The Securities Litigation Review: South Korea
i Sources of law
The primary sources of securities law include the Financial Investment Services and Capital Markets Act (FSCMA), the Civil Act, the Commercial Act and the Criminal Act, all enacted by the National Assembly.
To cope with the complexity and fluidity of securities transactions, the Enforcement Decree of the FSCMA enacted by the President of Korea, and the Enforcement Rule of the FSCMA enacted by the Prime Minister of Korea (which stipulates detailed regulations for implementation of FSCMA), lay down material standards and requirements in relation to securities transactions.
Other regulations relevant to securities transactions include the Regulations on Financial Investment Business, the Regulations on Issuance, Public Disclosure, etc., of Securities and the Regulations on Return of Short-Swing Profit, Investigations and Report on Unfair Trades, etc., enacted by the Financial Services Commission (FSC), an entity established under the Act on the Establishment, etc., of the Financial Services Commission (AEFSC). Further, the Financial Supervisory Services (FSS) (which is established under the AEFSC as delegated under the FSCMA) has enacted detailed regulations on the above regulations, as delegated by relevant laws.
Judicial interpretations by the Supreme Court
Supreme Court precedents are not the primary source of securities law under the Korean legal system, where the principle of stare decisis is not recognised. However, as courts tend to follow Supreme Court precedents in securities-related litigation, such precedents are 'de facto binding'.
ii Regulatory authorities
Korean domestic regulatory authorities concerning securities transactions include the FSC, the Securities and Futures Commission (SFC) and FSS, all established under the AEFSC. The FSC is a central administrative agency under the Prime Minister, and has purview over matters concerning: financial policy and financial systems; and the management, supervision and surveillance of financial institutions and capital markets. The FSC has the authority to establish, amend and abrogate regulations related to the above matters, and if the FSS reports any violation committed by a financial institution to the FSC, sanctions may be imposed on the financial institution after the FSC examines the matter.2
The SFC is an internal committee within the FSC, and is responsible for: investigation of unfair trading (e.g., insider trading) in the capital markets; and affairs concerning accounting standards.3
The FSS conducts inspection and supervision of financial institutions, under the guidance and supervision of the FSC and the SFC.4 The FSS has primary supervisory authority over financial institutions in Korea.
iii Common securities claims
If a person who acquires securities incurs damages because of a false description or representation of a material fact in a registration statement or an investment prospectus, or an omission of a description or representation of a material fact therein, then he or she may claim damages against the persons5 involved in the preparation of the registration statement and the investment prospectus within one year of the day on which he or she became aware of the fact, or within three years of a registration statement related to the relevant securities becoming effective.6
Pursuant to the FSCMA, a corporation listed on a stock exchange is required to submit its business report to the FSC and Korea Exchange (KRX) within 90 days of the end of each business year.7 If a person who acquires or disposes of securities incurs damages owing to a false description or representation of a material fact in such business report or an omission of a description or representation of a material fact therein, he or she may claim damages against the persons8 involved in the preparation of the business report, etc., within one year of the date on which he or she became aware of the fact, or within three years of the relevant submission date of the business report.9
However, the accused person is not liable if he or she proves that he or she was unable to know this fact and exercised reasonable care, or that the person who acquired the securities knew the fact at the time when he or she made an offer to acquire them.10
The FSCMA provides that if any insider11 who has the opportunity to use non-public information of a corporation listed in a stock exchange derives profit by purchasing securities issued by the corporation and then selling them within six months or by selling the securities and then repurchasing them within six months, the corporation may require the insider to return the short-swing profit to the corporation, regardless of whether or not the insider actually used the non-public information.12
The FSCMA prohibits an insider13 who becomes aware of any material non-public information of a corporation listed on a stock exchange in the course of performance of the business, or a person who received the material non-public information from the insider, from using the material non-public information in trading or any other transaction involving specific securities or allowing another person to use such information.14 If the insider or the recipient of the information trades or makes any other transaction of specific securities in violation of the above provision, any person who has incurred damages because of the violation may claim damages against the offender within one year of the date on which the person becomes aware of the violation, or within three years of the date on which the violation was committed.15
