2012west 4115 ( December 26, 2012)

not subject to the provision on donation of profits resulting from capital increase unless it is subject to the method of securities offering;

The instant company’s subscription to new shares cannot be deemed as subscription to new shares by means of public offering, including the fact that there was no sanctions against the Financial Services Commission for failing to perform its duty to report on subscription to new shares by means of public offering.

Article 39 of the former Inheritance Tax and Gift Tax Act

2013Guhap8448 Revocation of Disposition of Imposition of Gift Tax

Ansan ○

○ Head of tax office

September 18, 2014

October 30, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposing gift tax on the Plaintiff on July 24, 2012 is revoked.

1. Details of the disposition;

A. On May 3, 2007, A○○○○○○○, a listed corporation (former trade name: Kenya○○○○○, Inc.; hereinafter referred to as “instant company”), announced the issuance of new shares with respect to the third party allotment method.

B. Since May 4, 2007 to August 16, 2007, the company of this case published the decision of capital increase for new shares at least nine times. On August 1, 2007, 2007, the company of this case withdrawn the submission of the securities registration statement on the ground that "the last party to the third party allocation for the third party is merely ○○ and thus is only ○○, and thus does not fall under the method of stock offering under Article 2-4 (1) and (3) of the former Securities and Exchange Act (amended by Presidential Decree No. 20551, Jan. 18, 2008; hereinafter "Enforcement Decree of the Securities and Exchange Act") and Article 2-4 (4) and (4) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20551, Jan. 18, 2008; hereinafter "the Enforcement Decree of the Securities and Exchange Act")."

C. Meanwhile, on August 16, 2007, the instant company issued a public notice for capital increase with the following contents (hereinafter “instant public notice for capital increase”). The Plaintiff acquired the instant public notice for capital increase with the instant public notice for capital increase (the date of payment for capital increase, August 16, 2007; the amount of payment KRW 00 billion; hereinafter “instant shares”).

(e) After examining the change of shares with respect to the instant company from April 30, 2012 to June 8, 2012, the director of the regional tax office, “○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ KRW 1) was notified of the Plaintiff’s profits as indicated below the final price per share as calculated on August 14, 2007.

○○○ (hereinafter referred to as the “instant disposition”) imposed the tax imposition of KRW 00.

G. The Plaintiff was dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on September 12, 2012, but the Tax Tribunal dismissed the appeal on December 26, 2012. The Plaintiff appealed and filed the instant lawsuit on March 22, 2013.

[Ground for Recognition: Facts without dispute, Gap evidence 1 through 10, each entry of Eul evidence 1 through 4, the purport of all pleadings]

2. The assertion and judgment

A. The plaintiff's assertion

1) Whether the exclusion from taxation under the Inheritance Tax and Gift Tax Act is applicable

Article 39(1)1 (a) of the Inheritance Tax and Gift Tax Act provides that no gift tax shall be levied on the case where the issuance of new securities is made through an offer to acquire the securities under Article 2(3) of the Securities and Exchange Act. The term "public offering of new securities" refers to the case where the person who has received an offer to acquire the securities is 50 persons or more. However, among the persons who participated in the offering of new securities, since leCC, ParkD and KimE acquired the stocks under the name of 15 persons or more as well as the principal, the actual investors exceed 50 persons, and eventually, the company of this case has invited 50 persons or more to hold a presentation meeting for investment, and thus, the company of this case should interpret the above "public offering of new securities" as being excluded from sanctions against non-performance of obligation to report on the offering of new securities, it does not affect the fact that the person who has received an offer constitutes a public offering of new securities, and therefore, it constitutes a reduction of tax exemption from the requirement of the offering of new securities without reasonable reasons.

(ii)issuance in accordance with the market price;

Article 39(1)1 of the Inheritance Tax and Gift Tax Act applies to a case where new shares are issued at a low price. The company of this case has lawfully decided the issue price at the time of issuing new shares at a low price pursuant to the former Regulations on Issuance and Public Disclosure, etc. of Securities (amended by the Financial Services Commission Notice No. 2008-8, Apr. 7, 2008; hereinafter referred to as the “securities Regulations”). Moreover, the issue price at issue was made for general investors, including the Plaintiff, who have no interest with the decision-making body of the company of this case, and thus, the company of this case is a normal and reasonable transaction and there is no motive to distribute profits to the subscribers, including the Plaintiff. Accordingly, the issue price at issue determined according to the securities regulations shall be deemed the market price unless there are special circumstances.”

