[1] The meaning of "when a person inflicts property damage" in the crime of breach of trust and the standard for determining whether a property damage has occurred

[2] Whether an executive officer of a company may be exempted from liability for a crime of breach of trust on the ground that he/she actually obtained a shareholder's understanding about his/her breach of duty (negative)

[3] The case where the act of offering the acquired company's assets as security during the acquisition of the acquired company by so-called LBO constitutes a crime of occupational breach

[4] The criteria and method of proving intent to commit occupational breach of trust

[5] The case holding that an act of offering the assets of the acquired company as security during the process of acquiring the stocks, etc. of the acquired company with a loan and establishing a document company to acquire a stock company under company reorganization process constitutes a crime of occupational breach of trust

[6] Whether the crime of occupational breach of trust is established in a case where a director, etc. of a company fails to take reasonable measures to recover claims with sufficient collateral when lending company funds to another person (affirmative)

[7] If the representative director of the company provides the company's property as a security for a third party and replaces the already established security, the nature of the crime of occupational breach of trust

[1] In the crime of breach of trust, the term "when the act of breach of trust causes property damage" includes not only a real damage but also a case where the risk of property damage is caused, and once the risk of damage is caused, it does not affect the establishment of the crime of breach of trust even if the damage is recovered later, and the existence of property damage should be determined from an economic perspective in consideration of the whole property condition of the principal. Thus, even if the act of breach of trust is null and void by legal judgment, it is the case where the principal causes property damage or causes property damage.

[2] A stock company and a stock company and a shareholder are not the same person as a separate legal entity. Thus, even if a shareholder or a major shareholder are one person, if there is an act of breach of trust which causes damage to the stock company which is the principal, the crime of breach of trust shall be established. If an executive officer of a company obtains property benefits or causes damage to the company by making a third party obtain them due to an act in violation of his/her duties, such an act constitutes a crime of breach of trust, and it shall not be deemed that there was no damage to the company of the principal, or there was no intention to commit a crime of breach of trust.

[3] In a case where the acquirer takes out a loan from a financial institution to raise funds necessary for corporate acquisition and later provides the assets of the acquired company as a collateral (soever LBO (soeverever LBO) and later, the acquired company bears the risk of losing the assets provided as a collateral if the main debt is not repaid, so it cannot be deemed that the secured collateral for the acquirer is unlimited, and it can be allowed only if the acquirer provides the acquired company with consideration equivalent to the risk-bearing arising from the secured collateral as above. If the acquired company arbitrarily provided the assets of the acquired company without any consideration to the acquired company, it is reasonable to deem that the acquirer or the third party obtained economic benefits equivalent to the value of the secured assets and caused property damage to the acquired company. Since even if a corporate reorganization procedure is in progress due to default, the shareholders or creditors of the acquired company still needs to be protected, even if the acquired company is a company undergoing the corporate reorganization procedure, such conclusion does not affect the above conclusion.

[4] For the purpose of recognizing the intention of the crime of occupational breach of trust, a person who administers another's business must have an intention to inflict property damage on the principal, and there should be awareness that his or her or a third party has an intention to gain property benefits, and that his or her act is in violation of his or her duties. Even if the defendant had an intention to gain the victim's interest, it is only incidental, and if it is proved that he or she has the principal intent to gain or harm the victim's interest, it shall be deemed that there has been an intention of the crime of breach of trust. If the defendant denies his or her criminal intent by asserting that he or she had committed an act at issue in his or her own interest and denies his or her criminal intent, the facts constituting a subjective element of the crime of breach of trust (in-depth facts, such as intention, motive, etc.) shall not be proved by the method of proving indirect facts that have considerable relevance to the intention due to the nature of the object, and what constitutes indirect facts

[5] The case holding that an act of offering the assets of the acquired company as security during the process of acquiring the stocks, etc. of the acquired company with a loan and establishing a document company to take over a stock company under company reorganization procedure constitutes a crime of occupational breach of trust

[6] In lending corporate funds to another person, if a director, etc. of a company knew that it would cause damage to the company if the other person has already lost his/her ability to repay his/her debt and lent the funds to him/her, or if he/she continues to lend the funds without taking reasonable and reasonable measures to recover claims such as receiving sufficient collateral, such loans constitute a breach of trust against the company, which is an act of allowing the other person to gain profit and causing damage to the company.

