In the issuance of convertible bonds by non-registered and non-registered directors of a non-registered and non-registered corporation, the issuance of such convertible bonds can not be deemed to have inflicted damage on the corporation equivalent to the same amount, and it is difficult to conclude that the act of determining conversion price in an underwriting contract of convertible bonds constitutes a breach of duty, or that the director had intent to commit a breach of duty.

In the issuance of convertible bonds by non-registered and non-registered directors of a non-registered and non-registered corporation, the issuance of such convertible bonds can not be deemed to have inflicted damage on the corporation equivalent to the same amount, and it is difficult to conclude that the act of determining the conversion price in an underwriting contract of convertible bonds constitutes a breach of duty, or that the director had intent to commit a breach of duty.

Articles 355(2) and 356 of the Criminal Act, Article 3(1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes

Defendant 1 and three others

Defendants and Prosecutor

Lee Dong-dong

Law Firm Apool, Attorneys Cho Han-ok et al.

Seoul Central District Court Decision 2004Gohap908 Delivered on December 24, 2004

All the judgment below is reversed.

Defendants are not guilty.

1. Summary of grounds for appeal;

A. Defendant 1

(1) misunderstanding of facts or misapprehension of legal principles

First, on July 25, 200, 22,00 won conversion price of convertible bonds subscription contract (hereinafter "the contract of this case") entered into with Korea Technology Investment Company (hereinafter "Korea Technology Investment Company") as the representative director of Edidex (hereinafter "the company of this case") of Edidex (hereinafter "the company of this case") was 2,000 won, considering the stock value of the company of this case at the time, there was no reasonable price in light of the stock value of the company of this case, so the defendant did not incur damage to the company of this case by concluding the contract of this

Second, the Defendant did not have any intention to obtain personal benefits or to gain unjust benefits to the other party to the contract in concluding the contract of this case. At the time, the Defendant concluded the contract of this case based on management judgment based on information necessary for concluding the contract, such as management environment of the company of this case and the need for new funds, so there was no intention of breach of trust.

Third, since Defendant 4 was not aware of the investment plan prepared by Defendant 4 in entering into the instant contract, the Defendant did not enter into the instant contract in collusion with the said Defendant.

(2) Unreasonable sentencing

The punishment sentenced by the court below to the defendant (two years of imprisonment and three years of suspended execution) is too unreasonable.

B. Defendant 2, 3

(1) misunderstanding of facts

All the Defendants did not directly engage in the business for concluding the instant contract as the ordinary directors of the instant company, or conspired in breach of trust in advance, and merely agreed upon the resolution of the board of directors on the sole basis of the determination that the content of the instant contract is beneficial to the instant company and the conversion price is reasonable.

(2) Unreasonable sentencing

The sentence sentenced by the court below against the defendants (the 2-year suspended sentence against the defendant 2, the 10 million won fine against the defendant 3) is too unreasonable.

C. Defendant 4

(1) misunderstanding of facts

First, the conversion price of the instant contract was appropriate in comparison with the objective exchange value of the shares of the instant company, and in view of the various conditions of the instant contract and the management environment at the time of the instant company, it cannot be deemed that the instant contract was concluded to inflict damages on the instant company.

Second, in concluding the contract of this case, the defendant has not conspired to commit a breach of trust with the above defendants or forced the above defendants to conclude the contract.

(2) Unreasonable sentencing

The punishment sentenced by the court below to the defendant (two years of imprisonment and three years of suspended execution) is too unreasonable.

(d) Swords;

(1) misunderstanding of facts or misapprehension of legal principles

In light of the fact that there is no evidence to prove that the market price of the shares of the instant company at the time of the instant contract reaches KRW 43,000 per share, the part of the instant charges against the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of trust) was not acquitted, but there was a sufficient stock transaction to compute the objective exchange value of the shares of the instant company at the time, the lower court erred by misapprehending the facts or by misapprehending the legal principles on the rules of evidence.

(2) Unreasonable sentencing

The punishment sentenced by the court below to the defendants is too uneasible and unfair.

2. Determination on the grounds for appeal

A. Summary of the facts charged

The summary of the facts charged against the Defendants is as follows.

Defendant 1 is the representative director, Defendant 2, and Defendant 3 of the instant company; Defendant 4 was the representative director and the chairman of the Korea Technology Investment Corporation;

On May 10 of the same year, the company of this case filed a preliminary examination with the Korea Securities Dealers Association Steering Committee for the registration of KOSDAQ on March 16, 200, and passed such preliminary examination. However, due to the management difficulties of new stock companies (hereinafter referred to as "new stock companies"), which are major shareholders, the company of this case, the registration of the company of this case was suspended, and the new company was ordered to dispose of the company's shares held at the request of the bonds financial institution. Defendant 4 obtained such information as a major shareholder of the company of this case by purchasing the above shares directly from new shareholders or collecting the shares of this case in the over-the-counter market, while Defendant 1 obtained the status of the company of this case by purchasing the company's shares from the new shareholders or by collecting them in the over-the-counter market, and requested Korea to issue the convertible bonds under the name of the company of this case to acquire them at a price much lower than the conversion price, and thereafter, to acquire them at an early market price as well as to dispose of them by converting them into the company's shares.

