[1] The case where the acquisition of the company's own shares is exceptionally permitted and the validity of the acquisition of its own shares in violation of the prohibition provisions on acquisition of its own shares

[2] The case where the acquisition of shares in a third party, other than a company, constitutes the acquisition of shares prohibited by Article 341 of the Commercial Code

[3] In a case where a company lends a loan to a third party with no intention to actually collect the loan, and the third party has paid the subscription price with the loan, the validity of the payment (negative)

[1] In principle, the Commercial Act prohibits the acquisition of a company’s own shares on its own account from uniformly preventing various harm, such as undermining the company’s capital foundation, undermining the interests of shareholders, undermining the principle of equality of shareholders, undermining the principle of equity of shareholders, and undermining the control of an unfair company by the representative director, etc., and thus, exceptionally, it is clearly classified as cases where the acquisition of a company’s own shares is allowed, and thus, it is not possible to exceptionally allow the acquisition of a company’s own shares in cases where the company gratuitously acquires a company’s own shares or it is not possible to harm the interests of shareholders, etc., such as cases where the acquisition of a company’s own shares is allowed under Articles 341, 341-2, and 342-2 of the Commercial Act or the Securities and Exchange Act, or where it is evident that the company’s own shares cannot be acquired on another’s account. In other cases, the acquisition of a company’s own shares in violation of the prohibition provisions is null and void naturally.

[2] In a case where a company’s shares are acquired in a third party’s name other than the company, but the fund for acquiring the shares is made by the company’s contribution and the profit or loss derived from acquiring the shares reverts to the company, the acquisition of such shares constitutes an acquisition of treasury shares prohibited by Article 341 of the Commercial Act, since it is likely to endanger the company’s capital foundation by its account, unless it falls under an exceptional cause under

[3] Under the principle of the capital adequacy of a corporation, the subscription price for shares is actually paid in full and cannot be set up against the company by offsetting the payment. Thus, in case where the company lends a third party a loan equivalent to the subscription price for shares, and the third party has paid the subscription price for shares with the loan, if the company did not actually collect the loan from the beginning because it was agreed not to exercise the claim for the loan against the third party, and the third party has made an subscription for shares on the premise of such company's intention, the third party cannot be deemed to have increased the company's capital equivalent to the face value of the shares which the third party acquired. Thus, the above subscription price for shares is null and void since it is merely the pretending payment

[1] Articles 341, 341-2, and 342-2 of the Commercial Act; Article 46-2 of the Securities and Exchange Act / [2] Article 341 of the Commercial Act / [3] Articles 295, 334, 421, and 422 of the Commercial Act

[1] Supreme Court Decision 96Da12726 decided Jun. 25, 1996 (Gong1996Ha, 2309) dated Nov. 12, 1964

(Law Firm Jin, Attorney Park Jin-chul, Counsel for defendant-appellee)

Defendant 1 and one other (Attorney Lee In-bok et al., Counsel for the bankruptcy)

Seoul High Court Decision 2001Na3636 delivered on June 14, 2001

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

1. As to the second ground for appeal

A. In principle, the Commercial Act prohibits the acquisition of a company’s own shares on its own account from uniformly prohibiting various harm, such as undermining the interests of the company, shareholders, and creditors, impairing the principle of shareholder equality, and causing unfair corporate control by the representative director, etc., as the acquisition of a company’s own shares may endanger the company’s capital foundation (Article 341 of the Commercial Act). As such, the Commercial Act uniformly prohibits the acquisition of a company’s own shares for general preventive purposes.

Therefore, in addition to cases where the acquisition of treasury stocks is expressly permitted in Articles 341, 341-2, and 342-2 of the Commercial Act or in the Securities and Exchange Act, the acquisition of treasury stocks is exceptionally allowed even in cases where it is tangiblely evident that the company cannot endanger the capital foundation of the company or harm the interests of shareholders, etc., such as where treasury stocks are acquired without compensation or where treasury stocks are acquired for another person's account (see Supreme Court Decision 96Da12726, Jun. 25, 1996). In other cases, even if there are unavoidable circumstances to avoid serious damage that may arise to the company, shareholders, or creditors, etc., even if it is inevitable to avoid any serious damage that may arise to the company, shareholders

In addition, it is naturally null and void that a company acquires its own shares in violation of the foregoing prohibition provision (see Supreme Court Order 64Ma719, Nov. 12, 1964).