[7] In the case where the representative director of a company provides the company's property as a collateral for a third party and replaces the already established collateral, if the value of the newly provided collateral exceeds the value of the existing collateral, barring any special circumstance, it shall be deemed that property damage has occurred to the company in an amount equivalent to the amount of the guaranteed debt out of the increased value of the above method. However, in the case where the representative director of the company provides the company's property as a collateral for a third party and replaces the already established collateral, if the value of the newly provided collateral is smaller or equal than the value of the existing collateral,

[1] Articles 355(2) and 356 of the Criminal Act / [2] Articles 355(2) and 356 of the Criminal Act / [3] Articles 355(2) and 356 of the Criminal Act / [4] Articles 355(2) and 356 of the Criminal Act / [5] Articles 356 of the Criminal Act / [6] Articles 355(2) and 356 of the Criminal Act / [7] Articles 355(2) and 356 of the Criminal Act

[1] [4] Supreme Court Decision 99Do822 delivered on November 24, 2000 (Gong2001Sang, 202) Supreme Court Decision 2001Do4857 Delivered on May 14, 2004 / [2] Supreme Court en banc Decision 83Do230 Delivered on December 13, 1983 (Gong1984, 227), Supreme Court Decision 85Do1503 Delivered on October 22, 1985 (Gong1985, 1588), Supreme Court Decision 9Do822 Delivered on November 24, 200 (Gong201Sang, 202Sang, 204) / [309Do4205 delivered on July 22, 2004] Supreme Court Decision 2009Do42039 delivered on July 22, 2004

Defendant

Prosecutor

Law Firm Rate, Attorney Shin Sung-sung et al.

Seoul High Court Decision 2003No3322 delivered on October 6, 2004

Of the lower judgment, the part of the lower judgment on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) due to the establishment of a pledge right on June 12, 2001 and the establishment of a right to collateral between July 3, 2001 and July 9, 2001 is reversed, and the case on this part is remanded to the Seoul High Court. The remaining appeals are all dismissed.

The grounds of appeal are examined.

1. As to the ground of appeal on the part of occupational breach of trust by the act of offering security

A. In the crime of breach of trust, the term "where a property loss is incurred" includes not only a case where a real loss is incurred but also a case where a risk of a property loss is caused, so long as the risk of a property loss is caused, even if the damage is recovered later, it does not affect the establishment of the crime of breach of trust even if the damage is recovered later, and the existence of a property loss should be determined from an economic point of view in view of the whole property condition of the principal. Thus, even if the act of breach of trust is null and void by a legal judgment, if the act of breach of trust in question causes a real loss or a risk of actual loss of property from an economic point of view, it constitutes property loss (see, e.g., Supreme Court Decisions 9Do822, Nov. 24, 200; 201Do4857, May 14, 20

In addition, between stock companies and stock companies and shareholders cannot be the same person as a separate legal entity. Thus, even if a shareholder or a major shareholder is one person, if there is an act of breach of duty which inflicts loss on the company as the principal, the crime of breach of trust shall be established. If an executive officer of a company obtains pecuniary advantage or causes a third party to obtain such profit by an act in violation of his duty and causes loss to the company, the crime of breach of trust shall be established, and it shall be deemed that there was no loss to the company as the principal, or there was no intention to commit a crime of breach of trust (see, e.g., Supreme Court en banc Decision 83Do230, Dec. 13, 1983; Supreme Court Decision 85Do1503, Oct. 22, 1985).

In order to raise funds necessary for corporate acquisition, the acquirer takes out a loan from a financial institution and later provides the assets of the acquired company as collateral (the so-called LBO method) (the so-called LBO method), and the acquired company bears the risk of losing the assets provided as collateral if the main debt is not repaid. Therefore, the secured collateral for the acquirer cannot be deemed unlimited, and if the acquirer provides the acquired company's assets as collateral without any consideration, such as paying the price equivalent to the risk-bearing arising from the secured collateral as above, it may be allowed. If the acquired company arbitrarily provided the assets of the acquired company without any consideration to the acquired company, it is reasonable to deem that the acquirer or the third party obtained economic benefits equivalent to the value of the secured assets and caused property damage to the acquired company. Even if the reorganization procedure is in progress due to bankruptcy, the shareholders or creditors' interests have to be protected, and thus, even if the acquired company still does not affect the conclusion of the reorganization procedure.

In order to recognize the intention of the crime of occupational breach of trust, a person who administers another's business must have an intention to inflict property damage on the principal, and there should be awareness that his or her act violates his or her duty. Even if the defendant had an intention to gain the victim's own interest, it shall be deemed that there was an intention of the crime of occupational breach of trust if it is only incidental and it is proved that he or she has the principal intention to gain or harm (see Supreme Court Decisions 9Do822, Nov. 24, 200; 2001Do4857, May 14, 2004, etc.). Where the defendant denies a criminal intention by asserting that he or she had committed an act at issue for his own interest and denies a criminal intention, the fact that constitutes a subjective element of the crime of occupational breach of trust (such as intention, motive, etc.) shall be proved by an indirect method that proves considerable relevance with the intention of the victim's own interest, and it shall be reasonably linked to an indirect fact that is considerably related to 2014.

