Seoul High Court Decision 200Na14148 decided May 1, 200

Head of Cheongju Tax Office

March 31, 2005

Cheongju District Court Decision 2003Guhap2033 delivered on July 23, 2004

1. The defendant's appeal is dismissed.

2. The costs of appeal are assessed against the defendant.

1. Purport of claim

The Defendant’s disposition of imposition of KRW 485,336,490 of corporate tax for the business year 2000 against the Plaintiff on December 1, 2002 and KRW 84,529,90 of corporate tax for the business year 2001 shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of the disposition;

The following facts do not conflict between the parties, or can be acknowledged by comprehensively taking into account the whole purport of arguments as stated in the evidence of 1, 2, 2, 2, 5 through 5, 6-1 through 6, 7-1, 2, 3, 8, 9, 10-1 through 6, 11, 12, 13, 14-1, 2, 3, 15 through 18, 24-2, 3, 5 through 8, 11 through 15, and 11 through 4, respectively.

A. On April 25, 1985, Seoul Special Metropolitan City Mayor was established for the purpose of apartment construction and housing site construction business, etc., and the total amount of its capital was KRW 5.28 billion. Of shares 1,056, 58% of 1,056, 15% of 15% of 1,000 shares, 5% of 5.5% of 5% of 1,056, 5% of 5% of 1,056, 15% of 15% of 1, 5% of 1,00 3% of 1,00 3% of 1,00 2% of 2,00

나. 그런데 덕일건설은 그 목적사업 중 토목건축공사업에 관한 권리·의무 일체를 분할하여 원고를 설립하기로 하고, 1999. 5. 13. 그 분할계획서(갑 제13호증, 아래에서 이 사건 분할계획서라 한다)에 대한 주주총회의 승인결의를 거쳐 1999. 6. 20. 신설회사인 원고의 설립등기를, 1999. 7. 3. 덕일건설의 분할등기를 각 경료하였는바, 위 분할계획서에 의하면 분할시 총 264,000주의 주식을 발행하여 덕일건설의 주주들에게 그 지분비율에 따라 배당하고, 원고의 목적사업을 토목건축공사업 및 이에 부대하는 일체의 사업으로 하며, 원고는 분할 전 덕일건설의 채무 중 출자한 재산에 관한 채무만을, 덕일건설은 그 외의 채무만을 각 부담하는 것으로 되어 있다.

C. At that time, under Articles 530-9(4) and 527-5(1) of the Commercial Act, the Seoul Special Metropolitan City Mayor issued a public notice to the creditors to submit an objection to the above corporate division on behalf of the creditors within the prescribed period, but did not individually object to the creditors known.

D. After that, on September 14, 199, the business transfer report was filed with the transferee as the plaintiff on September 14, 199. On October 1, 1999, the transferee accepted the report on the condition that the transferee will accept all the existing obligations based on the mutual guarantee of the transferor.

E. Meanwhile, on December 31, 1996, Taeil Construction guaranteed the obligation to the Credit Guarantee Fund for a limited partnership Gyeongwon General Construction (hereinafter referred to as "Gyeongwon Construction") and guaranteed the obligation to the Credit Guarantee Fund of Sejongwon Construction Co., Ltd. (hereinafter referred to as " Sejongwon Construction"), around December 11, 1997, a majority of the liabilities to other construction companies by mutual guarantee methods, including guaranteeing the obligation to the Credit Guarantee Fund of Sejongwon Construction (hereinafter referred to as " Sejongwon Construction"), and thereafter, it was disposed of as a national tax from the head of the competent tax office on October 31, 199 due to the default on the payment of Gyeongwon General Construction from the head of the competent tax office on October 31, 199, and the Sejong Construction was disposed of as a result of the de facto default of the construction business by obtaining the approval of composition from the Chungcheong District Court on June 30, 199.