On July 200, 200, Defendant 1 notified Defendant 1 that he would purchase the shares of this case from a third party at KRW 47,500 per share of KRW 182,000 per share through the above Kim Sung-ri, and that he would purchase the shares of this case and become a major shareholder, while he notified Defendant 1 that the two Korea Technology Investment would purchase the shares of this case held by the new Korean Technology Investment in this case before the end of the asset realization of the company of this case, it was actively demanded that the convertible bonds of KRW 10,000 per conversion price of KRW 22,00 per share be issued to a third party in the Korea Technology Investment in this case.

In such a case, Defendant 1, 2, and 3, who are the representative director or director of the instant company, observe the internal procedures necessary for the issuance of convertible bonds. At that time, the assessment of actual value of the instant company’s shares in consideration of transaction details and transaction price, company’s asset value and growth potential, etc., and the assessment of reasonable conversion price should be made by taking into account the premium on management rights that the Korea Technology Investment obtains by acquiring the instant convertible bonds. Based on this, the total amount of convertible bonds issued is to be paid as the acquisition price for the instant company by making the maximum amount of funds possible by determining the total amount of convertible bonds to be paid as the acquisition price for the instant company, and thus, he/she violates his/her duties, even though there was a occupational duty to handle the affairs for Esteex by making it possible to do so,

In holding a board of directors at the office representative director of the company of this case on July 200 to discuss the conclusion of the contract of this case by holding a board of directors and holding a board of directors at the office of the representative director of the company of this case, without thoroughly reviewing the necessary matters for the conclusion of the contract of this case, 22,000 won of convertible bonds at the conversion price of 22,00 won from the appearance of Korea Technology Investment Employees, without any promotion process, to request the issuance of 10 billion won of convertible bonds by a third party allocation method. As the actual market price of the company's stocks of this case, 22,000 won which is the price significantly lower than the lowest price of 43,000 won as the actual market price of the company of this case, interest rate shall be 3% per annum, and the conversion period shall be 1 month before the redemption date from the issue date, and the minutes of the board of directors shall be prepared retroactively as if the board of directors was held on July 25, 2007.

As a result, the Defendants conspired to enter into the instant contract, thereby having Korean technology investors gain pecuniary advantage equivalent to the amount of KRW 9,545,445,00 [minimum transaction price per week = (minimum transaction price of KRW 43,00 - conversion price of KRW 22,00 x conversion price of KRW 454,545] of the number of convertible stocks], and suffered pecuniary loss equivalent to that of the instant company.

B. The judgment of the court below

Based on the facts acknowledged based on the relevant evidence, it is difficult to conclude that the market price of the shares of this case is at least 43,00 won at the time of the contract of this case, and it is difficult to find specific cases to compute the market price of shares at that time. Defendant 1, 2, and 3 cannot be deemed to have known that the market price of the shares of this case reaches 43,00 won. However, the court found that the new shares of this case were disposed of to the invested institutions around December 199, when the company did not prepare for KOSDAQ, the market price of the shares of this case was at least 28,50 won, and that there was an increase in the market price of the shares of this case to acquire new shares at the time of the contract of this case by the public offering of new shares at KRW 22,000,000,000,000,000,0000,000 won, which are more than the market price of the new shares of this case.

C. The judgment of this Court

(1) The basic facts

Comprehensively taking account of the evidence duly examined and adopted by the court below, the following facts can be acknowledged.

(A) Details of the conclusion of the contract for the acceptance of the instant convertible bonds and the subsequent progress

The instant company was a corporation engaged in the manufacturing, processing, sale, and export and import of ELC films and related products for ELCD, and was incorporated into the new group on August 24, 1995, and used the trade name of NACK Co., Ltd. after incorporation into the new group on August 24, 1995, and changed its trade name into EEX on March 7, 200.

The company of this case promoted the registration of the KOSDAQ market from around 1999, and around January 200, the company designated a securities company in charge of its registration as Samsung Securities and demanded it to conduct its registration business. The Samsung Securities submitted a preliminary written request for registration of the company of this case to the Korea Securities Dealers Association on March 16, 200, and the Association passed a preliminary examination on registration of the company of this case on the condition that it satisfies the prescribed requirements for share distribution after public offering around May 10, 200.

Samsung Securities was prepared for the above procedure from January 10, 200 to April 24, 200 of the same year and calculated as 15,628 won (the average amount calculated by adding 8,498 won per share value, and 20,382 won per share to 1.5) the essential value of this procedure and 19,000 won (the amount of 27,200 won at an appropriate share price after the registration of the company), taking into account the desired public offering price of 25,00 won presented by the company of this case, and the company of this case planned to meet the requirements for share distribution by means of registration of the KOSDAQ around June 200.