B. According to the evidence duly admitted by the lower court and the first instance court, the following facts are recognized:

In order to take over Nonindicted Co. 1 (hereinafter “Nonindicted Co. 1”) under the company reorganization procedure, the Defendant established Nonindicted Co. 2, a company on May 23, 2001, and received a loan of KRW 35 billion from Nonindicted Co. 2, a representative director, from Nonindicted Co. 4, 2001 (hereinafter “Nonindicted Co. 3 deposits”), with respect to Nonindicted Co. 1’s new shares to acquire 5,200,000,000 won of the company’s new shares to acquire 5,000,000,000 won of the company’s new shares (1:5,000 won per share). After Nonindicted Co. 2 acquired Nonindicted Co. 1’s new shares, the Defendant agreed to set up a collateral security right on Nonindicted Co. 3’s new shares to be owned by Nonindicted Co. 1, 201. Pursuant to the above agreement, Nonindicted Co. 2 set up the collateral on July 1, 2003 and returned it to Nonindicted Co. 3.

In addition, the Defendant, as the representative director of Nonindicted Company 2, took out a loan of KRW 32 billion from the Hanmi Bank on June 5, 2001, provided as security the amount equivalent to KRW 62 billion in total of the reorganization claims and securities against Nonindicted Company 1 acquired by Nonindicted Company 2, and agreed to withdraw KRW 32 billion out of the total amount of deposits held by Nonindicted Company 1 at the time of the completion of the company reorganization procedure and deposit it with Hanmi Bank, and return the above reorganization claims, etc. in lieu of setting up a pledge right on the above deposits. Under the above agreement, the Defendant appointed as the representative director of Nonindicted Company 1 as the representative director, and terminated the above reorganization claims, etc. on June 12, 2001.

As above, the Defendant provided the assets of Nonindicted Company 1 as collateral with respect to the funds that Nonindicted Company 2 obtained from financial institutions in order to take over the stocks of Nonindicted Company 1 and the reorganization claims against Nonindicted Company 1, but did not take measures such as providing the funds equivalent to the collateral provision burden of Nonindicted Company 1 or offering the stocks, bonds, etc. acquired by Nonindicted Company 2 as collateral at least until the above loans are repaid.

C. In full view of the above legal principles and the above facts, since most of the major assets of Nonindicted Company 1 were provided as a responsible property for the above loans of Nonindicted Company 2 due to the Defendant’s act of offering the above security, and the risk of disposal at the time of the repayment of the above loans in the future, it shall be deemed that the Defendant violated his duties and thereby, the Defendant obtained property benefits from the Defendant or a third party and suffered property damage to Nonindicted Company 1.

D. The lower court determined that the Defendant’s offering of the assets of Nonindicted Company 1 as collateral to the above financial institutions after the acquisition of Nonindicted Company 1 cannot be readily concluded immediately on the ground that the Defendant offered the assets of Nonindicted Company 1 as collateral to the above financial institutions, and that it was an intention to cause damage to Nonindicted Company 1, solely on the following grounds: (a) the Defendant’s acquisition of Nonindicted Company 1 in the process of corporate reorganization, and the Defendant’s intent to promote the interest of Nonindicted Company 1 in the process of securing the acquisition fund; and (b) the Defendant made efforts for the normalization of management, based on a series of actual processes: (c) the Defendant’s offering of the assets of Nonindicted Company 1 as collateral to the above financial institutions, which is the acquiring company, was in the process of corporate reorganization; and (d) the Defendant’s intention to cause damage to Nonindicted Company 1.