The FSCMA prohibits manipulation of the market price of securities by (1) selling or purchasing securities at the value agreed to between a seller and a purchaser; (2) misleading a person to cause a misunderstanding that there is a significant trading of a security; (3) disseminating a rumour that fluctuations in the market price for securities are being caused by market manipulation; (4) making a false or misleading representation concerning a material fact in trading securities; (5) engaging in a series of purchases or sales in connection with listed securities or entrusting or being entrusted with this act, with an intention to fix or stabilise the market price of the listed securities; or (6) causing a fluctuation in, or fixing, the market price of underlying assets of certain derivatives with an intention to acquire unjust profits from trade of the derivatives.16
Any person who incurs damages because of this market price manipulation may file a claim against the offender within one year of the date on which the person became aware of the market price manipulation or within three years of the date on which the act was committed.17
The FSCMA generally prohibits unfair trading, such as: (1) utilising unfair means in connection with trading of securities; (2) making false descriptions or representations of a material fact; (3) utilising inaccurate market prices with the intent of attracting trading; (4) disseminating a rumour using a deceptive scheme or violence; and (5) making a threat with intent to cause fluctuation in the market price (Article 178 of the FSCMA). Any person who incurs damages because of this unfair trading may file a claim against the offender within one year of the date on which the person became aware of the unfair trading or within three years of the date on which the act was committed.18
On the other hand, owing to the speculative nature of short sales, the FSCMA allows short sales in exceptional cases,19 but only imposes an administrative fine for negligence for violation of this provision20 without any damages claims provisions, unlike for other unfair trading practices.
Accountants or auditor's liability
The FSCMA provides that if there is a false description or representation of a material fact in a registration statement, an investment prospectus or a business report; or an omission of a description or representation of a material fact therein, a certified public accountant who has certified that the descriptions of the documents are true and correct is liable for damages inflicted upon any person who acquired securities.21
In addition, if an auditor has made a false description or representation of a material fact in an audit report attached to a business report, the auditor is liable for damages sustained by bona fide investors in reliance of the audit report.22
i Forms of action
Any victim who incurs damages because of securities-related wrongdoings (false statement, insider trading, market manipulation and unfair trading) may file an action seeking damages in the form of individual actions or joint actions under the Civil Procedure Act (CPA). If the securities-related wrongdoings constitute torts under the Civil Act, the victim may elect to claim either damages under Article 750 of the Civil Act or damages under the FSCMA.
When at least 50 victims, who have common interests (who have legal or de facto material issues in common) and hold, in the aggregate, at least 1/10,000th of the total number of the outstanding securities of the defendant company, incur damages in the course of the trade or other transactions of securities because of false statements, insider trading, market manipulation, unfair trading or defective audits as set forth in the FSCMA, they may, after obtaining permission from a court, file a securities-related class action against the issuer of the securities to seek damages under Articles 125, 162, 170, 175, 177 and 179 of the FSCMA under the Securities-related Class Action Act (SCA).
A shareholder of a corporation listed on a stock exchange (regardless of the number of shares held by the shareholder) may demand that the corporation file a claim against a person who derives a short-swing profit as set forth in Article 172(1) of the FSCMA for the return of such profit, and the shareholder may make the claim on behalf of the corporation, if the corporation does not file the claim within two months of receiving the demand.23
If any director or auditor, or a person involved in the execution of duties of a company, engages in securities-related wrongdoings (false statement, insider trading, market manipulation or unfair trading) and, therefore, is liable for damages sustained by the company, any shareholder who holds no less than 1/100th (1/10,000th, in the case of a corporation listed in a stock exchange) of the total issued and outstanding shares may file an action on behalf of the company under the Commercial Act.24
If an action seeking damages is filed in relation to securities-related wrongdoings (false statement, insider trading, market manipulation or unfair trading), the procedures shall be in accordance with civil procedures under the CPA. Under the CPA, there is no discovery system as provided in Anglo-American law. However, it is possible to secure relevant documents from a defendant by obtaining a court's order for submission of documents during the course of a trial.25
Securities-related class actions are under the exclusive jurisdiction of the collegiate panel of a district court that has jurisdiction over the location of a defendant's general forum,26 and unlike a general civil action, both plaintiff and defendant of a securities-related class action are required to appoint attorney-at-law as their counsel.27 Further, the CPA applies mutatis mutandis to other matters related to a trial. Thus, as in the case of a general civil action, even though there is no discovery system, it is possible to secure relevant documents from a defendant by obtaining a court's order for submission of documents during the course of a trial.28
If a shareholder of a corporation files an action seeking the return of a short-swing profit under the FSCMA on behalf of the corporation, there is no special restriction on jurisdiction or pleading methods. However, the shareholder, as a plaintiff, should remain as a shareholder of the corporation until the close of the action. With respect to other matters, general civil procedures apply.
