Cho High Court Decision 201Do1285 (Law No. 19, 2011)

The Plaintiff cannot be deemed to have been in a position to exercise shareholder rights practically.

The act of transferring the shares at issue is a nominal name that does not affect the actual control or management of the non-party corporation, and it is difficult to view that the shares at issue were transferred to the plaintiff practically, and thus, it cannot be viewed that the plaintiff was in the position to exercise the shareholder rights

Article 39 of the Framework Act on National Taxes

2011Guhap34436 The revocation of the designation as the person liable for secondary tax payment.

Hongx

Head of Geumcheon Tax Office

September 14, 2012

October 26, 2012

1. On September 16, 2010, the Defendant’s imposition disposition of value-added tax for the second period of 2009 against the Plaintiff, which exceeds KRW 000 among the imposition disposition of KRW 000 for the second period of 2009, exceeding KRW 000 among the imposition disposition of KRW 00 for the first period of 2010, exceeding KRW 000 among the imposition disposition of KRW 000 for the business year of 2009, exceeding KRW 000 among the imposition disposition of KRW 00 for the business year of 2009, and exceeding KRW 000 out

2. The plaintiff's remaining claims are dismissed.

3. Of the litigation costs, 5% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

The imposition disposition of KRW 00 of the value-added tax for the second term of 2009 against the Plaintiff on September 16, 2010, 2000, 000 of the value-added tax for the first term of 2010, 000 of the corporate tax for the business year 2009, and 000 of the corporate tax for the business year 2010 shall be revoked.

1. Details of the disposition;

A. From February 27, 2004 to March 30, 2010, the Plaintiff was registered as the representative director of XX Co., Ltd. (hereinafter referred to as “Nonindicted Co., Ltd.”) and held 94.8% (237,000 shares) of the total number of outstanding shares of Nonparty Co., Ltd as of the end of 2008 (250,00 shares) (no shares change was made after the end of 2008).

B. On September 16, 2010, the Defendant determined that the non-party corporation failed to pay the value-added tax for the second period of February 2009 and that it is impossible to appropriate the delinquent amount with its assets as its assets, and issued a disposition to designate the Plaintiff as the secondary taxpayer under Article 39(1)2(a) of the Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201; hereinafter the same) on September 16, 2010 and impose the value-added tax for the second period of February 2009 of the non-party corporation as its oligopolistic shareholder, KRW 00, KRW 000, corporate tax for the first period of January 200, and KRW 000, corporate tax for the business year of 2009, and corporate tax for the business year of 2010 (hereinafter referred to

C. The Plaintiff filed an appeal with the Tax Tribunal on March 24, 201 through an objection on December 15, 2010, but the Tax Tribunal dismissed the Plaintiff’s claim on July 19, 201.

[Reasons for Recognition] Unsatisfy, Gap evidence 1, 3 (including virtual numbers; hereinafter the same shall apply), Eul evidence 1 to 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff is merely a nominal owner in the form of the shares at issue, and KimA is a person who actually owns the shares at issue in the course of de facto controlling the management of the non-party corporation, and thus, the instant disposition taken on the premise that the Plaintiff is an oligopolistic shareholder

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) Matters relating to the transfer of shares in question

A) On January 7, 2004, the Plaintiff joined the non-party corporation operated by KimA as the team leader of the business division, and was registered as the representative director of the non-party corporation in the corporate register from February 27, 2004 to KimA’s instruction, and was transferred 4,800 shares of the non-party corporation as the employee shares.

B) The 182,00 shares of a non-party corporation held by KimA in the name of OO was transferred to KimA in 2007, and the 240,000 shares plus the 58,000 shares held by KimA in the above 182,00 shares and the previous 58,000 shares were transferred to the Plaintiff. The 237,200 shares out of the total 242,00 shares held by KimA in the name of SCC (hereinafter referred to as “instant shares”) were transferred to the Plaintiff. The remaining 4,800 shares were transferred to the DoB who is an employee of the non-party corporation. Accordingly, the Plaintiff became the nominal owner of the 242,00 shares at issue (237,200 shares transferred by AA, etc. + the previous 4,800 shares held as shares).

C) Of the shares at issue, 5,000 shares were sold to YY in Japan in 2008, and shares in the Plaintiff’s name remain 237,000 shares. Such shares were arranged in the table as follows.

(The following table omitted):

D) Although there exist each share transfer contract of June 20, 207 with the content that the rightCC transferred 2,000 shares of the non-party corporation to the Plaintiff at KRW 000,000, the share transfer contract of January 30, 2007, that the KimA transferred 228,000 shares of the non-party corporation to the Plaintiff at KRW 000,000, the share transfer contract of May 31, 2007, and that KimA transferred 7,200 shares of the non-party corporation to the Plaintiff at KRW 00,00,000, the share transfer contract of June 20, 2007 (hereinafter "the above transfer contract of each case"). However, there was no data that the Plaintiff paid all or part of the share transfer price to the non-party corporation to the Plaintiff.

E) On August 7, 2007, the Plaintiff prepared a document (Evidence A 10) stating that part of the shares of the non-party corporation should be transferred to the above company and received investment in order to strengthen the partnership with YA, a customer of the non-party corporation, and entered into a transfer contract between the Plaintiff and the above company with the approval of KimA, on the 5,000 shares of the non-party corporation. On January 18, 2008, Y transferred 00 won out of 00 won deposited into the Korean Cita bank account under the name of the Plaintiff to the Korean Cita bank account under the name of the non-party corporation on the day, and used the remaining 00 won as the operating fund of the non-party corporation.