However, when the company faces a new crisis and applied for the structural improvement work, the KOSDAQ Operation Committee may be liable for contingent debt to the company of this case on May 26, 2000, and on the ground that the management right is unstable, the company of this case was virtually failed to register on the KOSDAQ by prolonged postponement of registration on KOSDAQ on the ground that the management right is unstable.

At the end of June 200, Non-Indicted 1, who had worked as the head of the Korea Technology Investment Promotion Center, was able to dispose of the shares held by the instant company upon the request of the creditor financial institution, and was able to prepare the investment plan for the instant company and obtain the approval of Defendant 4, the representative director of the Korea Technology Investment Company, and the said investment plan was finalized upon the approval of the Korea Technology Investment Promotion Committee on July 3, 200 after the resolution of the Korea Technology Investment Promotion Committee.

According to the above investment plan, the Korea Technology Investment Corporation 1 Corporate Restructuring Fund 1 (the Korea Technology Investment Association is an investment association established by inviting investors, and the Korea Technology Investment Association hereinafter referred to as the "Investment Association") purchases 308,000 shares of the company of this case and 200,000 shares owned by other institutions, total of 50,000 shares per share and 200,000 shares owned by the company of this case. The amount of 200,000 shares with 25,000 shares with 35,480,000 shares with 20,000 shares with 35,480,000 shares with 20,000 shares convertible bonds (average 50,113 won per share) with the acquisition of 50% or more shares owned by the company of this case by the Korea Technology Investment Association hereinafter referred to as the "Investment Association") after the registration of the KOSDAQ of this case in early 2001 through the method of transfer and sale.

In accordance with the direction of Defendant 4, Nonindicted 1 decided to purchase 59,000 won per share of the largest shareholder in addition to the management premium of the largest shareholder through negotiations with Nonindicted 2, who is a new business operator, and the creditor bank, which had been under the new business management, was approved by the creditor bank.

In addition, Defendant 1 also demanded Defendant 1 to issue convertible bonds worth KRW 5 billion with the conversion price of KRW 22,00,000 on Korean technology investment by notifying Defendant 1 that he would be the largest shareholder of the purchase of shares from the new company of the investment association. Defendant 1 accepted this without any objection.

On July 14, 200, Defendant 4, the representative director of Korean Technology Investment Co., Ltd., transferred 308,000 shares of the instant company, which were newly held with the new representative director on July 14, 200, to the Investment Association 59,000 won per share, and, under the agreement with the management of the instant company, the instant company, prior to the completion date of the contract (prohibitd payment), entered into a share acquisition agreement to the effect that the instant company shall issue convertible bonds on the condition that “2,00 won per annum, annual interest rate of 3,000 won, issue amount of 5 billion won, and one month prior to the expiration date of the period for the request for conversion,” and Defendant 1 affixed a seal on the said written contract as the confirmation date of the issuance of the said convertible bonds.

In the course of negotiations with the new company, Non-Indicted 1, who was in possession of another invested institution, has negotiated on the part of the "Korea Penal Complex Investment" and the sale of stocks that he had been aware of as the shareholder of the company of this case in addition to purchasing the shares of the company of this case. However, when the Korea Penal Complex Investment demands the price equal to the transaction price newly known with the new company and the investment plan's profitability was excessively reduced, Non-Indicted 2, who was in charge of selling the shares of this case. Non-Indicted 2, who was well aware of the current status of shareholders of the company of this case, was able to collect shares instead of purchasing shares.

On July 10, 200, Nonindicted 2 negotiated the terms of sale and purchase with the invested institutions holding the shares of the instant company, and around July 10, 200, Nonindicted 2 purchased KRW 8,498 shares of the instant company held by “Au Technology Investment” in the name of Nonindicted 3, and around that time, purchased KRW 182,00 shares per share in the name of Nonindicted 3 in the name of Nonindicted 3. The said Nonindicted 2 and Nonindicted 3 sold them to the investment association at KRW 47,50 per share.

As a result, an investment association acquired 490,000 shares (i.e., new shares + 308,00 shares owned by other invested institutions) and became the largest shareholder who becomes to hold 40.8% of the shares of the instant company. On August 7, 2000, upon completion of payment of remaining wages under the above share acquisition agreement, the company’s largest shareholder was changed from new shares to the investment association.

After concluding the aforementioned stock acquisition agreement with the new company, Defendant 4 determined a new investment plan with the content that the total subscription amount of convertible bonds to be underwritten by the company of this case from the initial 5 billion won to the initial 10 billion won, and the underwriter of convertible bonds from the investment association to the Korean technology investment. The previous investment plan was modified.

Defendant 1 accepted the revised investment plan without any objection, and on July 200, immediately before the conclusion of the instant contract, Defendant 1 held a board of directors meeting to explain the contents of the issuance of convertible bonds agreed with the Korea Technology Investment Association to Defendant 2 and 3, the attending directors.

