International Finance Corporation and one other (Law Firm Yang Hun, Attorneys Lee Ho-ro et al., Counsel for the defendant-appellant)

Korea Mortgage-Backed Securitization Co., Ltd. (Law Firm Faithful, Attorneys Bag-man et al., Counsel for the plaintiff

December 18, 2009

1. The defendant shall pay to the Plaintiff International Finance Corporation 1,644,180,164, and to the Plaintiff KMEL Holdings Holdings 1,635,179,178, and each of the above amounts, 6% per annum from April 10, 2009 to January 29, 2010, and 20% per annum from January 30, 2010 to the date of full payment.

2. The plaintiffs' remaining main claims and conjunctive claims are all dismissed.

3. Of the costs of lawsuit, 1/2 shall be borne by the Plaintiffs, and 1/2 by the Defendant, respectively.

4. Paragraph 1 can be provisionally executed.

Main Claim and Preliminary Claim: the Defendant shall pay to the Plaintiff International Financial Corporation 3,351,186,884 won, Plaintiff KMEL Holdings Holdings 3,443,175,106 won, and 20% interest per annum from the day following the delivery of a copy of the complaint of this case to the day of full payment.

1. Basic facts

A. Establishment of the defendant

1) The defendant is a non-listed corporation established on September 21, 1999 for the purpose of business of distributing profits from the management, operation, and disposal of mortgage-backed securities after taking over mortgage-backed claims from financial institutions pursuant to the Special Purpose Companies for Companies Act enacted on January 29, 199 and issuing mortgage-backed bonds as security, or distributing profits from the management, operation, and disposal of the mortgage-backed securities. The defendant was authorized for mortgage securitization by the Financial Supervisory Commission on October 22, 1999.

2) On December 21, 2002, the Defendant had repeated capital increase on several occasions, and owned 22,496,878 common shares issued in face value of 5,000 won, capital stock of 112,484,390,000 won, and among them, the Plaintiff International Finance Corporation (hereinafter “IFC”) owned 2,00,000 shares (8.9%) and Plaintiff KSM Holdings Holdings (hereinafter “KS”) owned 2,00,000 shares (8.9%).

3) Meanwhile, the shareholders of the defendant, including the plaintiffs, have agreed to list the defendant's shares on the KOSDAQ on October 31, 200 and promoted them. To this end, it is required to issue share certificates using uniform standard securities. Accordingly, the defendant revised the relevant articles of incorporation and concluded an agency contract with the National Bank, issued new shares using uniform standard securities, and deposited them with the National Bank in the name of each shareholder, but eventually, it was unnecessary to list the defendant's shares on the KOSDAQ.

(b) Establishment of the Korea Housing Finance Corporation;

On March 27, 2003, the Korea Housing Finance Corporation enacted the Korea Housing Finance Corporation Act on December 24, 2003 by promoting the establishment of the Korea Housing Finance Corporation, which is mainly engaged in supplying long-term and low interest housing funds, etc. to the ordinary people through the securitization of mortgage-backed claims, etc. and the credit guarantee business, and on February 27, 2004, the Korea Housing Finance Corporation established the Korea Housing Finance Corporation by investing capital of KRW 320 billion in the Bank of Korea and the Bank of Korea in accordance with the same Act on February 27, 2004.

(c) Business transfer;

On March 2, 2004, the Defendant passed a resolution of the board of directors on the transfer of all business related to mortgage-backed securitization to the Korea Housing Finance Corporation. On March 17, 2004, the general meeting of shareholders made a special resolution on the transfer of all business related to mortgage-backed securitization to the Korea Housing Finance Corporation according to net asset value. On March 17, 2004, the Defendant entered into a business transfer agreement with the Korea Housing Finance Corporation to transfer the business as of the transfer date according to net asset value.

