Cho Jae-2017-west-3402 ( October 24, 2017)

The transfer tax rate of 20% shall apply to non-listed stocks transferred by the large shareholder.

According to the literal interpretation of the language and text, it is reasonable to see that the 'large shareholder' under Article 94 (1) 3 (a) of the Income Tax Act includes all of the large shareholders of the listed corporation and the unlisted corporation, and thus, in the case of the unlisted stock, 20% transfer income tax rate is applied to the

Article 104 of the Income Tax Act

Seoul Administrative Court-2017-Gu Group-81543 ( November 13, 2018)

HanO et al.

O Head of the tax office and 4

.1, 2018

November 13, 2018

1. The plaintiffs' claims against the defendants are all dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

1. Details of the disposition;

A. The Plaintiffs, as shareholders holding shares issued by ○○ Korea Co., Ltd. (hereinafter “○○○ Korea”), a non-standing small and medium enterprise (hereinafter “○○○ Korea”), and △ agreed terms Korea Co., Ltd. (hereinafter “△ agreed terms Korea”), transferred their shares (hereinafter “each shares of this case”) on July 14, 2016 to △△ (hereinafter “△△”) as follows.

No.

Transferred Shares

Number of stocks (ratio)

Transfer Value (won)

1

Han ○

○○ Korea

1,400 Shares (total issued shares 14%)

70,000,000

Dogsung Korea

750 Shares (total issued 15%)

375,000,000

guidance.

1,145,000,000

2

○ ○

Dogsung Korea

250 Shares (total issued 5%)

125,000,000

3

Han-gu

Dogsung Korea

250 Shares (total issued 5%)

125,000,000

4

○ Kim

○○ Korea

1,400 Shares (total issued shares 14%)

70,000,000

Dogsung Korea

250 Shares (total issued 5%)

125,000,000

guidance.

895,000,000

5

한▤▤

○○ Korea

1,400 Shares (total issued shares 14%)

70,000

Dogsung Korea

1,000 Shares (total issued shares 20%)

500,000,000

guidance.

1,270,000,000

6

○ ○

Dogsung Korea

1,250 Shares (total issued shares 25%)

625,000,000

7

Gyeong Kim

Dogsung Korea

500 Shares (total issued 10%)

250,000,000

8

Gyeong-gu

○○ Korea

1,400 Shares (total issued shares 14%)

70,000,000

B. On November 30, 2016, the Plaintiffs applied the tax rate of 20% under Article 104(1)11(c) of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter the same) on the premise that the transfer price of each of the instant shares constitutes “stocks of small and medium enterprises that are transferred by a major shareholder” and paid the scheduled return and payment of capital gains tax for the year 2016, as indicated in the list.

C. Since then, the plaintiffs mean a major shareholder of the stock listed corporation, who is exempted from the application of the 10% tax rate under Article 104 (1) 11 (b) of the former Income Tax Act. As to the transfer of each of the shares of this case, which is non-listed stocks, the plaintiffs filed a request for correction as follows: the 10% tax rate under Article 104 (1) 11 (b) of the former Income Tax Act should be applied to the transfer of each of the shares of this case. Accordingly, the defendants were exempted from the application of Article 104 (1) 11 (b) of the former Income Tax Act, because the 20% tax rate under Article 104 (1) 11 (c) of the former Income Tax Act is applied to the transfer of shares by a major shareholder of non-listed corporation, and accordingly

No.

Plaintiff Name

name.

Preliminary Return,

Amount of tax payable ( won)

The filing date of request for rectification

Amount of corrected claim

(won)

Date of rejection

1

Han ○

west ○ ○

The head of a tax office

24,355,00

6 March 2017

12,177,500

April 17, 2017

2

○ ○

ancient ○

The head of a tax office

23,855,000

6 March 2017

11,927,500

May 8, 2017

3

Han-gu

23,855,000

11,927,500

May 8, 2017

4

○ Kim

Kim

The head of a tax office

175,615,00

Mar. 10, 2017

87,807,500

April 21, 201

5

한▤▤

248,720,000

124,360,000

6 April 2017

6

○ ○

○

The head of a tax office

121,305,000

Mar. 8, 2017

60,652,500

April 25, 2017

7

Gyeong Kim

48,220,000

24,110,000

May 2, 2017

8

Gyeong-gu

paper ○

The head of a tax office

151,250,000

March 14, 2017

75,625,00

May 4, 2017

라. 원고들은 이 사건 각 처분에 불복하여 2017. 7. 5. 조세심판원에 심판청구를 하였으나, 조세심판원은 2017. 9. 27. 원고 심○○, 김□□의 각 청구를, 2017. 10. 24. 원고 한○○, 이○○, 한□□, 김○○, 한▤▤, 전□□의 각 청구를 모두 기각하는 결정을 하였다.