Defendant 2, who had been a director in charge of finance at the time, presented the opinion that "the conversion price shall be at least 25,000 won", but Defendant 1 stated that "the conversion price shall be at least 22,00 won since Samsung Securities had already been agreed with the company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company's company

Defendant 1, around July 25, 200, pursuant to the above resolution of the board of directors on July 25, 200, entered into the instant contract with the purport that “Korea Technology Investment shall acquire convertible bonds of an amount equivalent to 10 billion won and the conversion price shall be 22,00 won.” On the same day, Korea Technology Investment Co., Ltd. subscribed all the convertible bonds by paying the total amount of the issuance price of convertible bonds.

Defendant 4 was involved in the management of the instant company by dispatching Nonindicted 4 to a management director after the conclusion of the share acquisition agreement with the new company on July 14, 2000. However, following the conclusion of the instant contract, Nonindicted 4, who concluded a contract with the Korea Technology Investment in Technology and entered into a new share purchase agreement with the Korea Technology Investment in fact at the location of its major shareholder, shall prepare documents stating that the resolution of the board of directors was made prior to the date of the conclusion of the said share purchase agreement in order for the Korea Technology Investment to have been allocated the said convertible bonds at a third party’s location. Defendant 1 and 2, according to its opinion, prepared the minutes of the board of directors retroactively as if the said board of directors was held as of July 12, 200.

After that, the majority shareholders of the company of this case who became aware of the contents of the contract of this case stated that the share price will be caused if the above convertible bonds are converted into shares, and the other members of the investment association also argued that the value of the share ownership of the company of this case would be reduced if the Korea Technology Investment Association is converted into shares early, and that the Korea Technology Investment Association's claim against the acceptance of convertible bonds is likely to decrease the value of the share ownership of the company of this case. The defendant 4 agreed with the defendant 1 to put a limitation on disposal of the shares converted from the convertible bonds and their convertible bonds until 30 months elapse from the date of issuance of convertible bonds." The above provision was inserted into the subscription bond of this case on July 25, 200.

Defendant 4 ordered Defendant 1, through Nonindicted 4, to deposit KRW 10 billion in convertible bonds paid by Korea technology investment in the paper of gold bullion, and around August 29, 200, Defendant 4 provided the above deposit claim amounting to KRW 15 billion in the name of the principal corporation in the name of the principal corporation controlled by Defendant 4, as security, in borrowing KRW 15 billion in the name of the principal corporation controlled by Defendant 4, and was finally sentenced by the Seoul High Court on September 3, 2002 for the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) and five years in suspension of execution.

Defendant 4 dismissed Defendant 1 from office as representative director of the instant company on January 2001, and appointed Nonindicted 5, who was the head of the Korea Technology Investment Restructuring Headquarters, on February 12, 2001. The instant company filed a new preliminary examination for the registration of KOSDAQ around February 15, 2001. In the process of this case’s provision on the restriction on disposal of convertible bonds, the instant contract submitted to the Korea Securities Dealers Association a written consent on the voluntary disposal of convertible bonds on February 28, 2001, and thereby, the above restriction on disposal was repealed.

Around August 2001, Korea Technology Investment Co., Ltd. transferred 7 billion won of the instant convertible bonds to an investment association as acquisition price at the time of asset exchange with the investment association. Around July 26, 2002, the investment association transferred the convertible bonds held in the possession of management rights of the instant company to Osung LSE Co., Ltd. on or around July 26, 2002. After that, the instant company was registered in the KOSDAQ on a successful basis on January 7, 2003, and all convertible bonds issued under the instant contract were converted into stocks.

(B) Trading status of the shares of the instant company

The new company originally held 1,200,000 shares of the company of this case and agreed to dispose of them as part of the restructuring work, and requested 11 investment companies, such as Korea Investment Company, to conduct market research, etc. on December 29, 199, including 118,000 shares out of the shares of this case (90.2% of the shares of this case) to sell 720,00 shares out of them (30,000 shares sold to A240,000 shares, and 240,000 shares, and 60,000 shares out of the shares sold to ABD Investment through consultation within six months from the sale of the shares of this case (30,00 shares sold to ABD Investment).

The shares of the instant company, which were sold as above, began to have been distributed among the general public through the investment company from this point of time. As the general investors anticipated the registration of the KOSDAQ of the instant company and actively purchased the said shares, they were traded at the price of KRW 50,000 to KRW 80,00 per share on May 200. Accordingly, in the case of Korea’s Capital Investment, the said shares were sold from February 2, 200 to the general investors at the price of KRW 50,000 per share.

Around February 23, 2000, pursuant to the terms and conditions of the redemption as seen above, the new redemption had been adjusted by taking into account the amount of KRW 180,000 from ABE investment, KRW 120,000 from CBE investment, KRW 60,000 from CBE investment, and KRW 360,00 from the central start-up investment, and the amount of KRW 360,00 from the initial selling price, during the initial selling price, dividends, interest, etc. (or KRW 27,500 per share in the case of ABE investment). As regards the total amount of KRW 300,00 per share, ABE investment did not respond to the redemption as to the remainder of KRW 60,00.