(d) Exercising appraisal rights;

1) On March 15, 2004, prior to the resolution of the general meeting of shareholders, the Plaintiffs notified each of them in writing to the Defendant that they object to the transfer of business. On March 16, 2004, with respect to the Plaintiff’s registered common shares 2,00,000,000 shares of the Defendant’s issuance, the Plaintiffs exercised their appraisal rights for each of the Defendant on March 25, 2004 with respect to the Plaintiff’s registered common shares 2,00,000 shares of the Defendant’s issuance.

2) Although the Plaintiffs and the Defendant agreed to determine the purchase price of stocks, the Plaintiffs asserted that the purchase price should be calculated by taking into account the earnings value other than the net asset value, while the Defendant asserted that the purchase price should be calculated according to the net asset value, and did not reach an agreement on the purchase price. After which, the Defendant was dissolved on May 13, 2004, and followed the liquidation procedures.

3) On May 31, 2004, the plaintiffs filed an application for the determination of the purchase price of shares as Seoul Southern District Court 2004 non-conforming 55, and on February 17, 2005, the plaintiffs calculated the purchase price of shares 4,000,000 won per share (hereinafter "the shares of this case") for purchase as net asset value and received a determination of KRW 6,084 per share. On April 2, 2008, the plaintiffs appealed against the determination that the above application should not be open to the public pursuant to Article 13 of the Non-Contentious Case Litigation Procedure Act as non-contentious case company, but the first instance court revoked the first instance judgment on the ground that the examination was open to the public pursuant to Article 13 of the Non-Contentious Case Litigation Procedure Act, but the purchase price of the shares of this case was calculated as net asset value and the reappeal was determined as KRW 6,084 won per share, and the reappeal was dismissed on November 207, 2008.

4) On December 5, 2008, the representative of the plaintiffs started to discuss the procedure for purchase of shares with the defendant such as sending the documents to be submitted to the defendant for payment of purchase price pursuant to the above court's decision to the defendant on December 5, 2008. On December 16, 2008, the defendant stated the account that the maximum amount of purchase price can be transferred directly to the plaintiffs' representative, and on December 16, 2008, requested the defendant to prepare documents necessary for the receipt of shares from the national bank (securities receipt, identification card - evidentiary documents, etc.) and necessary documents related to the cancellation of the registration of foreign-capital invested companies (share transfer certificate, etc.). On the other hand, the defendant sent 00, 100, 200, 208, 2008, 2008, 300, 600, 800, 600, 600, 800, 600, 6000, 8, 106, 600.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 2-1, Gap evidence 1, Gap evidence 2-8, Eul evidence 1-13 and 16 (including each number), the purport of the whole pleadings

2. Judgment as to the main claim

A. Determination on the cause of the claim

According to Article 374-2 (2) of the Commercial Act, where a shareholder opposing a transfer of business exercises the appraisal right against the company, the company shall purchase the above shares within two months from the date of receiving the request for appraisal right. Since appraisal right is a kind of right to form its nature, if the shareholder claims purchase right, a sales contract is established as a matter of course regardless of the company's consent. Thus, it is reasonable to see that the period for payment for the above two months is the period for payment of purchase price. Therefore, the company is not liable for delay. However, the company should bear interest for delay calculated at a rate of 6% per annum as provided by the Commercial Act from the time when the above period expires. Thus, barring any special circumstances, the defendant is liable to pay damages for delay calculated at the rate of 6% per annum from the date of receiving the request for appraisal right for each share purchase price

B. Determination as to whether a delay liability exists due to simultaneous performance relations

The defendant asserts that since the defendant's obligation to pay the purchase price of shares and the obligation to deliver the share certificates of the plaintiffs are simultaneous performance relations, the defendant's obligation to pay the purchase price of shares does not fall into delay of performance merely with the intention of the deadline for payment of the purchase price of shares. Accordingly, the plaintiffs asserted that the right to refuse payment of the purchase price of shares can be denied if the purchase price of shares is formed by exercising the appraisal right against the transfer of business, unless the purchase price of shares is delivered and redeemed to the company.