[Ground of recognition] Facts without dispute, entries in Gap evidence 1 to 3 (including each number), the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

Article 104 (1) 11 (b) of the former Income Tax Act is interpreted as an abbreviation of "a shareholder of a listed stock corporation" under Article 94 (1) 3 (a) of the same Act, who holds stocks in excess of the total market value under Article 157 (4) 1 of the Enforcement Decree of the same Act or subparagraph 2 of the same paragraph. In the case of non-listed stocks, even if a major shareholder transfers stocks, the application of Article 104 (1) 11 (b) of the former Income Tax Act is not excluded. As such, the 10% tax rate under Article 104 (1) 11 (b) of the former Income Tax Act is applied to the transfer of each of the stocks which are non-listed stocks. Each of the instant dispositions taken on different premise is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Under the principle of no taxation without law, the elements of taxation, non-taxation, or tax reduction and exemption shall be avoided, and the interpretation of tax laws and regulations shall not be extensively interpreted or analogically interpreted without reasonable grounds (see, e.g., Supreme Court Decision 2008Du11372, Aug. 20, 2009).

2) In light of the language and structure of the relevant statutes, legislative intent, and amendment history, etc., it is reasonable to deem that the application of 20% of the transfer income tax rate is made in accordance with Article 104(1)11(b) of the former Enforcement Decree of the Income Tax Act even in the case of unlisted stocks, if the requirements of Article 157(4) of the former Enforcement Decree of the Income Tax Act (amended by Act No. 26982, Feb. 17, 2016; hereinafter the same) are met.

A) Article 94(1)3(a) of the former Income Tax Act provides that "income generated from transfer of stocks, etc. of a stock-listed corporation under the Financial Investment Services and Capital Markets Act (hereinafter referred to as a "stock-listed corporation") by a major shareholder prescribed by Presidential Decree (hereinafter referred to as a "major shareholder" in this Chapter) taking into account the ratio of stocks owned, total market value, etc. and transfer of stocks, etc. not through trading in the securities market (hereinafter referred to as "securities market") under the same

B) In order to promote the stock market, the former Income Tax Act, in principle, was included in the taxable income in the transfer of unlisted stocks in order to promote the stock market. However, in the case of the transfer of listed stocks, even if the transfer gains accrue, it is not treated as taxable income under the Income Tax Act even if it is not treated as the transfer income, and the income accruing from the transfer of stocks or investment shares listed on the Korea Stock Exchange for the first time under Article 94 subparagraph 3 of the Income Tax Act amended by Act No. 5580 of Dec. 28, 1998, which is prescribed by the Presidential Decree, has been stipulated as transfer income tax, and until now, the stockholders and persons in a special relationship with them possess more than a certain size of stocks or more and more than a certain size of the market value of stocks, taxation on the transfer gains is conducted for such transfer. In other words, Article 94 (1) 3(a) of the former Income Tax Act provides that the transfer income tax should be imposed even in the case of trading of listed stocks in order to ensure the balance of taxation.

In light of the above legislative intent, the concept of "large stockholder" under Article 94 (1) 3 (a) of the former Income Tax Act, unless it falls under a certain exception, shall be interpreted as taxable subject to transfer margin only to ① the stocks transferred by the large stockholder prescribed by Presidential Decree in consideration of the ratio of owned stocks, total market value, etc., and ② the stocks transferred without transaction in the securities market. Here, taking the awareness of "stocks, etc. of a stock-listed corporation" under the above provision into account the ratio of owned stocks, total market value, etc., shall not be deemed to be limited to the case of a stock-listed corporation. Therefore, it is reasonable to interpret that the concept of "large stockholder" under the above provision should be deemed to be limited to the case of a stock-listed corporation, regardless of whether it satisfies the requirements of Article 157 (4) of the former Enforcement Decree of the Income Tax Act, and that "large stockholder" under Article 94 of the former Income Tax Act and Article 104 (1) 1 (b) of the former Enforcement Decree of the Income Tax Act is the same.