2) Matters concerning the operation of the non-party corporation

A) From December 7, 2007 to October 16, 2008, KimA signed each disbursement resolution (No. 14-1 to 15 of the evidence A) with the final approving authority, in particular, from the 'the operation plan of the non-party corporation, drafted around December 2008' to the FAX, the 'the expenditure resolution regarding the portion of the fund enforcement' was sent to the 'the FAX', and the 'the daily financial report should be prepared and reported every day.'

B) When withdrawing the funds of a non-party corporation, KimA took the method of withdrawing and using the funds immediately after transferring them from the corporate account to the borrowed account (Evidence A No. 16) in the name of the Plaintiff from the corporate account in the form of “the representative director”, or depositing them into the account of another corporation’s employees (GlaD, rightCC) and using them.

3) From January 5, 2008 to December 31, 2009, the doorB, who served as the chief development officer in a non-party corporation, stated as follows (see Evidence A 24).

(Contents) The following:

4) On November 30, 2010, the non-party corporation reported the closure of business due to the business depression, and the retired employee, due to the unpaid wage problem, prepared a written confirmation that the Plaintiff, the representative director of the non-party corporation, and the transfer of the income from the non-party corporation, guarantee the payment of overdue wages to the employees on December 29, 2010.

[Reasons for Recognition] A without dispute, Gap evidence Nos. 1, 3, 4, 6, 7, 9 through 20, 23, 24, Eul evidence Nos. 3, 5, and 6, the testimony of a witness assistant, and the purport of the whole pleadings

D. Determination

1) According to Article 39(1)2(a) of the Framework Act on National Taxes, where the property of a corporation is insufficient to cover national taxes, additional dues, and disposition fee for arrears that the corporation shall pay, the person who actually exercises the rights to the shares exceeding 50% of the total number of issued and outstanding shares of the corporation as of the date on which the liability to pay national taxes is established shall be deemed to have secondary liability to pay taxes within the scope of the amount calculated by multiplying the insufficient amount by the total number of issued and outstanding shares of the corporation by the number of oligopolistic shareholders. Article 39(2) of the same Act provides that one shareholder and his/her relatives prescribed by Presidential Decree, or other specially related persons who hold more than 50% of the total number of issued and outstanding shares of the relevant corporation shall be deemed to have exceeded 50% of the total number of issued and outstanding shares of the relevant corporation. Therefore, it is reasonable to view that all oligopolistic shareholders who actually exercise the rights to the shares exceeding 50% of the total number of issued and outstanding shares of the oligopolistic shareholder is not necessarily required to exercise the rights to be held (see, 20008%.

2) The facts of stock ownership should be proved by the tax authority based on the data, such as the list of shareholders, the statement of stock transfer, or a certified copy of corporate register, etc. However, even if a single shareholder appears to be a single shareholder in light of the above data, where there are circumstances, such as that the actual shareholder was stolen, or registered in the name other than the real shareholder’s name, the nominal owner who asserts that he/she is not a shareholder should prove that he/she is not a shareholder (see, e.g., Supreme Court Decision 91Nu1721, Jul. 23, 191).

3) Examining the case back to the instant case, comprehensively taking account of the following circumstances acknowledged by the facts recognized as above and the purport of the entire pleadings, it is possible to confirm that the person in a position to substantially exercise shareholder rights to the shares at issue is KimA, not the Plaintiff, and there is no other counter-proof by the Defendant.

① In accordance with each contract for stock transfer, even if there is a large amount of the share transfer price of the instant case, the Plaintiff cannot be found to have actually transferred the instant shares from KimA to the Plaintiff, in light of the following: (a) the Plaintiff’s submission of evidentiary materials that the transfer price of the instant shares reaches KRW 00,000; (b) the Plaintiff’s transfer price of 5,00 shares under his/her name to Y would have been approved by KimA; (c) the transfer price would have been ultimately reverted to KimA; and (d) the transfer price would have been ultimately attributable to the Plaintiff on the date of preparation of the share transfer contract as of June 20, 207.

② Since KimA transferred all of its shares to the Plaintiff, it appears that KimA had led the management of the legal entity as the final approving authority of the non-party legal entity, the funds of the non-party legal entity appears to have been substantially managed by KimA through the borrowed account in the name of the Plaintiff, and KimA had guaranteed payment against the demand of the employees who retired from the non-party legal entity for the payment of wages in arrears. In light of the fact that KimA had maintained the role of the non-party legal entity as the beneficial owner despite the transfer of the shares in question, it appears that the transfer of the shares in most of the non-party legal entity was a nominal act that does not affect the actual control or management of the non-party legal entity.

4) However, under Article 39(2) of the Framework Act on National Taxes and Article 20 subparag. 9 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 23592, Feb. 2, 2012; hereinafter the same) the Plaintiff is in a special relationship with KimA, and is included in the total number of oligopolistic shareholders’ stocks, together with the stocks originally owned by the Plaintiff, and the Plaintiff also included in the total number of oligopolistic shareholders’ stocks. The instant disposition is still valid within such scope. The Plaintiff’s liability is limited to the Plaintiff’s share ratio (4,800 shares ¡À250,000 =1.92%) from the tax amount in arrears of the non-party corporation, so the portion of the instant disposition of the non-party corporation’s KRW 00,000 among the value-added tax amount for February 2, 209 and KRW 200,000 among the corporate tax amount for each business year exceeding 200,000.

3. Conclusion

Therefore, the plaintiff's claim is reasonable within the above scope of recognition, and it is so justified, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.