of the fact that Article 54(4) of the Inheritance and Gift Tax and Gift Tax Act, which provides for the valuation of the value of unlisted stocks, does not reflect the profit value of the stocks in assessing the stocks of the company that is deemed difficult to continue its business, it is reasonable to not consider the “profit value of the stocks” in calculating the value of the stocks in this case.

Therefore, the stock purchase price of this case shall be calculated by adding the market value of the stock and the net asset value of one share to the average rate of 1.

In this regard, the applicant asserts that the special circumstances of the treatment electronic company should be reflected in calculating the purchase price of shares as “other circumstances” stipulated in Article 374-2(5) of the Commercial Act, since the creditor financial institutions secured control over the transfer of business in the course of debt-to-equity swap and caused damage to minor shareholders in bad faith, such as from 1 free capital to 3:00 of the transfer of business in this case, to the transfer of business in this case. However, even if it is acknowledged that there was an unlawful or unfair act in the course of the restructuring of the treatment electronic company in domestic affairs, the validity of the resolution of the resolution of the transfer of business in this case or the resolution of the general meeting of shareholders that approved the resolution of the transfer of business in this case, based on such reasons, cannot be reflected in calculating the purchase price of shares in this case

(2) The base date for calculation

As seen earlier, it is reasonable that the factors to determine the purchase price of stocks should be calculated on or before the date preceding the date of resolution of the board of directors which caused appraisal rights. In this case, since the transfer of the business of this case was decided on September 30, 202 by the treatment Electronic Board of Directors, the purchase price of stocks shall be calculated on September 29, 2002, which is the preceding day, as the base date.

On the other hand, the applicants asserted that the base date for calculating the purchase price of shares should be November 28, 2001, which is prior to the reduction of capital without compensation by means of stock consolidation at the ratio of 1:00,000. However, they asserted that the purchase price of shares calculated by averaging the actual transaction volume during the 60-day period prior to the said 60-day period is KRW 5,432 (the purchase price calculated by averaging the actual transaction volume during the previous 60-day period with the base date) In this case, the appraisal right of the applicants exercised against the resolution for the transfer of the business in this case is consistent with the essence of the appraisal right system guaranteed by the Commercial Act, and the base date for calculating the purchase price of shares is to fairly adjust the interests of minority shareholders and the company, and is also consistent with the equity with the stock-listed corporation to which the Securities and Exchange Act applies. Thus, the above applicants' assertion is not accepted

(3) Determination of a specific value

㈎ 주식의 시장가치

On September 29, 2002, the base date for calculating the purchase price of shares, the market value of treatment electronic shares as of September 29, 2002, and as seen earlier, the shares of treatment electronic shares were already delisting and there is no objective index to verify the fair market value at the time of the above base date.

In order to take into account the market value of stocks in calculating the stock purchase price, treatment electronic shall be the case where the relevant stocks are normally traded in the open market and their market value is formed on the base date for calculating the market value of stocks. Since treatment electronic was closed after April 13, 2002, the market value of treatment electronic stocks shall not be considered in calculating the market value of the stocks in this case as of September 29, 2002. However, as seen below, even in the case of an unlisted corporation, reflecting the market value of stocks in the case of an unlisted corporation, in accordance with the essence of the appraisal right system and is helpful in determining the fair stock purchase value, the above assertion is not acceptable.

(6) On November 30, 2001, the record reveals: (1) after treatment electronic was closed at a shareholders' meeting on November 30, 2001: 7:1 on December 26, 2001, shares of treatment electronic were re-transactioned at 3,750 won at the market price from the Korea Stock Exchange; (4) on March 15, 2002, the last closing price was suspended due to de-listing at 1,635 won; (5) on average price of treatment electronic shares of 52 days until de-listing at 2,958 won; (2) on the end of 2001 and early 2002, treatment electronic shares of 40 billion won were dis-listed at 70 billion won; and (4) on the first 70 billion won, treatment electronic shares of 5 billion won were continuously traded at 40 billion won during the 206th anniversary of such de-listing price; and (3) on average price of 200 billion won during the immediately preceding 200.

In light of the above facts, it is reasonable to set the market price of the shares at September 29, 2002, which is the base date for calculating the purchase price of treatment electronic shares, based on the average market price during the above period of de-listing, in full view of the following circumstances, such as: (a) the number of shares continues to maintain a certain market price in consideration of the possibility of rehabilitation and the possibility of re-listed even during the period of de-listing adjustment; and (b) the resolution of the transfer of the business of this case was announced after the expiration of the period of de-listing; and (c) there was no reason to affect the price of treatment electronic shares until such shareholders' expectations are broken; and (d) the market price at the time of September 29, 2002, which is the basis date for calculating the purchase price of the shares of this case,

On the other hand, the applicants applying the proviso of Article 191(3) of the Securities and Exchange Act, Article 84-9(2) of the Enforcement Decree of the Enforcement Decree of the Securities and Exchange Act, and claim that KRW 788.57, which is calculated in consideration of the market price and trading volume of the stock of this case during the 2 months preceding April 12, 2002 when the transaction by delisting was terminated, shall be the market value of the stock of this case. However, the base date for the determination of purchase price of the stock of this case ( September 29, 2002) shall be five months after the date of delisting, in light of the fact that the market price at the time of trading by the Stock Exchange before delisting as alleged above, cannot be deemed as the market value of the stock of this case. Thus, the above assertion shall not be accepted.

㈏ 1주당 순자산가치

The net asset value of the treatment electronic company as of September 29, 2002, which is the base date for the calculation of the purchase price of the instant shares, is difficult to understand in the records. However, according to the “actual report on assets and liabilities” prepared by the film accounting firm attached to the records, on December 31, 2001, the value of the assets of the treatment electronic company as of December 31, 2001 shall be KRW 1,893,754,00,000 for total liabilities, approximately KRW 5,580,349,000 for total liabilities, the net asset value -3,686,595,000,000 for total shares, the total assets value of the company shall be KRW 89,688,481 for common shares, and thereafter, there is a significant change in the number of assets, liabilities, and shares issued by the film accounting firm as of September 29, 2002.

㈐ 계산

Therefore, the purchase price of the instant shares shall be calculated by taking into account the market value of the shares as of September 29, 2002 and the net asset value of the shares per share as of September 1: 204 (408+0)/2) by average of 204 won (408+0)/2) considering the ratio of 1.

4. Conclusion

Therefore, the decision of the court below that dismissed the application of the applicant (appellant) 1, the applicant (Appellant) 2, the applicant (Appellant) 3, the applicant (Appellant) 4, the applicant (Appellant) 5, the applicant (Appellant) 6, the applicant (Appellant) 7, and the applicant (Appellant) 8 on the ground that it is unlawful. The decision of the court below that determined the purchase price of shares as 204 won for the remaining applicants and the principal of the case as to the application of the case is just in its conclusion, and it is so decided as per the Disposition.

[Attachment List omitted]

Judges Lee Dong-Smoking (Presiding Judge)