Can a listed company sue over the regulator's notice that short-term trading profits occurred? Supreme Court Decision 2020Du44930 on 'the notification of the occurrence of short-term trading profits'

Question

Article 2(1)(1) of the Administrative Litigation Act defines a 'disposition' as 'the exercise of public authority by an administrative agency as the enforcement of law on concrete facts, or its refusal, and any other administrative action comparable to these'. Article 172 of the Capital Markets Act gives a listed company a claim to the return of short-swing profits made by its officers, employees or major shareholders, gives shareholders a right to demand that claim and a derivative right, and in paragraph 3 requires the competent authority to notify the company of the occurrence of such profits, after which the company must disclose the notified content. The question is whether that notification is a disposition that can be challenged in an appeal action under Article 2(1)(1).

Decision 2020Du44930 raises the question on an action by a plaintiff against the Governor of the Financial Supervisory Service over a notification made to a listed company, published as ○○○. The Seoul High Court held that the notification was not subject to an appeal action. The Supreme Court disagreed on that point but dismissed the appeal, holding that the action had in any event been filed after the period for bringing it had expired.

Material to check

The statutes are Article 2 of the Administrative Litigation Act, whose paragraph 1(1) defines 'dispositions etc.' as the exercise of public authority as enforcement of law on concrete facts, its refusal and comparable administrative acts, together with decisions on administrative appeals, and Article 172 of the Capital Markets Act on the return of insiders' short-term trading profits. Paragraph 1 lets the company claim the return of the profit from the officer, employee or major shareholder who made it within six months of buying and selling, or selling and buying, specified securities; paragraph 2 lets a shareholder demand that the company make the claim and, if the company does not make it within a set period after the demand, bring it in the company's place; paragraph 3 requires the competent authority, on learning of the occurrence of short-swing profits, to notify the company, which must then disclose the notified content by a prescribed method. The current text of Article 172 names the Securities and Futures Commission in paragraph 3, where the decision speaks of the competent authority.

The decisions are the decision, Supreme Court Decision 2020Du44930 (19 August 2022), and the two it cites on reviewability: Decision 2008Du167 (18 November 2010, en banc), which sets the criteria for whether an agency's act can be the subject of an appeal action and holds that the rejection of a building report is such an act, and Decision 2021Du53894 (17 March 2022), which restates those criteria, adds that where it is unclear whether an act is a disposition the counterparty's ability to recognise and foresee it should carry weight, and holds a second notice of an adjustment payment to be a disposition separate from the first.

Possible readings

Read with Decision 2008Du167 and Decision 2021Du53894, Article 2(1)(1) admits no abstract or general answer. The question is decided case by case, keeping in mind that an administrative disposition is an act of law enforcement on concrete facts that directly affects the rights and duties of the people, and weighing the content and purpose of the relevant statutes, the subject, content, form and procedure of the act, the substantive connection between the act and the disadvantage suffered by the counterparty and other interested parties, the principle of legality in administration, and the attitudes of the agency and the interested parties.

On that test, Decision 2020Du44930 holds that a notification of short-swing profits is a disposition even though it only supplies material with which the company and others can exercise a return claim and has no effect of creating or fixing that claim. Two aspects decide the matter. The notification brings the listed company's disclosure duty into being and so directly affects the counterparty's legal position, and the change in substantive legal status cannot be denied even if the agency has no direct means of forcing disclosure. And the disclosure duty rests not on the objective fact of the profit but on the agency's notification once it knows of that fact, so a company wishing to contest the duty has no judicial remedy other than challenging the notification itself.

A third reading follows the way the cited decisions treat uncertainty. Decision 2008Du167 allowed the rejection of a building report to be challenged so that the party could clear up its legal unease before building, and Decision 2021Du53894 said that where reviewability is unclear, the counterparty's ability to recognise and foresee the choice of remedy matters. Decision 2020Du44930 reaches the same practical result: the notification is the only act on which the company's duty depends, so it must be open to challenge.

What the decisions held

The Seoul High Court's judgment of 15 July 2020 (2019Nu62446) held that the notification the defendant made to the company ○○○ was not subject to an appeal action. It held separately, on the period for bringing the action, that the objection procedure under Article 39 of the Rules for Capital Market Investigation cannot be regarded as a special administrative appeal procedure, so the proviso to Article 20(1) of the Administrative Litigation Act, which starts the period from receipt of the written decision where an administrative appeal has been exhausted, does not apply, and the main clause starts the period from the day the plaintiff knew of the disposition; the action was filed after that period had run, and was therefore improper.

The Supreme Court held that the notification under Article 172(3) is a disposition subject to an appeal action. It accepted that the notification merely provides material for exercising the return claim and does not create or settle the claim to the return of short-swing profits, but held that this does not answer the question. The notification triggers the company's disclosure duty and thus directly affects the counterparty's legal position, and since the duty arises only upon the notification of an agency that has learned of the profit, a company that wants to dispute the duty has no other judicial remedy. It therefore held that the High Court had misunderstood the law on reviewability of an administrative action.

That error did not affect the result and was no ground for setting the judgment aside, so the appeal was dismissed with costs on the plaintiff. The Supreme Court went on to approve the High Court's conclusion on the period for bringing the action, holding that it had not misunderstood the law on that period: the objection procedure under Article 39 of the Rules for Capital Market Investigation cannot be seen as a special administrative appeal procedure, so the period ran from the day the plaintiff knew of the disposition, and the action was filed out of time and was therefore improper.

Points left open

The decision leaves the date of the plaintiff's knowledge unrecorded. It approves the finding that the period ran from the day the plaintiff knew of the notification and that the action was filed after it expired, but it does not say when that day was, or which event fixed it, so the starting point must be found on the record of each case.

The decision also leaves undecided whether anyone other than the notified company may challenge the notification. It deals with the disclosure duty of a listed company and with the plaintiff's action against the Governor of the Financial Supervisory Service; it says nothing about the position of the officer, employee or major shareholder whose profit the notification concerns, nor about whether the notification can be attacked on the merits once it is recognised as a disposition. The Court did not decide whether the notification itself was lawful.

When to reconsider

We revisit this brief if the Supreme Court fixes the starting point of the period for challenging such a notification, rules on who besides the notified company may challenge it, holds on whether the objection procedure under the Rules for Capital Market Investigation can ever be a special administrative appeal procedure, or if Article 172 of the Capital Markets Act is amended, the current text already naming the Securities and Futures Commission in paragraph 3 where the decision speaks of the competent authority.

Statutes referred to

• 행정소송법 제2조
• 자본시장과 금융투자업에 관한 법률 제172조

Decisions referred to

• 대법원 2022. 8. 19. 선고 2020두44930 판결 · Decision ledger
• 대법원 2010. 11. 18. 선고 2008두167 전원합의체 판결
• 대법원 2022. 3. 17. 선고 2021두53894 판결

Verification status

All texts below were read at the National Law Information Center on 24 October 2026. The decision was read in its published headings and full reasons, the two articles in their current text, and the two cited decisions in their published holdings and summaries.