The plaintiffs argued that the concept of "major shareholder prescribed by Presidential Decree in consideration of the ratio of owned stocks and the total market value of the stock-listed corporation is applicable only to the stock-listed corporation under the premise that the person who holds the stocks in excess of the ratio prescribed by Presidential Decree or the total market value of the stock-listed corporation is a major shareholder, and that the income earned by such major shareholder from the transfer of stocks is subject to capital gains tax. However, such interpretation goes beyond the limit of the literal meaning of the above provision.

C) In addition, Article 157 (4) of the former Enforcement Decree of the Income Tax Act provides that "major shareholders as prescribed by Presidential Decree" under Article 94 (1) 3 (a) of the former Income Tax Act, "one shareholder who owns stocks, etc. of a corporation" and other shareholders shall be 2/100 [4/100 in the case of stocks, etc. of a corporation listed on KOSDAQ or KONEX market and stocks, etc. of a venture business under Article 2 (1) of the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses [4/10 in the case of stocks, etc. of a corporation listed on KOSDAQ or KONEX market] of the total sum of stocks, etc. of the corporation as of the end of the business year immediately preceding the business year in which the date of the transfer of stocks, etc. belongs" (Article 157 (1) 3 (a) of the former Enforcement Decree of the Income Tax Act provides that "one shareholder and other shareholders shall be 500,000,000 won,000 won or more of the market price of the corporation listed corporation.

The plaintiffs claim that each of the above provisions is invalid because it goes beyond the limit delegated by Article 94 (1) 3(a) of the former Income Tax Act, which stipulates that the scope of large shareholders shall be set by the shareholders of a stock-listed corporation. However, as seen earlier, the plaintiffs cannot accept it as a assertion based on the interpretation of Article 94 (1) 3(a) of the former Income Tax Act.

D) Meanwhile, the plaintiffs amended Article 94(1)3(a) of the Income Tax Act (amended by Act No. 14389, Dec. 20, 2016) to be a major shareholder of a stock-listed corporation prescribed by Presidential Decree taking into account the ratio of stocks owned, total market value, etc. as stocks of the former stock-listed corporation, etc., and considering the ratio of stocks owned, total market value, etc., as stocks of the stock-listed corporation, etc. of the former stock-listed corporation, the majority shareholder of the stock-listed corporation prescribed by Presidential Decree is deemed to be a major shareholder of the stock-listed corporation under the existing provision, and Article 104(1)11(a) of the same Act defines the concept of a major shareholder as a "major shareholder prescribed by Presidential Decree" in consideration of the ratio of stocks owned, total market value, etc. of the stock-listed corporation. Accordingly, the majority shareholder is divided into "major shareholder of a stock-listed corporation" and "major shareholder of a stock-listed corporation" in Article 167-8(1) of the Enforcement Decree.

However, there is no new provision that "the criteria for the majority shareholders of non-listed stocks that were not applicable to the previous proposal of the amendment of the Income Tax Act (amended by Act No. 14389, Dec. 20, 2016)" are to be set out. The reason for the amendment of Article 167-8 (1) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27829, Feb. 3, 2017) provides that "the criteria for the majority shareholders who are not subject to the preferential tax rate for minority shareholders at the time of transfer of non-listed stocks shall be adjusted upward from 1/100 to 4/100, and the total market value criteria shall be the same as the majority shareholders of the listed stocks, from 2.5 billion won to 2.5 billion won from April 1, 2018 to 1.5 billion won from April 1, 2020 to 1.0 billion won from each of the above revised standards are different from the majority shareholders.

3) In this case, there is no dispute between the parties that the plaintiffs owned more than 2/10 of the total amount of shares issued by ○○ Korea or ○○○ Korea as of the end of the immediately preceding business year immediately preceding the business year in which the transfer date of each of the instant shares belongs. Thus, all of the plaintiffs constitutes a major shareholder under Article 157(4)1 of the former Enforcement Decree of the Income Tax Act, and thus, the 20% tax rate under Article 104(1)11(c) of the former Income Tax Act shall apply to the transfer of each of the instant shares.