A) The Plaintiff’s gift profit is calculated pursuant to Article 29(3)1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. The Defendant calculated “the value per share before the capital increase or merger” pursuant to the proviso to Article 63(1)1(a) of the Inheritance Tax and Gift Tax Act by applying “the value per share before the capital increase or merger” pursuant to Article 52-2 subparag. 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act as “the value per share before the capital increase or merger.” However, the par value division is merely a split of existing shares without capital change, and it does not lose the identity between shares before and after the capital increase, and thus, the above provision is stipulated.

It can not be seen as a "marred, merged, etc.".

B) In addition, new shares issued by capital increase with consideration of the instant case, including the instant shares, were protected for one year. The Plaintiff acquired shares on condition of rescission on condition of acceptance of protection. Therefore, the Plaintiff’s assessment of the price of the instant shares under Article 63 of the former Inheritance Tax and Gift Tax Act is unlawful even though it is necessary to assess the price of the instant shares in accordance with the evaluation provision on conditional rights under

C) In rendering the instant disposition, the Defendant calculated the “value per share prior to the capital increase” under Article 29(3)1 (a) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act on the basis of the payment date of the capital increase for the instant capital increase (the date of August 16, 2007). However, in the case of capital increase for new shares issued by a third party, the effect of the revocation of rights is the resolution of the capital increase. Therefore, the said value should be calculated on the basis of the resolution date of the board of directors rather than the payment date for the capital increase

4) Illegality of additional tax portion

Even if the principal gift tax portion among the instant disposition is unlawful, the Plaintiff’s failure to report the relevant gift tax due to the difference in the interpretation of relevant Acts and subordinate statutes is not an erroneous or misleading legal relationship regarding the issue of capital increase with respect to the instant disposition, and thus, constitutes a case where there is a justifiable reason not to mislead the Plaintiff. Therefore, the part imposing additional tax among the instant disposition is unlawful.

(b) Related statutes;

Attached Form is as shown in the attached Form.

(c) Fact of recognition;

1) The details and documents disclosed by the instant company to the electronic disclosure system of the Financial Supervisory Service for capital increase with consideration are as follows.

On August 1, 2007, the instant company submitted a withdrawal statement to the ○○○ Committee on the effect that “The Party shall hold a board of directors on 2000.0.00 with respect to the decision of capital increase for capital increase publicly announced on ○○○○.0.0.0, and decided to accept the entire number of stocks so allocated to the Korea Securities Depository for one year. Accordingly, the submission of a securities registration statement shall be withdrawn.”

The attached third party allocation method stated that "the number of persons assigned shall be excluded from the number of persons allotted by the third party, ○○ or the total number of persons assigned by the third party."

2) ① One of the underwriters of new shares issued with capital increase in the instant case was investigated by ○○○ on September 24, 2008, and stated as follows.

② On November 16, 2012, the LAL submitted a confirmation document as follows.

3) The details of the publication on the par value division of the shares of the instant company are as follows.

4) The changes in the final market price in the Korea Exchange are as follows:

【Ground for Recognition: Facts without dispute, evidence examined earlier, evidence A’s evidence Nos. 14 through 16, Eul’s evidence Nos. 5 and 6, the purport of the whole pleadings】

D. Determination

1) Whether the exclusion from taxation under the Inheritance Tax and Gift Tax Act is applicable

Article 39(1)1 (a) of the Inheritance Tax and Gift Tax Act provides that the gift tax shall not be levied on capital increase issued by offering to a third party under Article 2(3) of the Securities and Exchange Act.

In addition, Article 2 (3) of the Securities and Exchange Act provides that "public offering of new securities shall be made under the conditions as prescribed by the Presidential Decree," and Article 2-4 (1) of the Enforcement Decree of the Securities and Exchange Act provides that "where the person who has been solicited to acquire securities is not less than 50 persons as a result of the calculation under paragraph (3) and the number of persons who are solicited to acquire the securities is less than 50 persons, the securities concerned may be transferred to not less than 50 persons within one year from the date of issuance, and if the securities can be transferred to not less than 50 persons within one year from the date of issuance, the public offering of securities shall be deemed a public offering of securities (see, e.g., Supreme Court Decision 2012Du25712, Feb. 27, 2014)."

