Whether the difference between the acquisition price of new stocks under the conditions of protection and the market price constitutes deemed donation

Since the validity of a juristic act of acquiring shares cannot be deemed to depend on the gender of an uncertain fact in the future, it does not constitute conditional rights. Therefore, the amount equivalent to the difference allocated by a third party at a price lower than the market price of new shares constitutes deemed donation.

Donation under Article 39 of the Inheritance Tax and Gift Tax Act

Article 63 of the Inheritance Tax and Gift Tax Act

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of KRW 12,876,180 against the Plaintiff on October 3, 2004 is revoked.

1. Details of the disposition;

A. On September 20, 2001, the Plaintiff acquired 19,379 shares of registered ordinary stocks (hereinafter “instant shares”) to the Korea Securities Depository for one year after the issuance of new shares, in accordance with the resolution of the board of directors on September 18, 2001, that ○○○○○○○, a corporation registered on KOSDAQ, intended to provide capital increase through a third-party allotment method, with 27,360 shares per share (10% discount on the base price calculated pursuant to Article 57 of the Regulations on Issuance, Public Disclosure, etc. of Securities) by allocating 19,379 shares (hereinafter “instant shares”) to a third-party allotment method.

B. The Defendant deemed that the Plaintiff acquired the instant shares at a lower price than the market price in accordance with the result of the survey on the change of shares with respect to ○○○○○○○○○○○○, and deemed that the Plaintiff was donated KRW 91,972,734 by multiplying KRW 91,97,734 by the number of shares per share 4,746, the difference between KRW 32,106, which is the average closing price per share of ○○○○○, and KRW 27,360, the Plaintiff’s acquisition price per share for two months after the said offering of new shares, and determined and notified the Plaintiff on October 3, 2004 (hereinafter “instant disposition”).

C. The plaintiff raised an objection against the director of ○○ Regional Tax Office on November 22, 2004, but he received a decision of dismissal on February 25, 2005, and on April 11, 2005, the Director of the National Tax Tribunal requested the National Tax Tribunal to adjudicate on the national tax, but received a decision of dismissal on October 14, 2005.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 2-1, Gap evidence 2-2, Eul evidence 1-2, Eul evidence 1-2, Eul evidence 2-1, Eul evidence 2-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The market price of the instant shares constitutes conditional rights under Article 65 of the Inheritance Tax and Gift Tax Act (hereinafter “the Inheritance Tax and Gift Tax Act”), which are issued by a third party allotment method for one year under the terms and conditions of protection, and the market price is assessed not only based on Articles 39 and 63 of the Act, but also on the basis of applying Article 65 of the Act and Article 60 of the Enforcement Decree of the Act. In the case of the instant shares, it is the best method to assess the market price by applying the “ provision on the issuance and public notice, etc. of securities prescribed for stock-listed corporations, etc.” In the case of the instant shares, the foregoing provision is the market price. In the case of the third party allotment method, the issue price discounted within the limit of 10% from the closing price on the day preceding the date of resolution of the board of directors. Accordingly, the issue price at discount of the instant shares falls under the reasonable market price in view of fair trade and related laws and regulations, and thus, the disposition of the instant shares is unlawful in view of the market price and the profits of the instant shares.

(b) Relevant statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether the instant shares constitute conditional rights

"Conditional rights" under Article 65 (1) of the Act refers to the additional clauses of a juristic act which shall depend on the gender of an uncertain fact in the future where the effectiveness or extinction of a juristic act takes effect or its extinction in the future. Therefore, "Conditional rights" refers to rights for which the fulfillment of a condition has not been confirmed and in which one of the parties is expected or possible to gain certain profits by the fulfillment of the condition (see Article 149 of the Civil Act). As seen above, even if the shares of this case are to be protected at the Korea Securities Depository for one year after the issuance of new shares, it is merely limited to the disposal of the shares of this case for a certain period of time under an agreement between ○○○ and the Plaintiff, and thus, it cannot be deemed that the validity of the legal act of acquiring the shares of this case depends on the gender of an uncertain fact. Thus, the shares of this case cannot be deemed to constitute "Conditional rights" under Article 65 (1) of the Act.

(2) Whether the instant shares were donated

According to Article 39(1)1-c (c) of the Act, where a corporation issues new stocks to increase its capital at a price lower than the market price, a person who is not a shareholder of the corporation in question shall consider the profits earned by directly obtaining the new stocks as a donation. According to Article 29 of the Enforcement Decree of the Act, the difference between the appraised value of the corporation that issues new stocks and the appraised value of the new stocks shall be calculated as profits. If the Plaintiff, not the shareholder of ○○○, was allocated the stocks issued by the corporation to increase its capital at a price lower than the market price, the profits equivalent to the difference shall be deemed to have been donated. The market price of the stocks in this case shall be calculated.