3. Conclusion

The plaintiffs' claims against the defendants are without merit, and they are dismissed. It is so decided as per Disposition.

Related Acts and subordinate statutes

(1) The former Income Tax Act (Amended by Act No. 14389, Dec. 20, 2016)

Article 94 (Scope of Transfer Income)

(1) Capital gains shall be the following incomes, generated in the relevant taxable period:

3. Income generated from transfer of stocks or investment shares falling under any of the following items (including preemptive rights to new stocks, and securities depository receipts prescribed by Presidential Decree; hereafter in this Chapter, the same shall apply):

(a) Transfer of stocks, etc. of a stock-listed corporation under the Financial Investment Services and Capital Markets Act (hereinafter referred to as "stock-listed corporation") by its major shareholders prescribed by Presidential Decree (hereafter in this Chapter, referred to as major shareholders) in consideration of the ratio of stocks owned, total market value, etc. and transfer of stocks, etc. not through transactions in the securities market under the same Act

(b) Stocks of corporations which are not listed corporations.

Article 104 (Rate of Transfer Income Tax)

(1) The amount of capital gains tax calculated by applying the following tax rates to the tax base of capital gains in the relevant taxable period (hereinafter referred to as "amount of capital gains tax"). In such cases, where one asset falls under at least two of the tax rates under the following subparagraphs, the amount of capital gains tax calculated by applying the relevant tax rate shall be the larger of the calculated amount of capital gains tax, and the tax rate under subparagraph 12 may be reduced within 75/100 of such tax rate, as prescribed by Presidential Decree, if necessary for fostering the capital market

11. Assets under Article 94 (1) 3:

(a) Stocks, etc. of a corporation, other than small and medium enterprises prescribed by Presidential Decree (hereafter in this Chapter, referred to as "small and medium enterprises"), held by a large stockholder for less than one year: 30/100 of the

(b) Stocks, etc. of small and medium enterprises (limited to transfer by a person other than a large shareholder);

10/100 of the tax base of capital gains;

(c) Other stocks, etc.: 20 percent of the tax base of capital gains;

(1) The former Enforcement Decree of the Income Tax Act (amended by Act No. 26982, Feb. 17, 2016)

§ 157. Scope of securities depository receipts and major shareholders

(4) "Large shareholders prescribed by Presidential Decree" in Article 94 (1) 3 (a) of the Act means persons falling under any of the following subparagraphs (hereafter referred to as "major shareholders" in this Chapter):

1. Where a stockholder or an investor (hereafter referred to as "one stockholder" in this Chapter) holding stocks or equity investment shares of a corporation (including preemptive rights to new stocks, and securities depository receipts under paragraph (1); hereafter the same shall apply in this Chapter) and a related party under Article 1-2 (1) and (3) 1 of the Enforcement Decree of the Framework Act on National Taxes (hereafter referred to as "other stockholders" in this Chapter) possess 2/100 or more of the total sum of stocks, etc. of the relevant corporation as of the end of the business year immediately preceding the business year in which the transfer date of stocks, etc. belongs [referring to a corporation which has issued stocks, etc. listed on the KOSDAQ (hereafter referred to as the " KOSDAQ market" in Article 8 of the Addenda to the partial amendment of the Enforcement Decree of the Financial Investment Services and Capital Markets Act (hereafter the same shall apply in this Chapter) of the Financial Investment Services and Capital Markets Act) or KON market-listed corporation (referring to a corporation that has issued 10/10 or more of stocks, etc. listed on the KON market under Article 10/17 (10 or less of the Enforcement Decree of the Act];

2. One stockholder and other stockholders in cases where the total market value of the stocks, etc. of the relevant corporation owned by one stockholder and other stockholders as of the end of the immediately preceding business year immediately preceding the business year whereto the transfer date of stocks, etc. belongs is not less than five billion won (in cases of stocks, etc. of listed corporations on the KOSDAQ market and stocks, etc. of venture business under Article 2 (1) of the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses which are traded under Article 178 (1) of the Financial Investment Services and Capital Markets Act, four billion won, and in cases of stocks, etc