On the other hand, Article 625, Paragraph 2 of the Commercial Code provides that "the act of illegally acquiring the shares on the company's account, regardless of in the name of the district or in whatever name it is subject to punishment."

In addition, even if a company acquires shares in the name of a third party other than the company, if the funds for the acquisition of shares are made by the company's contribution and the profits and losses from the acquisition of shares are attributed to the company, the acquisition of such shares constitutes the acquisition of treasury shares prohibited by Article 341 of the Commercial Act, because it is likely to endanger the company's capital foundation by making the company's account and it is not an exception under the Commercial Act or any other Act.

B. On the other hand, according to the principle of the capital adequacy of a corporation, the subscription price for shares is actually paid in full and cannot be asserted against the company by offsetting the payment (Articles 295, 334, 421, and 422 of the Commercial Act). Thus, in case where a company lends a third party the subscription price for shares with the loan equivalent to the subscription price for shares, and the third party has paid the subscription price for shares with the loan, the company has no intention to recover the loan from the beginning because it was agreed not to exercise the claim for the loan against the third party, and the third party has subscribed for the subscription for shares on the premise of such company's intention, the third party cannot be deemed to have increased the company's capital equivalent to the face value for shares acquired, and thus the above subscription price for shares is null and void since it merely merely merely pretends the payment.

C. According to the facts duly admitted by the court below, the plaintiff will participate in the capital increase with new stocks under the name of the plaintiff or his designated person. However, the loan of 10 billion won to 10 billion won as the price for subscription for new stocks, and the loan of 10 billion won as the price for subscription for new stocks is provided as a security, and the loan of 10 billion won as the price for all of the acquired stocks is offered as security, and in the event of the occurrence of the reasons such as the suspension of the business, the right to claim the purchase of the above shares shall be deemed to have occurred, and the purchase price shall be deemed to be offset against the above loan obligations of the plaintiff, and the interest shall be deemed to have been paid as the price for the purchase price for the above loan, and the contract was concluded as the loss of the above rights to all the bonds such as interest. Accordingly, the loan of 10 billion won shall be null and void for the purpose of the contract as to the acquisition of new stocks under the name of the plaintiff as the price for new stocks.

D. Thus, since a loan agreement of KRW 10 billion between the Plaintiff and the Plaintiff based on the above contract is null and void, there is no obligation of the Plaintiff under the above loan agreement, and since the amount deposited to the Plaintiff with the loan under the contract was deposited to the Plaintiff as the purchase price of new shares, it cannot be deemed that the Plaintiff made unjust enrichment equivalent to the loan.

E. Although the reasoning of the judgment of the court below is not appropriate, the conclusion that the Plaintiff’s principal and interest of loan and other obligations under the above loan agreement do not exist is justifiable, and there is no error of law by misunderstanding the legal principles affecting the judgment of the court below

2. Regarding ground of appeal No. 1

In light of the conclusion that the purchase of shares and a set-off agreement of this case are valid, the Defendant asserted that only the Plaintiff would benefit the Plaintiff as a result of the refund of share capital and that it would be contrary to the principle of shareholder equality. However, as seen above, the contract of this case is aimed at acquiring the shares of this case with the aim of acquiring the shares of this case, and its entire invalidation is null and void as it violates the prohibition of acquiring the shares of this case, and its entire invalidation is also null and void, and the argument in the grounds of appeal is without merit.

3. As to the third ground for appeal

The defendant asserts that the right to set aside under the Bankruptcy Act shall be exercised since the purchase of stocks in this case and the offset agreement in this case are acts with the knowledge that they would harm bankruptcy creditors, or even if they do not belong to the duty of the bankrupt, they are acts with respect to the extinguishment of obligations after the suspension of payment or a petition for bankruptcy was filed. However, as long as the contract between the plaintiff and the repayment is null and void for the same reason as seen earlier, it cannot be set off between the purchase price of stocks and the loan, and therefore, the defendant does not have reason or necessity to exercise the right to set aside against the offset agreement

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Shin-chul (Presiding Justice)