On the other hand, Article 2-4 (5) of the Enforcement Decree of the Securities and Exchange Act provides that "in order to have a person who is solicited to subscribe to securities acquire securities, it refers to an act of notifying or providing guidance on the procedure of acquisition of securities through advertisements through newspapers, broadcasting, magazines, etc., distribution of printed matters, such as notice and leaflets, holding a presentation session for inducing investments, and electronic communication means, etc." Article 8 (1) of the Securities and Exchange Act provides that "in cases where the total amount of public offering price or sale price of securities exceeds a certain amount, a public offering of new or outstanding securities shall not be made unless an issuer files a report with the Financial Services Commission on the securities concerned, and Article 10 (1) of the Securities and Exchange Act provides that "in cases of an offer to acquire or purchase securities for which a registration statement has not become effective, the issuer, seller, and his agent of the securities shall not consent to such offer."

Article 39 (1) 1 (a) of the Inheritance Tax and Gift Tax Act provides that no gift tax shall be levied on capital increase issued by a third party through a public offering of new securities under Article 2 (3) of the Securities and Exchange Act. The purport of Article 39 (1) 1 (a) of the same Act is to stipulate that where new stocks are issued through a public offering of new securities meeting the requirements and procedures prescribed by the Securities and Exchange Act and the Enforcement Decree of the Securities and Exchange Act, it shall be deemed that many and unspecified persons are traded within the Korea Exchange or Association, and that the price is determined during fair public offering of new stocks and thus it is difficult to deem that the difference between market price and issuance price is a gift. In addition, in addition, in the case of public offering of new securities exceeding a certain scale, the said provision of the Securities and Exchange Act provides that the said public offering of new securities shall not be permitted unless a return is filed with the Financial Services Commission, and that such public offering of new securities shall not be permitted even if there is an offer for the acquisition of the securities, i.e., 800 or more investors to acquire the new securities.

Pursuant to Articles 10(1) and 9(1) of the Securities and Exchange Act and Article 3(1) of the Enforcement Rule of the Securities and Exchange Act, it shall be interpreted that a securities registration statement shall be accepted by the Financial Services Commission and it shall be conducted after the lapse of 10 days (the

In light of the above legal provisions and legal principles, in full view of the following circumstances that can be acknowledged by the facts and evidence as seen earlier, it is deemed that the disposition of this case was not erroneous on the premise that it cannot be deemed as an offering of new stocks through the 'securities offering method' under the premise that the offering of new stocks cannot be deemed as an exception to taxation under Article 39(1)1(a) of the Inheritance Tax and Gift Tax Act.

① The instant company had submitted and withdrawn a securities registration statement for public offering, and had taken protective measures in accordance with private placement methods. Moreover, there was no sanction against the instant company on the ground that it did not perform its duty to report on capital increase by issuing new stocks through the public offering method.

② Ultimately, the instant company committed an act of soliciting an offer without submitting a securities registration statement, which does not constitute “the Financial Services Commission’s acceptance of a securities registration statement and the solicitation of an offer after the lapse of 10 days (the listed company’s stock offering).”

③ In the process of capital increase with consideration of the instant case, there is no evidence to deem that the instant company engaged in the activities of notifying or guiding the acquisition of securities by means of newspaper, broadcasting, magazine, etc., distribution of printed matters, such as notice and leaflets, holding of an investment presentation meeting, and electronic communication means, etc. (Although the Plaintiff asserted that the evidence Nos. 4, 6, and 15 was an evidence to this effect, each of the above evidence is not directly related to, or insufficient to recognize it, and the result of the Plaintiff’s personal newspaper is insufficient to recognize it), rather, at ○○○○○○ stated that “the instant company was allocated from the beginning only to a specific person who has interest with a major shareholder, in a closed manner.”

④ From among the persons participating in capital increase with consideration, the Plaintiff asserted to the effect that leCC, ParkD, and KimE acquired not only its own stocks, but also the shares of other investors. Such other investors also received the solicitation for subscription, and thus, the other party to the solicitation for subscription is not less than 50 persons. However, the issuer of securities is the instant company, and the title trustor paid the capital increase with consideration to the said leCC, Park DoD, and Kim E, it is difficult to deem that the said title trustor was subject to solicitation for subscription of the instant company.

