Open Decision Ledger · Capital markets & finance
Scope of Exclusion from Application of the Short-Swing Profit Disgorgement Regime and Whether a Management Premium Is Included in the Computation of Profits
Translated from the Korean original. Read the Korean
Supreme Court, Feb. 12, 2004, 2002Da69327 (judgment)
No holding summary · checked against points at issue. The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Case name: 단기매매차익금
Official text on the National Law Information Center
Question
Does the short-swing profit disgorgement regime under Article 188 (2) of the Securities and Exchange Act apply even to stock transactions that are manifestly not insider trading, and is a management premium excluded from the computation of short-swing profits?
Holding
The grounds for exception under the Enforcement Decree are enumerated exhaustively, and the disgorgement regime does not apply only where, by reason of the type of transaction, there is objectively no possibility whatsoever of the use of inside information from the outset. A transfer of management control is an incidental effect of the transfer of shares, and the consideration therefor is consideration for the shares themselves; accordingly, the management premium cannot be excluded from the computation of profits.
Points at issue, verbatim
내부자 거래에 의한 주식거래가 아님이 명백한 경우, 증권거래법 제188조 제2항 소정의 단기매매차익반환제도가 적용되는지 여부(소극)
Unofficial English translation
Where it is clear that the stock transaction is not one arising from insider trading, whether the system for returning short-term trading profits under Article 188 (2) of the Securities and Exchange Act applies (negative)
Disposition
Reversed and rendered by the Supreme Court Stated in the decision
피고 패소 부분을 파기하여 그 부분 제1심판결을 취소하고, 그에 해당하는 원고의 청구를 기각한다.
Unofficial English translation
The portion constituting the defendant's losing part is reversed, the judgment of the court of first instance corresponding to that portion is set aside, and the plaintiff's claim corresponding thereto is dismissed.
Form of the test
Elements stated Stated in the decision
내부자 거래에 의한 주식거래가 아님이 명백한 경우 즉 거래의 유형상 애당초 내부정보의 이용가능성이 객관적으로 없는 경우에는 법 제188조 제2항이 적용되지 아니할 뿐이다.
Unofficial English translation
Where it is clear that the stock transaction is not one arising from insider trading, that is, where in the type of transaction there is objectively no possibility whatsoever of the use of inside information from the outset, Article 188 (2) of the Act is merely not applied.
Factors
- 내부자 거래에 의한 주식거래가 아님이 명백한 경우
- 단기매매차익반환제도가 적용되는지 여부
- 이른바 경영권 프리미엄
- 단기매매차익의 산정에서 제외되는지 여부
Unofficial English translation
• Where it is clear that the stock transaction is not one arising from insider trading
• Whether the system for returning short-term trading profits applies
• The so-called management premium
• Whether it is excluded from the calculation of short-term trading profits
Relation to precedent
Follows earlier decisions Read from the decision
헌법재판소 2002. 12. 18. 선고 99헌바105, 2001헌바48 전원재판부 결정
Unofficial English translation
Constitutional Court, Full Bench Decision 99Hun-Ba105, 2001Hun-Ba48, decided December 18, 2002
Decisions referred to
[ 1] 헌법재판소 2002. 12. 18. 선고 99헌바105, 2001헌바48 전원재판부 결정(헌공76, 26)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
What is the specific standard for determining which types of transactions fall within the category where there is objectively no possibility of the use of inside information from the outset, such as where a major shareholder sells shares pursuant to a sale agreement?
This reading will be re-examined if the provisions on the disgorgement of short-swing profits and the Enforcement Decree prescribing the grounds for exception are amended, or if a new decision concerning the treatment of management premiums is issued.
Cross-family AI independent reading & axis check
7 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
When compared with an independent reading by another AI model (GPT-6 Astra), which read only the original text without seeing the primary reading, 7 of the 8 axes agreed, and the readings diverged on Axis 6 (Relation to precedent).
Axis 6 (Relation to precedent): Primary “Follows earlier decisions” vs Independent “Cannot be determined”
Whereas the primary reading read the stated legal principle as a reaffirmation of existing precedent, the independent reading appears to have placed weight on the fact that the relation to precedent is not expressly stated in the provided Holdings and the operative part.