F. Accordingly, on April 28, 200, the Plaintiff requested the Korea Credit Guarantee Fund to pay the amount of KRW 3.4 billion equivalent to the amount of KRW 8.5 billion, which was determined at the time of the Plaintiff at the time of the time, KRW 8.4 billion. On May 8, 2000, the Plaintiff agreed to the effect that the Plaintiff shall pay the said guaranteed liability within the limit of KRW 1.5 billion, with respect to the amount repaid, the Plaintiff shall exercise the right to indemnity against the principal debtor, and shall not exercise the guaranteed liability against the sub-construction. On May 31, 200, 200, the amount of KRW 26,621,708, and KRW 309,000,000, KRW 2939,000,000, KRW 2939,000,000 among the total guaranteed liability for sub-construction, KRW 29,5039,00,000,00 for the Korea Credit Guarantee Fund.

G. After calculating the tax base and tax amount by appropriating the amount of the instant repayment in deductible expenses, the Plaintiff filed a corporate tax return with the director of the competent tax office for the business year 2000. On December 1, 2002, the director of the competent tax office, on the ground that the Plaintiff’s act of paying an amount equivalent to the amount of the instant repayment to the Taeil Construction constitutes unfair act and calculation of losses and losses, the Plaintiff’s act of paying the amount of the instant repayment to the specially related parties constitutes unfair act and calculation of losses and losses. The Plaintiff’s act of disposing of the said amount of the provisional payment as well as the amount of the instant provisional payment (the amount of KRW 58,07,254,200, KRW 120,481, KRW 211 in the business year 200, KRW 83,998, KRW 137 in the business year 200, KRW 309, KRW 209, KRW 4800 in the corporate tax and the amount of the instant payment for the Plaintiff for the business year 20005.

H. On March 5, 2003, the Plaintiff filed an appeal with the National Tax Tribunal on the instant disposition, but was dismissed on November 5, 2003.

2. The parties' assertion

A. The plaintiff's assertion

According to the division plan of this case, the plaintiff bears only the obligation with respect to the property invested among the obligations of Kudil Construction before division and bears only the other obligation. Thus, the Kudil Construction neglected to raise an objection individually to creditors known pursuant to Articles 530-9(4) and 527-5 of the Commercial Act despite the fact that it has to do so, the plaintiff neglected to do so. Thus, despite the contents of the division plan of this case, the plaintiff is jointly and severally liable with the Sodil Construction for all the obligations such as the obligation of Kudil Construction before division pursuant to Article 530-9(1) of the Commercial Act. Thus, the plaintiff's act of paying the amount equivalent to the amount of the repayment of this case to Kudil Construction does not constitute wrongful calculation, and thus, it does not constitute 811,272,246 won, 200 won, 208, 306 won, 306 won, 206 won, 307, 206 won, 2087, 2007

B. Defendant’s assertion

Even if a creditor protection procedure under the Commercial Act was not implemented in the course of dividing a company, such ground for invalidation of division can only be asserted by a lawsuit for invalidation of division under Articles 530-11(1) and 529 of the Commercial Act. Since a creditor has not filed a lawsuit for invalidation of division within six months from the date the registration of division was made pursuant to the above provision, the plaintiff also does not bear joint and several liability for the obligations before the sub-division. However, even though the plaintiff's waiver of the right to demand reimbursement by paying an amount equivalent to the amount of the repayment of this case to a person with a special relationship without relation to his business, constitutes a wrongful calculation under Article 52 of the Corporate Tax Act, and thus, the amount of the repayment of this case cannot be included in deductible expenses.

3. Relevant statutes;

It is as shown in the attached Form.

4. Determination

A. According to the provisions on corporate division under the Commercial Act, in the case of corporate division, a company to be incorporated as a result of the corporate division (hereinafter referred to as a newly incorporated company) is jointly and severally liable to repay the company's obligations before the corporate division (Article 530-9(1) of the Commercial Act): Provided, That the general meeting of shareholders may determine that the newly incorporated company bears only the liabilities for the invested company's obligations among those of the divided company. In this case, if the divided company survives after the corporate division (Article 530-9(2) of the Commercial Act), the company shall take procedures for protecting creditors, such as demanding that the newly incorporated company submit an objection within a given period to the creditors known to the company (Articles 530-9(4) and 527-5 of the Commercial Act). Meanwhile, if a creditor fails to file an objection within the period for objection, the division shall be deemed approved (Articles 530-9(4) and 527-5(3) and 232(2) of the Commercial Act).