⑤ Meanwhile, if, as alleged by the Plaintiff, 50 or more persons are recommended to recruit more than 50 persons even without a securities declaration as alleged by the Plaintiff, gift tax may not be imposed even if major shareholders or managers transfer the company’s capital at a low price to their related 50 or more persons.

Therefore, we cannot accept this part of the plaintiff's argument.

(ii)issuance in accordance with the market price;

① Even if the issue value of new shares allocated to the Plaintiff at the time of the instant offering of new shares is determined pursuant to Article 192 of the Securities and Exchange Act and Article 84-25(1)1 of the Enforcement Decree of the same Act as to the issue value of the listed corporation upon delegation by the Plaintiff pursuant to Article 57(3) of the Securities and Exchange Act, the said provision is subject to certain restrictions on the issue value of new shares in order to ensure fairness and transparency in issuing new shares, and its legislative purpose differs from that of Article 39(1)1(a) of the Inheritance Tax and Gift Tax Act, and thus, the said issue value cannot be deemed as “market value” under Article 39(1)1(a) of the Inheritance Tax and Gift Tax Act (see Supreme Court Decision 2013Du21670, Mar. 13, 2014

② In addition, even if the issue value of the instant new shares that the Plaintiff received at the time of issuing new shares was determined pursuant to Article 57(3) of the Securities and Exchange Regulations, which provides for the issue value in cases where the Plaintiff offered to a listed corporation for the purpose of increasing the number of shares, the said provision imposes certain restrictions on the issue value of the new shares in order to ensure fairness and transparency in issuing new shares, and is different from the legislative purpose and purport of Article 39(1)1 of the Inheritance Tax and Gift Tax Act. Thus, the said issue value cannot be deemed as “market value under Article 39(1)1 of the Inheritance Tax and Gift Tax Act” (see Supreme Court Decision 2013Du21670, Mar.

[Reference]

Therefore, we cannot accept this part of the plaintiff's assertion.

(iii) the base date for market price calculation;

A) Whether par value division is included in capital increase and merger

Article 63(1)1 (a) of the Inheritance Tax and Gift Tax Act provides that the method of evaluating stocks of listed corporations shall be the average of the closing price of the Korea Exchange every two months before and after the evaluation base date, and that the method of evaluating stocks of listed corporations shall be the average of the closing price of the Korea Exchange every two months before and after the evaluation base date: Provided, That in cases where it is inappropriate to apply the average amount on the basis of a capital increase, merger, etc. during two months before and after the evaluation base date, the average amount of the period calculated as prescribed by Presidential Decree during the two months before and after the evaluation base date, and Article 52-2(2)2 of the Enforcement Decree of the same Act provides that the average amount of the period from the date two months before and after the evaluation base date to the date before the date of the occurrence of the same cause shall be deemed the market price of securities if a cause such as capital increase, merger, etc. occurs after the evaluation base date before and after the evaluation base date.

In the event of a capital increase or merger after the appraisal base date, the assessment price of listed stocks should be calculated differently based on the appraisal base date, considering that there is a change in the stock price when new stocks are issued due to such reasons as capital increase or merger, the causes such as capital increase or merger have a significant impact on the formation of the future stock price.

Therefore, the "amount split" refers to the increase of the total number of issued shares by dividing the existing shares at a certain rate without a capital increase or decrease. In this case, the par split is conducted when the market price of a certain shares is excessively high and the transaction of shares is low or it is difficult to issue new shares. In this case, the price of shares is reduced by the par value split so as to promote the transaction of shares by lowering the price of shares. In this case, the price of shares is substantially increased if the shares are divided at par value, and the provisions of the proviso of Article 63 (1) 1 (a) of the Inheritance Tax and Gift Tax Act are to promote the balance of the appraisal by the price fluctuation of shares, and it is not appropriate to regard the same price before and after the increase in par value as above. (3) Considering the above purport, it is reasonable to interpret Article 63 (1) 1 (a) of the Inheritance Tax and Gift Tax Act to include capital increase or merger.