New shares of 170,000 out of the redeemed 360,000 shares are sold to individual investors again (new shares were sold to Nonindicted 7, who borrowed Nonindicted 6’s name on February 23, 2000, in KRW 32,000 per share; KRW 50,000 per share on February 23, 200; KRW 32,000 per share on February 28, 200; KRW 15,000 per share to Nonindicted 9 on February 25, 200; KRW 25,000 per share to Nonindicted 10; KRW 28,500 per share); ultimately, they were sold to Nonindicted 7,00 per share to be excluded from the original sale; KRW 18,00 per share; and KRW 32,00 per share on February 25, 200; and eventually, they were sold to Nonindicted 8,300 per share (the original sale).

On February 23, 2000, Nonindicted 11, a vice head, purchased KRW 10,000 per share of KRW 36,000 from Nonindicted 12 of the “Korea-Korea-Korea-Japan Securities” on February 23, 200, and Nonindicted 13 purchased KRW 12,50 per share of KRW 42,00 per share with Nonindicted 8 and Nonindicted 12 through Nonindicted 12.

on February 25, 200, Aju Technology Investment sold 10,000 per share to Nonindicted 15 on February 25, 200, KRW 45,000 per share, KRW 10,000 per share to Nonindicted 16 on February 28, 200, KRW 45,000 per share to Nonindicted 17 on March 3, 200, KRW 45,000 per share, KRW 10,000 per share to Nonindicted 17 on March 10, 200, KRW 50,000 per share, and KRW 10,00 per share to Nonindicted 18 on March 10, 200, KRW 46,00 per share to Nonindicted 18 on March 18, 200.

On March 14, 200, Nonindicted 19 purchased 600 won per share with the introduction of ‘scopic securities' (hereinafter referred to as the "copic securities"). Nonindicted 20 purchased 1,300 won per share from Nonindicted 21 on March 3, 200. Nonindicted 22 purchased 1,000 won per share from ‘Seoul Start-up Investment' (hereinafter referred to as ‘Seoul Start-up Investment') on March 14, 200, after hearing inquiries about the registration of KOSDAQ, around 60,000 won per share. Nonindicted 23 purchased 20,000 won per share from around 205,000 won per share (hereinafter referred to as ‘Scopic 20,000 won per share') on or around February 2, 200, at around 200 to around 205, 205.

On March 14, 200, Nonindicted 24 heard a question about the KOSDAQ registration, and purchased KRW 52,000 per share of KRW 52,000. Nonindicted 25 purchased KRW 10,000 per share of KRW 54,00 per share on March 200 and around April 200, and purchased KRW 57,00 per share of KRW 57,000 per share on several occasions.

On April 4, 200, Aju Technology Investment sold to Nonindicted 26 KRW 21,396,375 per share (28,490 per share), Nonindicted 27 KRW 17,506,125 per share (28,511 won per share), Nonindicted 28 KRW 1,923,750 per share (28,290 per share), and Nonindicted 29 KRW 41 share to Nonindicted 29 KRW 1,154,250 per share (28,152 won per share), and KRW 384,750 per share (27,482 won).

However, the instant company failed to register on KOSDAQ on May 26, 2000, and accordingly, the instant company’s shares did not amount to each transaction around July 2000, because the transaction of the instant company’s shares rapidly chilled.

(2) Requirements for establishing occupational breach of trust

The crime of occupational breach of trust is established when a person who administers another's business in violation of his duty obtains pecuniary advantage or has a third party obtain it, thereby causing loss to the principal.

The facts charged of the instant case are as follows: (a) the Defendants conspired to issue convertible bonds in violation of the duties required to the representative director and directors, which are agencies of the instant company; (b) thereby making Korea Technology Investment, a third party, obtain pecuniary benefits equivalent to the difference between the market price of the shares of the instant company and the conversion price; and (c) thereby causing damage equivalent to the same amount to the instant company; (d) the Defendants’ act of causing damage to the instant company; (e) whether Defendant 1, 2, and 3, an agency of the instant company, committed an act of breach of duty; and (e) whether Defendant 4 conspireds and participated in the act of

(3) Whether the contract of this case causes damage to the company of this case

(A) In the crime of occupational breach of trust, the term "if any property damage is inflicted" includes not only the case where a real loss is inflicted but also the case where a risk of actual damage to property exists. In general, in the case where a representative director of a non-registered company such as the company of this case or a representative director of a non-listed corporation issues convertible bonds at the conversion price using an amount significantly lower than the market price of the company's stocks, the acquirer of convertible bonds obtains pecuniary advantage equivalent to the difference between the market price of the stocks and the conversion price, and the corporation suffers pecuniary loss equivalent to the same amount (see Supreme Court Decision 2001Do3191, Sept. 28, 2001). First, we examine first of all, whether the market price of the company's stocks at the time of this case was much higher

(B) Generally, since the unlisted stocks are not traded in the open market, there are many cases where it is difficult to calculate the market price. However, if there is a normal example of transaction that properly reflects the objective exchange value of the unlisted stocks, the market price should be deemed the market price and the value of the stocks should be assessed (see Supreme Court Decision 2005Do856, Apr. 29, 2005). Accordingly, in the case of the instant company, the issue of whether there was a normal example of transaction that properly reflects the objective exchange value of the stocks of the instant company.