In full view of these provisions, in a case where a company is divided and divided continues to exist after division, liability property of the company is generally divided into the company to be divided and the newly incorporated company to protect creditors of the company to be divided. In this case, the company to be divided and the newly incorporated company to be jointly and severally liable for the obligations of the company before the division shall be held to protect creditors of the company before the division. In this case, even if the company is divided, it shall not be required to give separate notice to creditors known to the company since there is no possibility of undermining creditors' interests. However, if the principle of joint and several liability is strictly strict, it may act as an element to prevent the use of the company division system, thereby allowing the newly incorporated company to set a special resolution of the company's general meeting of shareholders, recognizing exceptions to the principle of joint and several liability, to only bear the liabilities of the company to be divided, and in this case, it shall be interpreted that the newly incorporated company bears only the liabilities of the company to be divided, and only the company to be divided bears the liabilities that it does not

In addition, if a company that is divided and a newly incorporated company does not bear joint and several liability for the company's obligations before the division, there is a change in the debtor's liability property and has a significant influence on creditors' interests, and thus, it shall be notified individually to creditors known to the company that is divided for the protection of creditors. Therefore, a change in the debt relationship between the company to be divided and the newly incorporated company to a debt relationship should be viewed as the requirement that the company to be divided had properly completed individual procedures for creditors known to the creditors. If such individual peremptory notice is omitted, it shall not be effective for the creditors, and in principle, it shall be interpreted that the company to be divided and the newly incorporated company shall be jointly and severally liable for the repayment (see Supreme Court Decision 2003Da25973, Aug. 30, 2004).

B. However, as seen earlier, the fact that Kuil Construction neglected the creditor protection procedure, including individual peremptory notices, to the creditors with respect to the guarantee obligation of Kudil Construction prior to division, cannot take effect for the guarantee creditor of Kudil Construction in accordance with the division plan of this case, and the Plaintiff and Kudil Construction shall be jointly and severally liable for payment.

C. The defendant limited the exclusion period of a lawsuit over invalidation of division pursuant to Articles 530-11 and 529(2) of the Commercial Act, so even if the plaintiff, who is a newly incorporated company, is jointly and severally liable for payment, the exclusion period shall also be six months. Thus, the plaintiff's joint and several liability is extinguished by six months after the above registration of division. However, the above provision stipulates that the exclusion period of a lawsuit over invalidation of division shall be six months as soon as possible for legal stability. Thus, there is no ground to deem that the above provision shall apply to cases where the creditor of the divided company makes a joint and several liability to the newly incorporated company.

D. Therefore, the Plaintiff’s payment of the amount equivalent to the instant repayment to the Taeil Construction and the Plaintiff’s payment of the guaranteed obligation to the financial institution, etc. of Taeil Construction before the division is based on the Plaintiff’s liability to repay the amount jointly and severally with the Taeil Construction. This cannot be deemed as different because the Plaintiff did not make a form of direct subrogation to the secured creditor of Taeil Construction. Therefore, the Plaintiff’s payment of the amount equivalent to the instant repayment to the Taeil Construction constitutes a wrongful calculation under Article 52 of the Corporate Tax Act, and thus, the disposition of this case that notified the Plaintiff of the additional payment of the corporate tax is unlawful.

5. Conclusion

Therefore, the plaintiff's claim of this case shall be quoted on the ground of its reasoning, and the judgment of the court of first instance is just and the defendant's appeal is dismissed as it is without merit. It is so decided as per Disposition.

Judges Cho So-young(Presiding Judge)(Presiding Judge)