Therefore, given that the instant capital increase was made after the occurrence of a cause for capital increase or merger, the appraised value per share prior to the capital increase should be calculated from August 14, 2007, which is the first transaction day after the capital increase (the base date for appraisal under Article 29(4) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act), to the average amount from August 16, 2007, which is the first transaction day after the capital increase (the base date for appraisal under Article 29(4) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act), by applying Article 52-2(2)3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. However, since the day preceding August 16, 207, which is the payment date for the stock price, is a legal holiday ( August 15, 2007), the preceding day of the payment date for the stock price, and ultimately, the Korea Exchange (○

B) Whether the instant shares constitute conditional rights, etc.

Article 63 of the Inheritance Tax and Gift Tax Act provides the method of appraisal of securities, etc. Article 65(1) of the Inheritance Tax and Gift Tax Act provides that "the term of existence of a conditional right, a right with uncertain duration, a right to receive trust profits or a right to receive periodical payments as prescribed by the Presidential Decree shall be appraised according to the method prescribed by the Presidential Decree based on the nature, content, and duration of existence of such right," and separately determines the method of appraisal of conditional rights, etc. separate from securities, etc. In this case, the plaintiff asserts that in the case of the shares of this case, the plaintiff shall be subject to the application of Article 65 of the Inheritance Tax and Gift Tax Act, not Article 63 of the Inheritance Tax and Gift Tax Act, since the shares of this case are acquired under the condition subsequent to the cancellation, since it depends on the fact that the legal act takes effect in the future, and thus the legal act becomes void as a matter of course, and thus the transaction is limited to the protection of a third party for one year after the issuance of new shares of this case, and thus, the plaintiff's acquisition of shares of this case cannot be deemed void.

(c) Calculation date of the assessment value per share before the capital increase;

The plaintiff asserts to the effect that the date of the resolution by the board of directors shall be the date of cancellation of rights, and since the ex-right shall take place on the date of resolution by the board of directors, since the ex-right shall take place on the date of resolution by the board of directors, the above date of resolution by the board of directors shall be the base date for the calculation of the ex-right. However, although there is no legal basis that the above base date for the calculation of the ex-right should be the date of cancellation of rights, Article 29(4) of the Inheritance Tax and Gift Tax Act provides that "the calculation of profits pursuant to paragraph (3) shall be based on the date of payment of stock price," the above base date for the calculation of the value shall be determined as the date of payment of stock price (in this case, August 16, 2007) in accordance with the above provision.

Therefore, we cannot accept all of the plaintiff's arguments.

4) Additional tax portion

Under the tax law, additional taxes are administrative sanctions imposed as prescribed by individual tax law in cases where a taxpayer violates various duties, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim. Such sanctions cannot be imposed in cases where there are justifiable grounds for not being able to cause the failure of the taxpayer to perform his/her duties, such as cases where the taxpayer is reasonably deemed to have been unaware of his/her duties, or where it is unreasonable for him/her to expect the performance of his/her duties (see, e.g., Supreme Court Decision 2003Du13632, Jan. 27, 2005). Meanwhile, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, additional taxes are administrative sanctions imposed as prescribed by the Act in cases where a taxpayer violates the duty to report and pay taxes as prescribed by the Act without justifiable grounds, and the taxpayer’s intent or negligence cannot be considered, and the land or mistake of the statutes does not constitute justifiable grounds (see, e.g., Supreme Court Decision 2013Du13, May 23, 2013).

In light of the above legal principles, the Plaintiff is obligated to report and pay gift tax on the following grounds: ① the Plaintiff’s acquisition of the instant company’s shares causes the portion deemed donated as seen earlier; ② the base date for appraisal is the payment of shares for the donation of the increase of capital; ② the date for appraisal is the payment of shares; the date for appraisal of capital increase is the same as the date for the public notice of capital increase and the date for payment of shares is consistent with the third party’s allocation method; thus, there is no difference of opinion on the base date for appraisal; ③ the details of shareholder change can be easily confirmed as the data for the public notice system of the Financial Supervisory Service; and thus, it cannot be objectively unreasonable to expect the taxpayer to perform the duty of tax payment; and thus, it should be interpreted as a case where the Plaintiff’s performance of the duty of tax payment is caused by mistake or mistake under the Plaintiff’s laws and regulations. Therefore, there is no justifiable reason for failing to perform the duty of tax return

5) Sub-committee

After all, the plaintiff's assertion cannot be accepted, and the disposition of this case is legitimate.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.