According to the facts acknowledged above, the shares of the company of this case began to be distributed from the beginning of the disposal of shares held by the investment company around December 29, 199 and began to be distributed from the general trading company. The question that the company of this case applied for registration to the company of this case was spread and the trading volume and transaction price of the shares are rapidly increased. Accordingly, the new company, a major shareholder, entered the company's corporate structural improvement project led by the financial institution, and there was no particular share transaction until the time of conclusion of the contract of this case after the new company's registration was entered into on May 26, 200. After that, the Korean Technology Investment, a general partner of the investment association, purchased 308,000 shares of the company of this case and purchased 50,000 shares of the remaining shares of the company of this case around July 14, 200 to acquire management right for the company of this case, and additionally, it can be known that it purchased 300,000 shares in the non-indicted 208,608.

However, in light of the fact that: (a) the instant company failed to register on KOSDAQ, thereby raising funds; (b) the management environment has been significantly deteriorated; and (c) transactions immediately before the registration on KOSDAQ were conducted in mind that the stock price of the instant company increases rapidly after the registration on KOSDAQ; and (d) there was a significant change in the investment environment; (b) in particular, the transaction price in the over-the-counter market is considerably different from the transaction price of the invested institutions; and (c) transactions conducted at a similar time are likely to have a significant difference in the price; and (d) the above transactions are considered to have been made with a strong speculative nature that took place in the over-the-counter market at the time; or (e) transactions conducted without being based on objective information on the corporate value of the instant company, all of the transactions of the instant company’s stocks that occurred before May 26, 200 are considered to have failed to reflect the objective value of the instant company’s stocks exchange at the time of conclusion of the instant contract.

On the other hand, the transaction price of KRW 59,00 per share, which was determined by Korea Technology Investment Co., Ltd. to purchase 308,000 shares of the instant company from the new company as an executive partner of the investment association on July 14, 200, when it purchased 308,00 shares of the instant company. Since the said shares were required to acquire the management right of the instant company at the time, it seems that the so-called management right premium has been added to the objective exchange value of shares because the said shares were necessary for acquiring the management right of the instant company. Considering that the ordinary management right premium has reached 80% or 300% of the original stock price, the said transaction price also cannot be deemed to reflect the objective exchange

In addition, with respect to the transaction price of KRW 47,50 per share, which was determined by the Korea Technology Investment Company at the time of the conclusion of the instant contract by purchasing 182,00 shares of the instant company from Nonindicted 3 who requested the purchase of the instant company’s shares at the time of the conclusion of the instant contract, the actual acquisition price of the instant shares was 43,00 won per share, because the said price was included in Nonindicted 2’s commission for Nonindicted 2. At the time, the investment company that sold the said shares to Nonindicted 3 had already obtained information that it had purchased KRW 59,00 per share from new Korea Technology Investment Co., Ltd. at the time, and had tried to sell shares at a higher price than the market price at the time. Since the said shares were necessarily necessary to maintain the largest shareholder’s shares, in order for the Korea Technology Investment Company to promote the investment plan that had been initially set at the time of the instant contract, it is not necessary to consider the objective transaction price at the time of the exchange of shares of the instant company.

Thus, the above transactions conducted before and after the conclusion of the contract of this case shall not be considered as normal transactions that reflect the objective exchange values of the shares of this case at the time of the contract of this case.

(C) Furthermore, we examine whether the conversion price of this case 22,00 won is determined at a price significantly lower than the market price of the shares of this case.

The Defendants asserted that the conversion price is the same as the estimated price of public offering determined by Samsung Securities, a major supervisor, at the time of preparing for the registration of the KOSDAQ around May 2000, as calculated immediately before the third fair agency entered into the instant contract, and therefore, it is not significantly different from the market price of the shares of the instant company.

As seen earlier, 22,00 won of the estimated price of public offering determined by Samsung Securities was assessed as 15,628 won per share through the company’s real history from January 10, 200 to April 24 of the same year by the above company, and the appropriate public offering offered by Samsung Securities Ri Center is determined in consideration of 19,000 won and the desired public offering price of 25,000 won presented by the instant company.

On the other hand, according to the KOSDAQ registration procedure at the time, when a company registered on the KOSDAQ and the stock price of the company lowers below the estimated price of public offering, the company is obligated to maintain the stock price above the estimated price of public offering by means of purchasing the company’s stocks. In general, since the company’s duty of manager is likely to adversely affect the profit of the manager, it is considered that the manager intends to avoid their risk by setting the estimated price of public offering at a price lower than the estimated reasonable price after registration on the KOSDAQ.