헌법재판소 2002. 12. 18. 선고 99헌바105, 2001헌바48 전원재판부 결정Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The court below rejected the defendant's contention that the stock transaction in this case fell within a ground for exception and that the management premium should be excluded. It then treated the transaction as one in which shares of the same issue were sold and subsequently purchased, and computed the short-swing profit at KRW 3,651,603,332 pursuant to Article 83-5 (1) subparagraph 1 of the former Enforcement Decree. It also affirmed the judgment of the first instance ordering delay damages at an annual rate of 25% from January 17, 2002, the day following the date of pronouncement of the judgment of the first instance.
Supreme Court standard: The Supreme Court held the determinations of the court below on the disgorgement and computation of short-swing profits to be proper, and dismissed the defendant's final appeal. It examined the matter of delay damages ex officio, however. In view of the Constitutional Court's decision of unconstitutionality of April 24, 2003 and the subsequent amendment of the statutes and regulations, it held that an annual rate of 5% applies through May 31, 2003, and that an annual rate of 20% applies from the following day. The portion exceeding that amount was the subject of reversal and self-adjudication.
Distinguishing conditions
- Where the transaction falls within a ground for exception exhaustively enumerated in Article 83-6 of the former Enforcement Decree
- Where it is manifest that, by reason of the type of transaction, there is objectively no possibility of the use of inside information from the outset
- Where the transfer of shares and the transfer of management control are separated, and the consideration for management control is paid as a separate performance that cannot be regarded as consideration for the shares themselves
Record verification notes
Before asserting the same conclusion, one must first confirm whether the transaction constitutes a sale and purchase within six months, and whether it is a type in which the possibility of using inside information is objectively excluded in light of the circumstances of the transaction.
From the official text
Points at issue
[1] 내부자 거래에 의한 주식거래가 아님이 명백한 경우, 증권거래법 제188조 제2항 소정의 단기매매차익반환제도가 적용되는지 여부(소극) [2] 이른바 경영권 프리미엄이 증권거래법 제188조 제2항 소정의 단기매매차익의 산정에서 제외되는지 여부(소극)
Unofficial English translation
[1] Where it is clear that the stock transaction is not one arising from insider trading, whether the system for returning short-term trading profits under Article 188 (2) of the Securities and Exchange Act applies (negative) [2] Whether the so-called management premium is excluded from the calculation of short-term trading profits under Article 188 (2) of the Securities and Exchange Act (negative)
Summary of the holding
The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Order
원심판결의 2002. 1. 17. 이후의 지연손해금에 관한 부분 중 금 3,651,603,332원에 대한 2002. 1. 17.부터 2003. 5. 31.까지는 연 5푼, 그 다음날부터 완제일까지는 연 2할의 각 비율에 의한 금원을 초과하는 피고 패소 부분을 파기하여 그 부분 제1심판결을 취소하고, 그에 해당하는 원고의 청구를 기각한다. 피고의 나머지 상고를 기각한다. 소송총비용은 피고가 부담한다.
Unofficial English translation
Of the portion of the judgment of the court below concerning the delay damages after January 17, 2002, the portion constituting the defendant's losing part that exceeds, with respect to 3,651,603,332 won, the monies calculated at the rate of 5% per annum from January 17, 2002 to May 31, 2003 and at the rate of 20% per annum from the day following until the date of full payment, is reversed, the judgment of the court of first instance corresponding to that portion is set aside, and the plaintiff's claim corresponding thereto is dismissed. The defendant's remaining final appeal is dismissed. The entire costs of litigation shall be borne by the defendant.
Provisions referred to
[1] 증권거래법 제188조 제2항 , 제8항 , 구 증권거래법시행령(2000. 9. 8. 대통령령 제16966호로 개정되기 전의 것) 제83조의6 , 헌법 제23조 [2] 증권거래법 제188조 제2항
Read 2026-10-16 · Cross-read 2026-10-16. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.
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