However, even if the amount borrowed by the defendant from the above financial institutions was used in paying the debt to the creditors of the non-indicted 1, the above loan was basically made by the non-indicted 2, a document company, to raise funds to acquire the shares or the right of management of the non-indicted 1, so direct profits from the above loan cannot belong to the non-indicted 1, and it is done for the interest of the non-indicted 2, and the defendant's offering of the assets of the non-indicted 1 to the above financial institutions as security without providing just consideration, etc. for the loan also is considered to have been done for the personal interest of the defendant or the non-indicted 2 to acquire the status or the right of management as the shareholder of the non-indicted 1. In other words, in this case, it is recognized that the defendant had the intention of breach of trust to cause damage to the non-indicted 1 for the interest of himself or the non-indicted 2, and the circumstance that the defendant made an effort to normalize the management of the non-indicted 1 after the provision of

In addition, the court below held that, apart from the above collateral payment for non-indicted 3's collateral, the real estate of this case had already been subject to the establishment of a right to collateral security and a right to lease on a deposit basis equivalent to 25.4 billion won, and the provisional disposition had already been completed. However, the risk of loss of the real estate of this case due to the acquisition of non-indicted 1's collateral security was reduced not only because the above collateral security was completely cancelled, but also the corporate reorganization for the non-indicted 1's ability to repay. In fact, the defendant paid 2.5 billion won out of the above loan for non-indicted 3's collateral security to the non-indicted 1's collateral security, and it was difficult to view that the above provisional disposition for the non-indicted 1's collateral security was made for the purpose of the above non-indicted 1's acquisition of collateral security to be disposed of, since the above collateral was not disposed of for the purpose of the non-indicted 1's business normalization, since the defendant's repayment of the above loan for the above non-indicted 2's collateral security loan.

E. Nevertheless, the court below rendered a not-guilty verdict on this part of the facts charged on the grounds that it is difficult to accept as above. In so doing, the court below erred by misapprehending the legal principles on occupational breach of trust or misunderstanding facts in violation of the rules of evidence and the rules of experience, which affected the conclusion of the judgment. The part of the grounds of appeal assigning this error is with merit.

2. As to the ground of appeal on the part of occupational breach of trust by lending act

In lending corporate funds to another person, if a director, etc. of a company knew that it would cause damage to the company if he/she already lost his/her ability to repay his/her debt and lends the funds to him/her, or if he/she continues to lend funds without taking reasonable measures to recover claims such as receiving sufficient collateral, such loans constitute a breach of trust against the company by allowing another person to gain profits and causing damage to the company (see Supreme Court Decision 99Do4923, Mar. 14, 200, etc.).

In light of the records, the court below acknowledged the facts as stated in its holding, and found that the reorganization claim against the non-indicted 1 company that the non-indicted 2 provided as security for the above loan obligation was a considerable value due to the completion of the company reorganization procedure and the normalization of management of the non-indicted 1 company, and that the reorganization claim that the non-indicted 2 provided as security for the non-indicted 1 company held substantial value and has sufficient ability to secure the above loan, it cannot be deemed that the defendant had an intention to inflict damage on the non-indicted 1 company immediately on the non-indicted 1, and it is difficult to find that the defendant had an intention to inflict damage on the non-indicted 1 due to the above act of the defendant, and it is reasonable to reverse the judgment of the court of first instance which found the non-indicted 2 guilty of this part of the facts charged, and it is not acceptable to accept this part of the grounds for appeal, contrary to what is alleged in the grounds for appeal.

3. As to the ground of appeal on the part of occupational breach of trust caused by the act of replacing collateral

If the representative director of a company provides the company's property as a collateral for a third party and replaces the already established collateral, if the value of the newly provided collateral is greater than the value of the existing collateral, barring any special circumstance, it shall be deemed that property damage has occurred to the company in an amount equivalent to the amount of the guaranteed debt out of the increased value of the collateral increased by the above method. However, in the event that the representative director of the company provides the company's property as a collateral for a third party and replaces the already established collateral, if the value of the newly provided collateral is smaller or equal than the value of the existing collateral

In light of the records, the court below acknowledged the facts as stated in its holding, and judged that the defendant's act of offering the deposit KRW 5 billion to non-indicted 3 as security was limited to the cancellation of security against the original rental apartment among the real estate of this case where the security had been already provided as security, and it is merely a replacement of security, and it is difficult to see that the defendant had an intention in breach of trust against the non-indicted 1, and it is also difficult to see that the defendant had an intention in breach of trust against the non-indicted 1, and there is no evidence to prove that there is no possibility of additional property damage due to the provision of security against the above deposit, and it is just to dismiss the prosecutor's appeal against this part of the facts charged and maintain the innocence, and there is no error of law such as misunderstanding of legal principles which affected the conclusion of the judgment

4. Conclusion

Therefore, among the judgment of the court below, the part on the establishment of the pledge right as of June 12, 2001 and the part on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) due to the establishment of the right to collateral security between July 3, 2001 and July 9, 2001 shall be reversed, and the case concerning this part shall be remanded to the court below for a new trial and determination, and all remaining appeals shall be dismissed. It is so decided as per Disposition by the assent of all participating Justices.

Justices Ahn Dai-hee (Presiding Justice)