(6) The total market price referred to in paragraph (4) 2 shall be as follows:

1. In case of the stocks, etc. of stock-listed corporations, the final market price as of the end of the fiscal year immediately preceding the fiscal year whereto the transfer date of stocks, etc. belongs: and

2. In case of stocks other than those under subparagraph 1, the appraised amount under Article 165 (4).

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26982 on February 17, 2016, and amended by Presidential Decree No. 27074 on March 31, 2016)

§ 157. Scope of securities depository receipts and major shareholders

(4) "Large shareholders prescribed by Presidential Decree" in Article 94 (1) 3 (a) of the Act means persons falling under any of the following subparagraphs (hereafter referred to as "major shareholders" in this Chapter):

1. In cases where one stockholder or one investor (hereafter referred to as "one stockholder" in this Chapter) possessing the stocks or equity investment shares of a corporation (including the preemptive right to new stocks, and securities depository receipts under paragraph (1); hereafter referred to as "stocks, etc." in this Chapter) and a related party under Article 1-2 (1) and (3) 1 of the Enforcement Decree of the Framework Act on National Taxes (hereafter referred to as "other stockholders" in this Chapter) with him/her as of the end of the business year immediately preceding the business year whereto the transfer date of stocks, etc. belongs, occupy 1/100 or more of the total sum of stocks, etc. of the relevant corporation as of the end of the business year immediately preceding the business year whereto the transfer date of stocks, etc. belongs (hereafter referred to as "ratio of stocks, etc. in this Chapter). In such cases, one stockholder and other stockholders after the date of acquisition shall be included as of the end of the immediately preceding business year, but thereafter come to possess 1/100 or more

2. One stockholder concerned and other stockholders in case where the total market price of the stocks, etc. of the relevant corporation possessed by one stockholder and other stockholders as of the end of immediately preceding business year immediately preceding that whereto the transfer date of stocks, etc. belongs is not less than 2.5 billion

(5) Notwithstanding paragraph (4) 1 and 2, where the ratio of stocks owned by one stockholder and other stockholders or the total market value thereof falls under any of the following subparagraphs, one relevant stockholder and other stockholders shall be deemed large stockholders. In such cases, where the ratio of stocks owned falls short of such standards as of the end of the immediately preceding business year, but falls under such standards by acquiring stocks, etc. thereafter, one stockholder and other stockholders after the date of acquisition shall be included:

1. In cases of stocks, etc. of a corporation listed on the KOSDAQ market (referring to a corporation that has issued stocks listed on the KOSDAQ market pursuant to Article 8 of the Addenda to the partially amended Enforcement Decree of the Financial Investment Services and Capital Markets Act (Presidential Decree No. 24697)): Where the ratio of stocks owned is at least 2/100 or the total market price is at least two billion won;

2. In cases of stocks, etc. of the KONEX-listed corporation (referring to a corporation that has issued stocks listed on the KONEX under Article 11 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act) : Where the ratio of stocks owned is at least 4/100 or the total market value is at least one billion won.

3. In cases of stocks, etc. of a venture business defined in Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses, which is traded pursuant to Article 178 (1) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act: Where the ratio of stocks owned is at least 4/100 or the total market price

(6) The total market price referred to in paragraph (4) 2 shall be as follows:

1. In case of the stocks, etc. of stock-listed corporations, the final market price as of the end of the fiscal year immediately preceding the fiscal year whereto the transfer date of stocks, etc. belongs: and

2. In case of stocks other than those under subparagraph 1, the appraised amount under Article 165 (4).

Addenda Article 26982, 26982, and 202

Article 1 (Effective Date) this Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 26-2 (1), 78-3 (5) [limited to the business operator subject to the verification of bona fide return under Article 70-2 (1) of the Act (based on the total amount of income of the immediately preceding taxable period) and 157 (4) (excluding cases falling under stocks, etc. of a corporation which is not a stock-listed corporation under the Financial Investment Services and Capital Markets Act), and (5) shall enter into force on April 1, 2016, the amended provisions of Article 40-4 shall enter into force on June 1, 2016, the amended provisions of Articles 207-10 and 3-3 (limited to cases falling under Article 162-3 (4) of the Act), the provisions of Article 55 (1) 2 (limited to those falling under Article 162-17 (3) and (4) of the Act, and the provisions of Article 555 (1) 7-4 (limited to those subject to the immediately preceding taxation period of the corporation] shall enter into force.