(3) Market price of the instant shares

According to Article 60 of the Act, the value of the property on which a gift tax is levied shall be based on the market price as of the date of donation (hereinafter referred to as the “date of appraisal”), and in case of securities, the value appraised by the method of appraisal stipulated in Article 63(1)1 (a) and (b) of the Act shall be deemed to be the market price. As seen above, if the Plaintiff was allocated the stocks of this case at a price lower than the market price as of the date of allocation, it shall be deemed that the Plaintiff received the gift equivalent to the difference at the time of allocation. Thus, as of September 20, 2001, which is the date of allocation, the market price shall be assessed on the date of donation as of September 20, 201. In addition, according to Article 63(1) of the Act and Article 52-2 subparag. 1 of the Enforcement Decree of the Act and Article 63(1) of the Act, in case of stocks and equity shares on KOSDAQ, the average amount of securities shall be the 20th day after the date of appraisal as of the last 20.

(4) Profits from donation

Inasmuch as the market price of the instant shares is KRW 32,106 per share, and the fact that the Plaintiff acquired the instant shares in KRW 27,360 per share, which is lower than that of the Plaintiff, is as seen above, the Plaintiff is deemed to have received the instant shares in KRW 91,972,734, which is the difference (=32,106 won-27360 won), X19,379, which is the difference.

(5) Therefore, the Defendant’s disposition of this case, which imposed gift tax on the difference by deeming the difference as the donation profit, is lawful (the “Rules on Issuance and Public Disclosure, etc. of Securities” can be deemed to be lawful (the “Rules on Issuance and Public Disclosure, etc. of Securities”). In the case where a stock-listed corporation, etc. issues new shares through market price issuance, the issue price shall be calculated by applying the discount rate set by the stock-listed corporation, etc. to the base price, and the discount rate shall be set within 10/100 in the case of third-party allotment method. However, the above provisions merely stipulate certain restrictions on the standards, etc. for the issuance of new shares to ensure the fairness and transparency of the issue price and the solicitation procedure for subscription, and merely do not exceed the scope of the discount rate set forth in the above provisions, it cannot be deemed that

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Relevant laws and regulations

○ Donation due to capital increase under Article 39 of the Inheritance Tax and Gift Tax Act

(1) Where a corporation issues new stocks or equity shares (hereafter in this Article, referred to as "new stocks") to increase its capital (including the amount of investment; hereafter in this Article and Article 39-2, the same shall apply), a person who obtains benefits falling under any of the following subparagraphs shall be deemed to have received a donation of the amount equivalent to such benefits:

1. In case where new stocks are issued at a price lower than the market price (referring to the price assessed under Articles 60 and 63; hereafter in this paragraph and Article 40 the same shall apply), the benefits falling under any of the following items:

(c) Profits acquired by a person who is not a stockholder of the relevant corporation by directly obtaining an allocation of new stocks from the relevant corporation (including the case of directly accepting and acquiring the relevant new stocks from an underwriter under the Securities and Exchange Act; hereafter in this paragraph, the same shall apply), or by shareholders of the relevant corporation by obtaining an allocation of new stocks in excess of the number entitled to be allocated under equal conditions in proportion

Article 60 of the Inheritance Tax and Gift Tax Act:

(1) The value of property on which an inheritance tax or a gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (

(2) The market price referred to in paragraph (1) shall be the value which is deemed to be normal in cases of free trade between many and unspecified persons, and shall include the expropriation and public auction price, appraisal price, and others which are deemed to be the market price,

Article 63 of the Inheritance Tax and Gift Tax Act

(1) The appraisal of securities, etc. shall be conducted by the following methods:

1. Appraisal of stocks and investment shares:

(a) The average amount of stocks and equity shares traded on the Korea Stock Exchange shall be the average daily market price ( regardless of whether there is any transaction record) of the Korea Stock Exchange every two months before or after the evaluation base date: Provided, That in calculating the average amount, in cases where it is inappropriate to apply the relevant average amount due to any cause, such as capital increase or merger, etc., during two months before or after the evaluation base date, the average amount of the periods calculated, as prescribed by Presidential Decree, during two months before or after the evaluation base date;

(b) The provisions of item (a) shall apply mutatis mutandis to the stocks and equity shares as prescribed by the Presidential Decree from among the stocks and equity shares of the Association-registered corporations as prescribed by the Presidential Decree. In this case, the “final market price”

Article 65 of the Inheritance Tax and Gift Tax Act and the evaluation of other conditional rights

(1) The value of conditional rights, term of existence of which is uncertain rights, rights to receive profits of trust or rights to receive regular amounts prescribed by Presidential Decree shall be appraised according to methods prescribed by Presidential Decree, based on the nature, contents, remaining period, etc. of the relevant rights.

