The second person liable for tax payment is registered as a second person and is not an oligopolistic stockholder.

It is registered as a primary shareholder of the company at the request of the person who actually owns and operates the company, and it does not constitute an oligopolistic shareholder and does not constitute a secondary tax obligor.

Article 39 (Secondary Liability to Pay Taxes by Investor)

Seoul Administrative Court 2014Guhap74626 revocation of designation as a person liable for secondary tax payment.

LAA

○ Head of tax office

December 30, 2015

1. Of the instant lawsuit, the part of the disposition imposing the value-added tax for the second year of June 18, 2014 against the Plaintiff by the Defendant designating the Plaintiff as the secondary taxpayer for the KK Co., Ltd. and exceeding KRW 87,000 among the disposition imposing the value-added tax for the second year of June 18, 2014, and exceeding KRW 76,000 among the disposition imposing the corporate tax for the business year of 2013, and the claim for revocation exceeding KRW 76,00 among the disposition imposing the corporate tax for the business year of August 26, 2014, respectively.

2. The Defendant: (a) designated the Plaintiff as a secondary taxpayer against KK on June 18, 2014; and (b) revoked the imposition of KRW 87,000 of value-added tax of KRW 200 on June 18, 2013 and corporate tax of KRW 76,00 for the business year of 2013; and (c) revoked the imposition of KRW 76,000 of corporate tax for the business year of August 26, 2014 for the business year of 2013.

3. The costs of lawsuit shall be borne by the defendant.

Cheong-gu Office

The Defendant: (a) designated the Plaintiff as the secondary taxpayer against KK on June 18, 2014; (b) revoked the imposition of KRW 90,000 of the value-added tax of KRW 20,000 on June 18, 2013 and corporate tax of KRW 78,000 on the business year of 2013; and (c) revoked the imposition of KRW 76,000 of the corporate tax of KRW 2013 on August 26, 2014.

1. Details of the disposition;

A. On June 23, 2011, KK Co., Ltd. (hereinafter referred to as “instant company”) is a corporation established on June 23, 201 for the purpose of manufacturing automation parts under Article 611-26 of Guro-gu Seoul Metropolitan Government Guro-dong Complex Building 109, and closed on June 11, 2014.

B. As of the end of 2012 and 2013, the Plaintiff is registered as holding 100% (20,000 shares, face value 5,00 won) of the shares issued by the instant company on the list of shareholders and detailed statement of changes in shares of the instant company.

C. On June 18, 2014, the Defendant: (a) designated the Plaintiff as the secondary taxpayer for the instant company; (b) imposed KRW 87,000, and corporate tax of KRW 76,00 for the business year of 2013, and KRW 76,000 for corporate tax of August 26, 2014 for the business year of 2013 (hereinafter collectively referred to as “instant disposition”).

D. The Plaintiff appealed and filed a request for examination with the Commissioner of the National Tax Service on September 5, 2014, but the Commissioner of the National Tax Service dismissed the Plaintiff’s request on December 2, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1, 3, 4 (including each number), Gap evidence 9-3, Eul evidence 1-2 and 4, and the purport of the whole pleadings

2. Of the instant lawsuits, the part exceeding KRW 87,00 in the imposition disposition of value-added tax for the second period of the second period of the year 2013, and the part exceeding KRW 76,00 in the imposition disposition of corporate tax for the business year 2013, and whether the part exceeding KRW 76,00 in the imposition disposition of corporate tax for the business year 2013 is legitimate.

In light of the purport of the claim in this case, the Plaintiff sought revocation of the disposition of imposition of KRW 90,00 for value-added tax of KRW 20,00 for June 18, 2014 and corporate tax of KRW 78,769,330 for the business year 2013, and corporate tax of KRW 76,00 for the business year 2013 as of August 26, 2014, and the purport of the entire argument in the statement in subparagraphs 1-1, 2, 1-2, as a whole, the Defendant cannot be deemed to have claimed revocation of the disposition of KRW 5,00 for each of the above disposition of KRW 20 for the business year 20,00 for the company in this case, and there is no evidence to prove revocation of the disposition of KRW 5,00 for each of the above disposition of KRW 20 for the business years 20,000 for each of the above disposition of KRW 15,2014.

3. The plaintiff's assertion

The Plaintiff lent the name of the shareholder at the request of HA, the actual owner of the instant company, and there is no fact that 100 million won of the share price was paid. Therefore, the Plaintiff, as a next shareholder of the instant company’s shares, should not be subject to secondary tax liability regarding the delinquent tax amount of the instant company. Therefore, the instant disposition is unlawful.