In light of the fact that a sales contract for shares is established, the obligation to pay the purchase price and the obligation to deliver the share certificates are meaningful obligations under the bilateral contract. This also applies to the exercise of appraisal rights. However, since fair purchase price calculation is not easy when appraisal rights are exercised, the purchase price of shares exercising appraisal rights under Article 374-2 (3) and (4) of the Commercial Act shall be determined by the agreement between the shareholders and the company, and if the agreement is not reached within 30 days after the date of request for purchase, the company or the shareholder requesting for purchase of shares shall be subject to the court's determination of the purchase price. In this case, it is necessary for the company to reasonably distribute the burden of paying the purchase price to the company at least nine (9) months after the date of request for consultation with the court for the delayed payment of the share certificates if such determination was not made within 20 (2) months after the date of request for consultation and the liability for payment of the share certificates should be determined within 30 (2) months after the date of request for consultation.

Therefore, the defendant's simultaneous performance defense is justified only after November 17, 2008 when the court's decision on the purchase price of shares became final and conclusive, and there is no reason for the plaintiff IFC from May 17, 2004 for the plaintiff IFC and from May 26, 2004 for the plaintiff KS from May 26, 2004 to November 16, 2008.

C. Limitation on liability

Article 374-2 (2) of the Commercial Act provides that the company shall bear the responsibility for delay of payment after the lapse of two months for the protection of shareholders, even though it is practically difficult to pay the purchase price prior to the determination of the purchase price by the court in order to appropriately distribute the burden that takes a reasonable period of time to determine the purchase price of shares between the company and the shareholders who exercise appraisal rights. In such a case, there is no need to protect shareholders if the determination of price is delayed due to the fault of shareholders, and in such a case, it is necessary to limit the liability for delay by

However, regarding the Defendant’s assertion that the purchase price should be calculated according to the net asset value of the instant case, the first instance court revoked the determination on the ground that the Plaintiffs asserted that the purchase price should be calculated in consideration of earnings value other than the net asset value, and did not reach an agreement on the purchase price. On February 17, 2005, Seoul Southern District Court Decision 2004No. 555 decided that the purchase price of the instant shares should be calculated as net asset value and determined as KRW 6,084 per share. On April 2, 2008, the Plaintiffs appealed against the lower court, Seoul High Court Decision 2005Ra192 on April 2, 2008, which did not disclose the examination under Article 13 of the Non-Contentious Case Litigation Procedure Act as commercial non-contentious case law, but the first instance court ordered that the Plaintiffs calculated the purchase price of the instant shares as the same net asset value as the first instance court’s determination, and that the Defendant’s reappeal was partially dismissed as the Defendant’s re-appeal was dismissed.

Therefore, the defendant shall pay 1,64,164 won [=3,288,360,328 won =12,168,00,000 won x 6% x 6% x 184/365 [4 + from May 17, 2004 to November 16, 2008] x 50%] x 1,635,179,178 won [3,270,358,356 won [12,168,000 x 6% x 4 + 175/365] x 200% interest rate from May 26, 2004 to November 16, 2008]; 20% interest rate from 200 to 30% interest rate 50% interest rate 50% interest rate 50% interest rate 50% interest rate 10% interest rate 20% interest rate 20% interest rate 20.3% interest rate 201.

3. Judgment on the conjunctive claim

The plaintiffs actually accrued the amount equivalent to the purchase price of the shares held by the defendant until the payment of the purchase price of the shares to the plaintiffs. Since the defendant retained the amount equivalent to the purchase price of the shares without any legal cause until the payment of the purchase price of the shares to the plaintiffs, it is argued that the plaintiffs are obligated to return unjust enrichment calculated at the rate of 6% per annum from the expiration of two months from the date of receiving the request for purchase of shares with respect to the purchase price of the shares to the date of payment of the purchase price of the shares. However, since the defendant delayed the payment of the purchase price of the shares to the plaintiffs, it cannot be deemed that the amount equivalent to the purchase price of the shares was possessed without any legal

4. Conclusion

Therefore, the plaintiffs' primary claims are accepted within the scope of the above recognition, and the remaining primary claims and conjunctive claims are dismissed, and they are so decided as per Disposition.

Judge ADDDDDIER (Presiding Judge)