Article 29 of the Inheritance Tax and Gift Tax Act: Calculation method, etc. of Donation Donation

(3) The profits which are deemed to have been donated pursuant to Article 39 (1) of the Act shall be the profits calculated according to the following classification: Provided, That where the value per stock before and after the capital increase does not exceed zero, the profits shall be deemed not to exist:

1. Profits stipulated in Article 39 (1) 1 (a) and (c) of the Act: The amount calculated by multiplying the value computed under item (a) minus the value under item (b) by the number of forfeited stocks or new stocks under item (c); and

(a) The value per stock calculated by the following formula: Provided, That in case where the appraised value per stock after the capital increase in a stock listed corporation, etc. is less than the value per stock calculated by the following formula, the relevant value:

[The number of shares issued before the capital increase (the total number of shares issued before the capital increase) + (the number of shares increased by the capital increase by the capital increase by the new stock X)] ¡À(the total number of shares issued before the capital increase + the number of shares increased by the capital

(b) The acceptance price per new stocks;

(c) Number of forfeited stocks or new stocks allocated (in case of a person who obtained the allocation in excess of the number of new stocks allocated under equal conditions, the number of new stocks for such excessive portion); and

The term “average amount of the periods calculated as prescribed by the Presidential Decree” in the proviso of Article 63 (1) 1 (a) of the Act in the proviso of Article 63 (1) 1 (a) of the Act means the average amount of the periods calculated according to the following classifications:

1. In cases of capital increase or merger before the evaluation base date, the period from the date when the same cause occurs (referring to the date nearest to the evaluation base date in cases of an increase or merger on two or more occasions; hereafter the same shall apply in this Article) to the date two months after the evaluation base date;

○ Evaluation, etc. of stocks, etc. of Associationregistered Association under Article 53 of the Inheritance Tax and Gift Tax Act

(1) The term "stocks and equity shares of an Association-registered corporation as prescribed by Presidential Decree" in Article 63 (1) 1 (b) of the Act means stocks and equity shares of an Association-registered corporation under the Securities and Exchange Act.

(2) The term "stocks and investment shares prescribed by Presidential Decree" in Article 63 (1) 1 (b) of the Act means stocks or investment shares excluding those suspended from trading or designated and publicly notified as investment-free issues or administrative issues (excluding those prescribed by Ordinance of the Ministry of Finance and Economy) within six months (three months in the case of stocks or investment shares on which gift tax is levied) before or after the standard date of appraisal, in accordance with the criteria determined by the

Article 60 (Appraisal of Conditional Rights, etc.) The value of conditional rights, the duration of existence of which is uncertain and the rights in litigation pursuant to Article 65 (1) of the Act shall be based on the value assessed according to any of the following subparagraphs:

1. In cases of conditional rights, the proper value based on the value of the original right, taking into account the facts constituting the contents of conditions as of the evaluation base date, certainty of the fulfillment of conditions, and all other circumstances;

○ Definition of Article 53 of the Regulations on Issuance and Public Notice of Securities

(1) The term "issuance of new stocks" in this Chapter means the issuance price of new stocks at a price close to the price of the same kind of stocks to be formed on the securities market or the KOSDAQ market.

(2) For the purpose of this Chapter, the term "public offering of outstanding stocks" means the public offering of new stocks for which a stock-listed corporation, etc. gives stockholders an opportunity to make a preferential subscription and such stockholders, etc. do not make an offer again, and the term "third party" means the method of issuing new stocks for which a specific person (including stockholders of the relevant corporation) is excluded from the preemptive rights of stockholders.

Article 57 of the Regulations on Issuance and Public Notice of Securities and Issuance Price of Paid-in Securities

(1) A stock-listed corporation, etc. may offer new stocks through the issuance of market price except for cases where the issue price calculated under paragraph (2) is below the par value.

(2) Where a stock-listed corporation, etc. provides capital increase through market price issuance, the issue price shall be calculated by applying the discount rate set by the stock-listed corporation, etc. to theoretical rights holders (in cases of capital increase by preferential public offering of shareholders, hereinafter referred to as the "resolution price") or the reference price set under each of the following subparagraphs: Provided, That the discount rate shall be set within 30/100 in cases of capital increase by public offering, and the discount rate shall be set within 10/100 in cases of capital increase by public offering of new stocks, and the discount

3. Where capital increase is made through capital increase through the third party allotment method, the reference stock price shall be calculated by counting the date preceding the date of the resolution by the board of directors (where the resolution by the board of directors has already made the amount of issued stocks, it may be the date of resolution by the board of directors).