Article 2 (General Application) (1) This Decree shall apply to the income accruing in the taxable period to which the enforcement date of this Decree belongs.

(2) The amended provisions concerning capital gains in this Decree shall apply to the portion transferred after this Decree enters into force.

(1) The former Income Tax Act (Amended by Act No. 14389, Dec. 20, 2016; Act No. 15225, Dec. 19, 2017)

Article 94 (Scope of Transfer Income)

(1) Capital gains shall be the following incomes, generated in the relevant taxable period:

3. Income generated from transfer of stocks, etc. falling under any of the following items:

(a) Stocks, etc. of a stock-listed corporation, which fall under any of the following:

1. Stocks, etc. transferred by large stockholders of a stock-listed corporation prescribed by Presidential Decree in consideration of the ratio of stocks held, total market price;

(i) Stocks, etc. transferred by a person who does not fall under a major shareholder under subparagraph (i) in violation of any transaction in the securities market (hereinafter referred to as the “securities market”) under the Financial Investment Services and Capital Markets Act;

(b) Stocks, etc. of an unlisted corporation;

Article 104 (Rate of Transfer Income Tax)

(1) The amount of capital gains tax calculated by applying the following tax rates to the tax base of capital gains in the relevant taxable period (hereinafter referred to as "amount of capital gains tax"). In such cases, where one asset falls under at least two of the following tax rates, the larger amount of the calculated amount of capital gains tax calculated by applying the relevant tax rate shall be the amount:

11. Assets under Article 94 (1) 3:

(a) Stocks, etc. of a small or medium enterprise prescribed by Presidential Decree (hereafter in this Chapter, referred to as a "small or medium enterprise"), which is transferred by a person other than a major shareholder prescribed by Presidential Decree (hereafter in this Chapter, referred to as a "major shareholder"),

10/100 of the tax base of capital gains;

(b) Stocks, etc. owned by less than one year by any corporation other than small and medium enterprises;

30/100 of the tax base of capital gains;

(c) Other stocks, etc.;

20/100 of the tax base of capital gains;

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27829 on February 3, 2017, and amended on February 13, 2018)

Article 157 (Scope of Large Shareholders of Stock Listed Corporation)

(4) "Large shareholder of a stock-listed corporation prescribed by Presidential Decree" in Article 94 (1) 3 (a) (i) of the Act means a large shareholder of a stock-listed corporation falling under any of the following subparagraphs (hereafter in this Article and Article 167-8, referred

1. In case where one stockholder or one investor possessing stocks, etc. (hereafter in this Chapter, one stockholder) and a person under the classification of the following items (hereafter in this Chapter, referred to as "other stockholders") as of the end of the business year immediately preceding that whereto belongs the transfer date of stocks, etc., occupy 1/100 or more in the aggregate of stocks, etc. of the relevant corporation (hereafter in this Article and Article 167-8, referred to as the "ratio of stocks, etc. to stocks, etc.") as of the end of the business year immediately preceding that whereto belongs the transfer date of stocks, etc., the relevant one stockholder and other stockholders. In this case, while it has been short of 1/100 as of the end of the immediately preceding business year, but thereafter come to possess 1/100 or more by acquiring stocks, etc. thereafter, one stockholder and other stockholders after

(a) Where the sum of stocks owned by one stockholder and a person in a special relationship with him/her under Article 43 (8) 1 of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as "one stockholder, etc.") is the largest among one stockholder, etc. of the relevant corporation: Any of the following persons:

(a) A person falling under any subparagraph of Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes;

2. A person who falls under Article 1-2 (3) 1 of the Enforcement Decree of the Framework Act on National Taxes.

(b) Where the total ratio of stocks owned by one stockholder, etc. is not the largest among one stockholder, etc. of the relevant corporation: Any of the following persons:

(i) lineal ascendants and descendants;