4. Relevant statutes;

It is as shown in the attached Form.

5. Whether the instant disposition is lawful

(a) Facts of recognition;

1) The Plaintiff, while serving as a research professor at the early K University in 2012, received proposals from LAA to work in LAW, which he/she operated, and served in LAW since mid-2012, in LAW.

2) Before July 6, 2012, the shares of the instant company were registered in the name of ParkCC, all of which were the spouse of the HaA’s spouse. On July 6, 2012, the shareholder registry was changed to the effect that the shares were entirely transferred from ParkCC to the Plaintiff.

3) On July 6, 2012, the Plaintiff did not appear to have remitted the amount equivalent to the acquisition price of the said shares to ParkCC or HA around the date of the Plaintiff’s financial transaction (AA bank 000, BB bank 00) submitted.

4) According to the financial transaction details of theCC bank account in the name of the representative director of the instant company at the time of the instant company and the Plaintiff’s respective accounts, on February 19, 2013, KRW 100 million was deposited in the account of KimD from KimD, and KimD transferred KRW 50 million to the Plaintiff’s respective accounts on the same day, and the Plaintiff transferred all of these dates to ParkCC.

5) On July 4, 2014, the Plaintiff drafted a performance agreement with the WUW (Representative HaA), HA, and KimD as follows:

1. Factual basis

The plaintiff is a sole shareholder in the documents of the company of this case, KimD is a representative director in the documents of the company of this case, and the actual management and ownership of the company of this case have WWU and HAA.

2. Details of agreement;

1) As of July 4, 2014, WUW and LAA promises to be responsible for legal and monetary settlement as the actual management and ownership of the instant company with respect to all legal and monetary issues that present and future arise in connection with the instant company.

2) The Korea Technology Finance Corporation loan amounting to KRW 225,00,000,00 received as joint and several guarantee by the Plaintiff and KimD shall be repaid until October 31, 2014.

3) The LAW and the LAA shall complete the repayment of the outstanding loan amount of KRW 000,00, out of the loan amount of KRW 000, executed by the letter of guarantee issued by the Credit Guarantee Fund in the name of KimD until October 31, 2014.

4) As of July 4, 2014, WUW and LAA shall pay the full tax amount of KRW 000 of the instant company’s tax imposed on the Plaintiff and KimD by October 31, 2014.

5) In addition, if the Plaintiff and KimD accrue additional obligations and additional charges due to the instant company, full repayment shall be made until October 31, 2014, including the above loans and taxes.

6) Since then, the Plaintiff: (a) entered into a contract to transfer 19,00 shares of WWW, a principal’s representative, to the Plaintiff; and (b) filed a tax base return for transfer income return and a securities transaction tax return with the Plaintiff in the name of the Plaintiff; and (c) filed a complaint with the Suwon District Prosecutors’ Office on November 6, 2014 on the ground that he/she committed the crime of forging private documents by filing a tax base return under the name of the Plaintiff; (b) KimD filed a complaint with the Suwon District Prosecutors’ Office; and (c) on October 1, 2014, he/she filed a complaint with the same Public Prosecutor’s Office on the ground that HA embezzled embezzled 2.2 billion won or more in total while substantially operating the instant company from 2011 to 2

[Ground of recognition] Facts without dispute, Gap evidence Nos. 4 through 6, 8 through 11 (including each number in the case of provisional evidence), Eul evidence No. 1-2, and the purport of the whole pleadings

B. Determination

1) Whether it constitutes an oligopolistic shareholder under Article 39 subparag. 2 of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014; hereinafter the same shall apply) shall be determined by whether it is a member of a majority of shares owned. Specifically, even if it does not take part in the management of the company, it cannot be determined that it is not an oligopolistic shareholder. The fact of ownership of shares should be proved by the tax authority based on the data, such as the list of shareholders, the statement of stock transfer status, or the certified copy of the company register, etc. However, even if it appears to be a single shareholder in light of the above data, if there are circumstances such as where the name of the shareholder was stolen or registered in the name other than the actual ownership, it cannot be deemed as a shareholder only in the name of the shareholder, but it should be proved by the nominal shareholder who asserts that it is not a shareholder (see, e.g., Supreme Court Decision 2003Du1615, Jul. 9,