Even according to the testimony of Non-Indicted 32 of the lower court, it is common practice to determine the reasonable share price expected after the registration of the KOSDAQ at a price of about 30% discount, and it can be recognized that the estimated price of the public offering was determined in accordance with these practices even in the process of preparing for the registration of the KOSDAQ of the instant company. Accordingly, it is thought that the initial Samsung Securities was not expected to be more than 32,000 won, which is much less reasonable share price than 27,00 won after the registration of the instant company on the KOSDAQ.

However, around May 200, the time when Samsung Securities submitted a review report including the decision of the scheduled value of public offering, it appears that the company of this case was immediately before the company completed preliminary examination for the registration of KOSDAQ by the KOSDAQ Steering Committee, and the expected value of investors in the company of this case reached the highest level. As seen earlier, the time when the contract of this case was concluded, which led to the failure to register KOSDAQ as seen earlier, and the management environment and the investment environment of the mother company’s insolvency were significantly deteriorated. Furthermore, in addition to this point, the so-called KOSDAQ, which had been previously worked, was gradually frequent, should be considered to have been formed at a considerably lower level than the reasonable share price after the registration of the newly anticipated KOSDAQ.

On the other hand, since the management performance until May 200 is very excellent and the expected net income converted into the annual performance in 2000 was exceeded KRW 6.5 billion, it may be deemed that there was a factor that the actual market price of the shares is higher than the actual market price of the shares of the company in 2000, which was anticipated by Samsung Securities. However, as long as it does not secure the status of a major shareholder, it is extremely difficult to participate in the management of the company or receive dividends, and it is extremely inappropriate for general public to consider it as the object of investment, such as that it is extremely inappropriate for them to sell it to the market, and thus, it is very inappropriate that the above short-term management performance prior to the above short-term management performance alone would have a significant impact on the increase in the essential value of the shares of the company in this case, even if it is a fact that may have a significant impact on the increase in the market price of the shares of the company in this case, it could not be determined that the transaction of the shares of the company in this case was actually supported by the time.

Meanwhile, as acknowledged earlier, the Defendants restricted the disposal of converted shares by stipulating that “the bond underwriter cannot dispose of the shares converted from the bonds or debentures before the lapse of 30 months from the date of issuance of the bonds without the consent of the company of this case.” In addition, considering the fact that the issuance terms of the convertible bonds of this case were 8.1% of the loan interest rate of commercial banks at the time of the issuance terms of the convertible bonds of this case (in the investigation record, 544 pages), the Korean technology investment that acquired the convertible bonds of this case seems to have a considerable investment risk compared to the general convertible bonds when acquiring the convertible bonds of this case. This is obvious that the conversion price of this case was lower than the market price of the company of this case. Thus, even if the conversion price of this case was determined lower than the market price of the company of this case, it cannot be deemed that the conversion price of this case was remarkably lower than the market price of the company of this case.

(D) In full view of all the circumstances examined above, 22,00 won of the conversion price in this case was higher than the intrinsic value of the company as well as the amount close to the market value of the company's shares at the time. Even if the conversion price in this case was lower than the market value of the company's shares, considering the provisions on the restriction on disposal of the contract in this case and other terms and conditions of the contract in this case, it is difficult to view that the Korean Technology Investment, which is the underwriter of convertible bonds, as the facts charged in this case, was considerably lower than the market value of the company's shares in this case. Accordingly, it cannot be deemed that the company in this case suffered financial loss equivalent to the difference between the market value of the shares in this case and the conversion price.

(4) Whether Defendant 1, 2, and 3 committed a breach of duty

In the crime of occupational breach of trust, the term "act in violation of the duty" means any act in violation of a fiduciary relationship with the principal by failing to perform an act as a matter of course which is expected not to perform, or by doing an act which is expected not to perform, under the provisions of law, the content of the contract, or the good faith principle, in light of specific circumstances, such as the content

In general, the intention of the crime of occupational breach of trust is established when it is combined with the perception that the person who deals with another's business would inflict property damage on the principal and that the intention of his or her or a third party's pecuniary gain is in violation of his or her duty, and such subjective element of the crime of occupational breach of trust (such as intention, motive, etc.) is a subjective element of the crime of occupational breach of trust in a case where the defendant denies the criminal intent by asserting that he or she committed the act at issue in his or her own interest, it is inevitable to prove by the method of proving indirect facts that have considerable relevance with the intention due to the nature of the object, and what constitutes considerable relevance indirect facts should be determined by the method of reasonably determining the link

However, the above legal principles should apply to determining whether a corporate manager had an intent to commit a breach of trust in relation to a business judgment. However, even if a manager has made a prudent decision with the belief that a corporate manager is consistent with the interests of the company based on the information collected in good faith without intent to take any personal benefits, the prediction is broom or there is a case where the corporate losses occur. In such a case, if the interpretation standards for intent are relaxed to impose a criminal liability for the crime of occupational breach of trust, this would not only violate the principle of no punishment without the law, but also cause a serious loss not only in the business, but also in the society, even if it is viewed as a policy level, as well as in the case of a company’s occupational breach of trust. Therefore, even if the current Criminal Code does not deny the legal principle that the crime of breach of trust is dangerous, the circumstances and motive leading up to the business judgment at issue, the contents of the business at issue, the economic situation of the company, and the probability of incurring losses and profits, and there is no strict perception that a third party is liable for an intentional loss (20).

