Early High Court Decision 2008J 2675 ( October 13, 2008)

Standard date for settlement in regard to deemed donation of profits from stock increase, etc.

Even if there is a restriction on sale after listing, gift tax shall be imposed on the date on which three months elapse from the registration date of the Securities Business Association, which is before the expiration of the period of restriction on sale.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 118,283,200 on July 10, 200 against the Plaintiff on July 10, 2008 is revoked (118,683,200 appears to be a clerical error in the above amount).

1. Details of the disposition;

A. On February 18, 200, the plaintiff acquired 40,000 shares of the company of this case (hereinafter referred to as "the shares of this case") 1,000 won per share from Kim Jong-I, the largest shareholder of the company of this case (hereinafter referred to as the "the company of this case"). "B. The defendant, in a special relationship with Kim Jong-I, has acquired shares of this case within 3 years retroactively from February 21, 2002, when the person who acquired shares of this case was registered with the Korea Securities Dealers Association, acquired more than the original acquisition value than the standard prescribed by the Presidential Decree. On July 10, 2008, the plaintiff was dismissed on the basis of 30,000 won for the gift tax of this case (hereinafter referred to as the "the shares of this case"), which was calculated on the basis of 30,000 won for 18,000 won for 20,000 won for 20,000 won for 30,000.

[Ground of recognition] Evidence Nos. 1, No. 1 to 4, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since it is possible to sell the shares of this case after two years have elapsed since they were listed pursuant to Article 21 of the Regulations on Listing of the KOSDAQ, their acquisition profits cannot be realized until they were transferred, and since Article 41-3(34) of the Act also regards the listing date as the date the first transaction of shares, etc. was commenced on the securities market, etc., the time when the sale cannot be conducted due to the restriction on sale should not be deemed the listing date. In light of the fact that the time when the sale cannot be conducted on the securities market, etc., the shares of this case shall be deemed as the date when three months have elapsed since the cancellation of the restriction on sale

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Article 41-3 (1) of the Act provides that when a person having a special relationship with the largest stockholder, etc. acquires stocks of the relevant corporation from the largest stockholder, etc. and obtains profits above the criteria prescribed by Presidential Decree, the relevant profits shall be deemed to have been donated. Article 31-6 of the Enforcement Decree of the Act provides that "profit above the criteria prescribed by Presidential Decree" shall be calculated based on the difference between the appraised value per stock as of the date of settlement and the acquisition value per stock as of the date of acquisition, etc., and it cannot be deemed that it is a condition of actual payment through purchase and sale of stocks, etc., and Article 41-3 (4) of the Act provides that the date of listing shall be deemed to be the date of first commencement of transaction of stocks, etc. at the securities market, etc., but it shall not be deemed that the first transaction of stocks, etc., which were the object of sale, should not be deemed to have commenced. Thus, even if there is a restriction on sale after listing, as seen in Article 21 of the KOSDAQ Regulations, it shall not be deemed to be erroneous in the imposition of this case."

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.