2) Based on the foregoing legal doctrine, the facts that the Plaintiff was registered as holding 100% of the shares issued by the instant company as of the end of the business year 2012 and 2013 on the list of shareholders as of the date of the instant company’s stock change and on the list of shareholders. However, in light of the following circumstances, it is reasonable to deem that the Plaintiff was registered as the next shareholder of the instant company upon the instant company’s request by the Plaintiff at the time of the actual ownership and operation of the instant company, in view of the evidence revealed earlier, and the testimony of the witness Haa as a whole acknowledged by comprehensively taking into account the overall purport

A) HA was present in this court as a witness, and there was a request that LA made the Plaintiff be registered as a shareholder of the company of this case, another company that the Plaintiff was one of its own employees in WW. At the time, the company of this case was required to obtain a loan from the AA Guarantee Fund, and the Plaintiff, a technician, was entitled to obtain a loan to the largest shareholder of the company of this case, and thus, the Plaintiff was registered as the largest shareholder. The Plaintiff did not participate in the management of the company of this case at all, and was able to conduct research and development. Before the Plaintiff was registered as a shareholder of the company of this case, the Plaintiff was ParkCC, the spouse of the company of this case, and the Plaintiff was not able to pay the share price to the Plaintiff, and the Plaintiff was able to bear the above 100 million won in total through the account in the name of Kim D and Kim representative, which was 100 million won in the name of the Plaintiff at the time of the transfer of the company’s shares.

B) By February 18, 2013, KimD, which was registered as the representative director of the instant company, was submitted to the instant court in a written confirmation, and, upon request and acceptance of the request by HaA to establish the instant company and cause disasters, such as a document representative, the head of the instant company served in the sales division. As a de facto representative director of the instant company, HA was ordered by HaA who was operated by the instant company. He entered the Plaintiff, who was a professor in the K University Research in WW in early 2012, and thereafter, after using the Plaintiff’s career, requested HaA and HaA to request the Plaintiff to receive an assessment favorable to the AA Guarantee Fund’s loan examination, such as the largest shareholder of the instant company’s document on February 19, 2013.

C) According to the Plaintiff’s financial transaction details (Evidence 8-1 and 2-2), it appears that there had been 16 monetary transactions between July 27, 2012 and June 25, 2013 between the Plaintiff and HA. However, most of them were that HA remitted money of KRW 16 million to the Plaintiff. In addition, there is no evidence to support that the Plaintiff paid the purchase price of shares to LA or HA, etc. around July 6, 2012, and there is no other evidence to support that the Plaintiff donated the shares of the instant company to the Plaintiff.

D) There is no evidence to deem that the Plaintiff received dividends or exercised rights as a shareholder, such as exercising voting rights at a general meeting of shareholders, while the Plaintiff was registered as an owner of the instant company’s shares.

E) At the time of registering the shareholder of the instant company, the Plaintiff has lent his name to HA to HA, and the instant company has provided joint and several sureties with the loan from the 2A Guarantee Fund. Although the Plaintiff suffered monetary damage due to the designation of the secondary taxpayer in relation to the instant company and the said joint and several sureties, the Defendant asserts that the Plaintiff’s assertion of the Plaintiff’s lending of the name of HA cannot be acknowledged, since only LA investigation agency filed a complaint against LA with respect to the fabrication of private documents concerning the acquisition limit of the shares in WW in the instant company, and did not file a complaint against HA regarding the instant company’s fraud. However, in relation to the instant company, as long as the Plaintiff acknowledged the fact that the Plaintiff lent his name with his own intent and jointly and severally guaranteed it, it is difficult to view the act of HA as constituting forgery or fraud, the Plaintiff’s assertion cannot be rejected solely on the ground that the Plaintiff did

3) Therefore, since the Plaintiff’s oligopolistic shareholder under Article 39 subparag. 2 of the former Framework Act on National Taxes cannot be deemed to bear the secondary tax liability for the delinquent tax amount of the instant company, the instant disposition based on a different premise is unlawful, and the Plaintiff’s assertion pointing this out is with merit.

5. Conclusion

Of the Plaintiff’s instant lawsuit, the part exceeding 87,00 won in the imposition disposition of value-added tax for the second period of June 18, 2014, and the part exceeding 76,000 won in the imposition disposition of corporate tax for the business year 2013, and the part exceeding 76,000 won in the imposition disposition of corporate tax for the business year 2013, and the part of the claim for revocation in excess of 76,000 won in the imposition disposition of corporate tax for the business year 2013 as of August 26, 2014 is unlawful and thus, each of the Plaintiff