2. A person who falls under Article 1-2 (1) 3 or 4 of the Enforcement Decree of the Framework Act on National Taxes.

3. A person who falls under Article 1-2 (3) 1 of the Enforcement Decree of the Framework Act on National Taxes;

2. One stockholder concerned and other stockholders in case where the total market price of the stocks, etc. of the relevant corporation possessed by one stockholder and other stockholders as of the end of immediately preceding business year whereto the transfer date of stocks, etc. belongs (hereafter in this Article and Article 167-8, referred to as the “total market price”) is not less than the amount classified as follows:

(a) Where stocks, etc. are transferred by March 31, 2018: 2.5 billion won;

(b) Where stocks, etc. are transferred during the period from April 1, 2018 to March 31, 2020: 1.5 billion won;

(c) Where stocks, etc. are transferred after April 1, 2020: One billion won;

(5) Notwithstanding paragraph (4) 1 and 2, where the ratio of stocks owned by one stockholder and other stockholders or the total market value thereof falls under any of the following subparagraphs, one relevant stockholder and other stockholders shall be deemed large stockholders. In such cases, where the ratio of stocks owned falls short of such standards as of the end of the immediately preceding business year, but falls under such standards by acquiring stocks, etc. thereafter, one stockholder and other stockholders after the date of acquisition shall be included:

1. In cases of stocks, etc. of a corporation listed on the KOSDAQ market (referring to a corporation that has issued stocks listed on the KOSDAQ market under Article 8 of the Addenda to the partially amended Enforcement Decree of the Financial Investment Services and Capital Markets Act (Presidential Decree No. 24697)): Cases where the ratio of stocks owned is at least 2/100 or the total market price is at least the amount classified as follows:

(a) Where stocks, etc. are transferred by March 31, 2018: Two billion won;

(b) Where stocks, etc. are transferred during the period from April 1, 2018 to March 31, 2020: 1.5 billion won;

(c) Where stocks, etc. are transferred after April 1, 2020: One billion won;

2. In cases of stocks, etc. of the KONEX-listed corporation (referring to a corporation that has issued stocks listed on the KONEX under Article 11 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act) : Where the ratio of stocks owned is at least 4/10 or the total market value is at least one billion won.

3. and 3. Deleted;

(6) The total market price under paragraph (4) 2 and (5) shall be the final market price as of the closing date of the business year immediately preceding the business year whereto the transfer date of stocks, etc. belongs: Provided, That if there exists no final market price as of the immediately preceding

Article 167-8 (Scope of Large Stockholders and Small and Medium Enterprises)

(1) "Large shareholders prescribed by Presidential Decree" in Article 104 (1) 11 (a) of the Act means any of the following persons (hereafter referred to as "major shareholders" in this Chapter):

1. Stock-listed corporations;

2. A shareholder of a stock-listed corporation who falls under any subparagraph of Article 157 (4): Provided, That the ratio of stocks owned shall be at least 4/100, while the total market price shall be at least four billion won only for stocks, etc. of a venture business as defined in Article 2 (1) of the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses traded pursuant to Article 178 (1) of the Financial Investment Services and Capital Markets Act.

(3) In applying paragraph (1) 2, the total market value shall be appraised pursuant to Article 165 (4).

1) The former Enforcement Decree of the Financial Investment Services and Capital Markets Act (amended by Presidential Decree No. 28040, May 8, 2017)

(1) The Association shall, when it carries out the business affairs related to over-the-counter trading of stock certificates that are not listed on the securities exchange pursuant to Article 286 (1) 5 of the Act, comply with the following guidelines:

1. It shall announce to the public the issue of stocks that the parties offer to trade between a number of parties simultaneously, the price bid for purchasing (hereinafter referred to as the "purchase price") or the price asked for selling (hereinafter referred to as the "sale price"), and the volume of the stocks;

2. Where a single price determined and publicly notified for each issue of stocks by the Financial Services Commission or an asking price coincide with a bidding price, it shall close the trade at such price;

3. He/she shall determine and report the business standards for the designation and cancellation of the stock certificates subject to trading, the method of trading, the method of settlement, etc. to the Financial Services Commission, and publicly announce them;

4. It shall publicly announce the issuer's current status, including changes in financial status and business or capital, as prescribed and publicly notified by the Financial Services Commission.