Suwon District Court 2013Guhap658 ( November 13, 2014)

Revocation of imposition of gift tax

In the event that the securities concerned are deposited without delay with the Depository and the protective custody measures are taken for one year, the stocks allocated to the plaintiffs are issued on the premise that the protective custody measures are taken for one year, and the plaintiffs also accepted the stocks and thereby the gift tax is legitimate.

Article 38 of the Inheritance Tax and Gift Tax Act (the Inheritance Tax and Gift Tax Act)

2014Nu71766 Revocation of Disposition of Imposition of Gift Tax

EAA and one other

Head of the tax office

Suwon District Court Decision 2013Guhap6658 Decided November 13, 2014

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked, and the defendant revoked on October 1, 201, the gift tax imposed on the plaintiff AA on October 1, 201 139,749,540

The disposition of the Board and the disposition of the Board of Governors 1,440,484,900 won imposed on the plaintiff BB shall be revoked.

shall be subject to the judgment.

1. Quotation of judgment of the first instance;

The reasoning for this Court’s explanation is as follows: (a) the reasoning for this Court’s ruling is the same as the reasoning for the judgment of the first instance, except for the addition of the judgment as to the newly asserted matters by the Plaintiffs in the first instance trial; and (b) thus, it is acceptable in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

A. Purport of the plaintiffs' assertion

Article 39 (1) 1 (c) of the former Inheritance Tax and Gift Tax Act provides that "in case where a corporation issues new stocks at a price lower than the market price and a person who is not a shareholder of the relevant corporation obtains profits from the relevant corporation by receiving a direct allocation of new stocks from the relevant corporation, the amount equivalent to such profits shall be deemed the value of donated property." However, in case where a stock-listed corporation or Association-registered corporation under the former Securities and Exchange Act does not allocate new stocks to a public offering method under Article 2 (3) of the same Act within the scope of "distribution" under Article 2 (1) (a) of the same Act (hereinafter referred to as the "general provision of this case"), and where such a corporation does not directly allocate new stocks to a person who is not

Article 2 (3) of the former Securities and Exchange Act provides that "the public offering of new securities shall be made under the conditions as prescribed by the Presidential Decree", and Article 2-4 (1) and (4) of the former Enforcement Decree of the Securities and Exchange Act provides that "the public offering of new securities shall be made not less than 50 persons who are solicited to subscribe for the acquisition of securities (paragraph (1) and (3) of the former Enforcement Decree of the Securities and Exchange Act shall be made not less than 50 persons (the number of persons who are solicited to subscribe for the acquisition of securities shall be less than 50 persons as a result of the calculation under paragraph (1) and paragraph (3) of the same Article shall not be included in the public offering of securities if the securities concerned can be transferred to not less than 50 persons within one year from the date of issuance, and it falls under the standards for resale prescribed by the Financial Supervisory Commission (paragraph (4))

In addition, Article 12 (1) of the former Securities and Exchange Regulations, where stock certificates or preemptive rights certificates of the same kind are listed, offered publicly or sold on the securities market or KOSDAQ, the relevant securities may be transferred to at least 50 persons within one year from the date of issuance pursuant to Article 2-4 (4) of the Decree: Provided, That this shall not apply to cases where a deposit contract (including registration under the Registration of Bonds and Debentures Act; hereafter the same shall apply in this Chapter) with the Korea Securities Depository (hereinafter referred to as the “Deposit Depository”) is made without delay after the issuance of the securities, and the deposit contract with the effect that the relevant securities will not be withdrawn or sold for one year from the date of deposit is implemented.

In addition, the above provisions have a fact that the share certificates of the same kind as the share certificates of this case were listed, publicly offered, or sold in the KOSDAQ market. Thus, if the proviso to Article 12(1) of the former Securities Act does not have effect since the proviso to Article 12(1) of the former Securities Regulations violated the Constitution, the benefits accrued to the plaintiffs by receiving new shares are excluded from the subject of gift tax, and thus, whether the proviso to Article 12(1) of the former Securities Regulations violates the Constitution is the premise of the judgment.

The proviso of Article 12(1) of the former Securities Regulations (amended by the Presidential Decree No. 12510, Dec. 1, 2008) is established to offer securities to the Financial Supervisory Commission for the purpose of making it possible to offer securities unless the Financial Supervisory Commission reports and acceptance procedures are followed, since the possibility of resale is limited in cases where securities are issued and deposited with the Depository for one year and compulsory protection measures are taken for one year. Therefore, the legitimacy of the legislative purpose is recognized.

However, if securities issued in accordance with the proviso of Article 12(1) of the former Securities and Exchange Act are deposited with the Depository and are subject to compulsory protection measures for one year, it does not constitute deemed public offering as prescribed in Article 2-4(4) of the former Enforcement Decree of the Securities and Exchange Act. This is ultimately subject to gift tax, while a shareholder who has taken protective measures for one year for the protection of minority shareholders has contributed to the protection of minority shareholders, there is no contribution to the protection of minority shareholders, lower or lower, even if there is no limit or lower limit of the transaction, or a shareholder whose protective measures have been taken within one year has not been taken, or whose protective measures have been taken within one year has not been imposed a gift tax.

Therefore, the proviso of Article 11(1) of the former Securities Regulations is invalid in violation of Article 11(1) of the Constitution that provides for the guarantee of property rights in breach of Article 23(1) of the Constitution or because there is no reasonable ground for discrimination, without maintaining the minimum amount of damage and balance of legal interests.

B. Determination

Article 2-4(3) of the former Enforcement Decree of the Securities and Exchange Act provides that, in cases where a listed corporation issues new stocks in accordance with the method of public offering of new stocks under the former Securities and Exchange Act, the issuance price shall be determined at a price close to the price formed at the securities market, etc. in principle. Furthermore, considering the fact that it is inevitable to issue a certain amount of discount to raise funds through public offering of new stocks in the securities market, etc., the listed corporation’s issuance price of new stocks shall not be subject to gift tax even if the purchaser gains profits by issuing new stocks according to the method of public offering of new stocks under the former Securities and Exchange Act (see, e.g., Supreme Court Decision 2012Du25712, Feb. 27, 2014). The legislative intent of Article 2-4(3) of the former Enforcement Decree of the Securities and Exchange Act is not more than 50 persons who have been solicited to offer new stocks at the time of offering and does not constitute a public offering of securities (i.e., the offering of securities at least 50 years after offering).

Accordingly, the Financial Supervisory Commission provides for the standard of possibility of resale to be regarded as securities offering in the main sentence of Article 12(1) of the former Securities Regulations. However, even if the standard of possibility of resale is satisfied, if the securities concerned are deposited without delay with the Depository and the protective order is taken for one year, it shall not be regarded as a public offering. Thus, the non-party company issued shares on the premise that it shall take protective measures for one year, and the plaintiffs issued shares on the premise that it will take protective measures for the shares allocated to the plaintiffs, and thereby the gift tax shall be imposed upon them by accepting the shares and accepting them. Thus, the plaintiffs' assertion cannot be accepted.

3. Conclusion

Therefore, the judgment of the first instance court is justifiable, and the plaintiffs' appeal is dismissed as it is without merit. It is so decided as per Disposition.