Seoul High Court 2012Nu14134 (Law No. 16, 2013)

"The method of public offering of securities" includes the method of deemed public offering stipulated in Article 2-4 (4) of the former Enforcement Decree of the Securities and Exchange Act;

If the number of persons who have received solicitation for subscription is less than 50 persons but meet the criteria for possibility of resale prescribed by the Financial Supervisory Commission, it constitutes deemed recruitment. The allocation of new stocks by the 'public offering method of securities' is an exception to deemed donation due to capital increase, so gift tax is illegal.

Article 39 of the former Inheritance Tax and Gift Tax Act

2013Du3016 Revocation of Disposition of Imposition of Gift Tax

StateAA

Samsung Head of Samsung Tax Office

Seoul High Court Decision 2012Nu14134 Decided January 16, 2013

March 13, 2014

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. The former Securities and Exchange Act (amended by Act No. 828, Dec. 31, 207; hereinafter referred to as "the former Securities and Exchange Act") provides that the issuance price of new shares shall not be more than 100 won if a person who is not a shareholder of the corporation obtains profits from the issuance of new shares under Article 39 (1) 1 (c) of the former Securities and Exchange Act (amended by Presidential Decree No. 4065, Jan. 29, 2004; hereinafter referred to as "the former Securities and Exchange Act") for the offering of new shares shall not be more than 50,000 won if the former Securities and Exchange Act provides that the issuance price of new shares shall not be more than 10,000 won for the issuance of new shares; the former Securities and Exchange Act shall not be more than 20,000 won if the former Securities and Exchange Act provides that the former Securities and Exchange Act shall not be more than 30,000 won for the offering of new shares.

Article 2-4 (4) of the former Enforcement Decree of the Securities and Exchange Act also requires various regulations on the procedure and issue value of new stocks. In addition, in light of the language and text of Article 2(3) of the former Securities and Exchange Act and Article 2-4 of the former Enforcement Decree of the Securities and Exchange Act, Article 2-4 of the former Enforcement Decree of the Securities and Exchange Act can be interpreted as a provision on deemed public offering under Article 2-4 of the former Enforcement Decree of the Securities and Exchange Act as one of the cases where public offering of new stocks is conducted under delegation of Article 2(3) of the former Securities and Exchange Act. In light of these, it is reasonable to view that “the method of public offering of new stocks” under Article 2-4(4) of the former Enforcement Decree of the Securities and Exchange Act includes the method of deemed public offering of new stocks as stipulated under Article 2-4(4) of the former Enforcement Decree of the Securities and Exchange Act and its legislative intent to prevent the issuance of new stocks under Article 2-4(4) of the former Enforcement Decree of the Securities and Exchange Act, the former Enforcement Decree of the Securities and Exchange Act does not contain the Plaintiff’s.