In this case, the issue is whether Defendant 1, 2, and 3 committed a breach of duty is that Defendant 1, 2, and 3 determined the conversion price at KRW 22,00 by acquiring convertible bonds equivalent to KRW 10 billion in Korean technology investment through the conclusion of the contract in this case.

However, according to the above facts, the company of this case failed to register the KOSDAQ and failed to raise new financing plan of this case, and disposed of the company's shares in the absence of new limit, which are major shareholders, and thus became at a management crisis. The above defendants actually invested 10 billion won in Korea, securing the status of the largest shareholders of the company of this case, thereby seeking long-term investment in the company. It was determined that the above defendants were able to obtain profits from the company of this case as a result of the expansion of company's reservation funds and the stable exercise of management rights. The above defendants had gone through the procedure necessary for issuing the convertible bonds of this case, and there was a substantial discussion about the conversion price between the above defendants. The interest rate of 10 billion won was 3% per annum of the contract of this case, and it was extremely less favorable to the company's new financing plan of this case. The above defendants had been 10 billion won in terms of a long-term investment plan of this case to acquire new financing from the company of this case to the company of this case.

Although it was determined that the above Defendants’ act did not cause damages to the company of this case, it is difficult to conclude that the above Defendants determined conversion price at KRW 22,00 in the process of concluding the contract of this case, or that the above Defendants had intent to commit breach of trust, in light of the aforementioned circumstances, motive, content of the contract of this case, circumstances at the time of the above management judgment, possibility of occurrence of losses and acquisition of profits through the contract of this case, etc.

(5) Whether Defendant 4 conspireds or participated in the act of breach of duty

Since the free market economy system, which Korea adopts basically, is based on free economic activities derived from the dual motive of each economic entity's profit-making pursuit, it is necessary to interpret that the state's penal authority should be punished by taking part in the economic activities of economic entities, such as by using illegal or unlawful means, and that such economic activities may undermine or threaten fair competition order in the market, and that it cannot be permitted against the public interest.

Therefore, in order to recognize a beneficiary who benefits from the crime of occupational breach of trust or a third party closely related thereto as a co-principal with an executor of occupational breach of trust, it is insufficient for the beneficiary or a third party closely related thereto to acquire profits by taking advantage of the act of occupational breach of trust passively even though he/she knows that the act of an executor constitutes an act of occupational breach of trust against the victim himself/herself. In addition, it is necessary to actively participate in the act of breach of trust by actively or actively taking part in the act of occupational breach of trust by inducing the act of an executor, compelling him/her to act, or participating in the whole process of the act of breach of trust (see Supreme Court Decision 2003Do4382, Oct. 30, 2003). It should not be punished as a co-principal of occupational breach of trust in cases where a beneficiary or a third party closely related thereto acquires profits as a result of trading with an executor of occupational breach of trust through a general method

Based on these legal principles, Defendant 1, 2, and 3 were presumed to have committed an act of violating their duties, such as the facts charged, when issuing convertible bonds to Korea Technology Investment. Then, considering whether Defendant 4 conspired or participated in the above act of breach of duty, Defendant 4 proposed to acquire convertible bonds of 10 billion won as the representative director of the Korea Technology Investment Association and the chairman of the above Defendant’s response, and thus, the contract of this case was concluded. During that process, there is no evidence to acknowledge that Defendant 4 urged another Defendants to make a decision or attempted to commit breach of trust, or used unlawful or unlawful means in concluding the contract of this case, as much as possible, to support a venture business’s funds and growth. 2) The Korea Technology Investment is a corporation established for the purpose of supporting the venture business’s funds and growth, and thus, it cannot be viewed that Defendant 4 actively participated in the company’s investment plan of this case to establish an investment plan of this case with a certain amount of money to be converted into the company’s investment fund of this case.

(6) Sub-committee

Therefore, even if all of the facts charged against the Defendants constitute a case where there is no proof of crime, the lower court erred by misapprehending the legal doctrine on the crime of occupational breach of trust, or by misapprehending the legal doctrine on the crime of occupational breach of trust, thereby finding the Defendants guilty.

3. Conclusion

Therefore, without examining the remaining grounds for appeal by the Defendants and the prosecutor, the appeal by the Defendants is without merit and the prosecutor’s appeal is without merit. Thus, the judgment of the court below is reversed in accordance with Article 364(6) of the Criminal Procedure Act, and it is again decided as follows.

4. Determination of facts charged

The summary of the facts charged against the Defendants is as stated in Article 2(a) of the Criminal Procedure Act. This constitutes a case where there is no proof of facts constituting an offense as stated in the judgment on the grounds of appeal, and thus, the Defendants are acquitted under the latter part of Article 325 of the Criminal Procedure Act.

Judges Kim Yong-sung (Presiding Judge)