Whether new shares were allocated according to the Securities and Exchange Act at the time of issuing new shares

The resolution of the board of directors only issued new shares to a specific person, including the plaintiff, in a third party allotment method, so it cannot be said that it had gone through the procedure of 'invitation' under the Securities and Exchange Act, and as alleged by the plaintiff, it cannot be deemed that the disclosure of the petition for subscription to new shares in the electronic disclosure system of the Financial Supervisory Service

Article 39 (Donation of Profits from Capital Increase)

Article 2 (Definitions of Securities and Exchange Act)

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 gift tax of KRW 14,313,370 against the Plaintiff on June 15, 2007 is revoked.

1. Details of the disposition;

A. On February 17, 2004, 2004, ○○ Lebz Co., Ltd. (the trade name of November 3, 2006 was changed to ○○M, Co., Ltd.; hereinafter referred to as “small and medium companies”) registered with the KOSDAQ on a company engaged in the manufacturing, export, and import, etc. of rectangular products, such as bags.

B. On January 9, 2006, the non-party company opened a board of directors to resolve to issue new shares of 745,890 won per share to 5 specific persons including the plaintiff, and decided to issue new shares to the third party by allocating the shares to the third party on January 12, 2006. Accordingly, on January 12, 2006, the non-party company received the allocation of new shares to the above 5th party (hereinafter referred to as "the allocation of new shares") and received the payment of the shares. Among them, the plaintiff paid 479,104 shares to the 179,98,720 won.

C. The Defendant deemed to have acquired new shares at a price lower than the market price and applied Article 39(1)1 (c), etc. of the former Inheritance Tax and Gift Tax Act (wholly amended by Act No. 8139 of Dec. 30, 2006; hereinafter “former Inheritance Tax and Gift Tax Act”). On June 15, 2007, the Defendant imposed KRW 14,313,115 (the amount calculated by multiplying the Plaintiff’s appraised value per share after capital increase by 3,249 won and KRW 569,100, the difference between the Plaintiff’s subscribed value per share 2,680 won and KRW 179,313,370 (hereinafter “instant disposition”).

[Reasons for Recognition: Evidence Nos. 1, 2, 3-1, 2, 4, 5-2, 1-1 through 4, 3-1, 2, 4-2, 3-1, 3-1, 4, and 4]

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The allocation of new shares under Article 2-4 (4) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20551, Jan. 18, 2008; hereinafter referred to as the "former Enforcement Decree of the Securities and Exchange Act") is a method of deemed public offering of new shares under Article 2-4 (4) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20551, Jan. 18, 2008; hereinafter referred to as the "former Enforcement Decree of the Securities and Exchange Act"). In this case, the definition of "in solicitation of subscription" under Article 2-4 (5) of the former Enforcement Decree of the Securities and Exchange Act is not applied. Even if the capital increase in this case was applied, it was a small public offering procedure of less than 2 billion won, which was made public notice of the decision of capital increase in the Financial Supervisory Service on Jan. 9, 2006 under the Securities and Exchange Act (amended by Presidential Decree No. 2051).

B. Relevant statutes

Article 39 (Donation of Profits from Capital Increase)

Article 2 (Definitions of Securities and Exchange Act)

Article 2-4 (Public Offering and Sale of Securities)

C. Determination

1) Article 39 (1) 1 (a) and (c) of the former Inheritance Tax and Gift Tax Act provides that, when a corporation issues new stocks to increase its capital at a price lower than their market price, gift tax shall be imposed on the person who obtains such profits as the value of donated stocks: Provided, That a stock-listed corporation or Association-registered corporation under the Securities and Exchange Act shall exclude cases where new stocks are allocated by means of public offering under Article 2 (3) of the same Act; on the other hand, Article 2 (3) of the Securities and Exchange Act and Article 2-4 (4) and (5) of the former Enforcement Decree of the Securities and Exchange Act provide that public offering of new stocks shall, in principle, be recommended to acquire new stocks from 50 or more persons by means of public offering of new stocks through such method as newspaper, broadcasting, magazine, etc. for the purpose of enabling such persons to acquire new stocks, and thus, such public offering of new stocks requires that the corporation issue or sale of new stocks by means of public offering of new stocks through such method as solicitation of new stocks, etc.

2) In light of the above legal principles, if the allocation of new shares was conducted by the method of public offering of new shares under Article 2(3) of the Securities and Exchange Act, and as seen in the above 1., the non-party company merely issued new shares through the resolution of the board of directors by the board of directors to a third party to 5 specific persons including the plaintiff. Thus, the non-party company cannot be deemed to have gone through the procedure of "invitation" under the Securities and Exchange Act, and as alleged in the plaintiff, the disclosure of the petition for subscription to new shares in the electronic public disclosure system of the Financial Supervisory Service cannot be deemed to be "invitation of subscription" under the above Act, and there is no other evidence to deem that it had gone through the above solicitation procedure prior to the allocation of new shares. Thus, the allocation of new shares in this case may not be deemed to have been made by the method of public offering of new shares.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.