In a general civil action, there is no restriction on settlement between parties or requirement for court approval of a settlement agreement.
In the case of securities-related class actions, the settlement of a lawsuit or waiver of claims shall be invalid without approval of a court, and where a court intends to determine whether to grant the settlement of a lawsuit or waiver of claims, the court shall give prior notice thereof to the class members and provide an opportunity to present opinions.29
If a shareholder of a corporation files an action seeking the return of a short-swing profit under the FSCMA on behalf of the corporation, there is no restriction on settlement or requirement for court approval of a settlement agreement. However, if a shareholder of a corporation files an action on behalf of the corporation under the Commercial Act, no relevant party may waive claims or come to a settlement without permission from the court.30
iv Damages and remedies
The amount of damages for a false description or representation of any material fact in a registration statement or an investment prospectus31 or a business report32 is the amount estimated by subtracting either of the following amounts from the amount actually paid by the claimant for acquiring the securities at issue: the market price of the securities at the time of the last hearing of the lawsuit filed for the claim of damages (referring to an estimate disposal price if there is no market price available) or the disposal price if the securities are disposed of before the closing of the proceedings.33 However, the Supreme Court, in many instances, reduces the actual amount of damages by applying the legal principle of limitation on liability based on comparative negligence or the principle of fairness in determining the amount of damages.34
If the claimant claims damages under Article 750 of the Civil Act on grounds that a false description or representation of a material fact in a registration statement, investment prospectus or a business report constitutes a tort, the amount of damages will be equal to the difference between the price the securities would have been without the false description or representation; and the price the securities were reduced to because of this false description or representation. The claimant will bear the burden of proof for the amount of damages.
The amount of a short-swing profit earned by an insider that is required to be returned35 shall be calculated based on the following formulas:
- where specific securities have been sold or purchased only once within six months of the purchase or sale in question being made, the profit is calculated by multiplying the difference between the unit selling price and the unit buying price by the smaller of the volume purchased and the volume sold (matching volume) and subtracting trading commission, securities transaction tax and special tax for rural areas applicable to the matching volume; and
- where specific securities have been sold or purchased twice or more within six months of the purchase or sale in question, the profit is calculated by applying the formula in (a) above to the portion purchased at the earliest point of time and the portion sold at the earliest point in time and applying the same formula to portions purchased and sold thereafter consecutively until the portions purchased or sold (to which the formula is applied) are completely exhausted.36
There is no special provision within the FSCMA regarding the calculation method of damages caused by the use of material non-public information.37 Accordingly, under general Korean legal principles, the amount of damages will be equal to the difference between the stock price after the lapse of a certain period of time from the disclosure of the non-public information and the stock price at which an insider actually conducted the transaction. However, it has been pointed out that it is not easy for the claimant to prove the actual damage under such a formula. Thus, a new provision has been recently added to the CPA stipulating that 'if the fact that damages incurred is acknowledged but it is very difficult to prove the specific amount of damages owing to the nature of the case concerned, a court may determine a reasonable amount of damages by taking into account the overall purpose of the pleadings and all relevant circumstances based on its examination of evidence', and accordingly, the court may determine such amount of damages on an ex officio basis.38
There is no special provision within the FSCMA regarding the amount of damages for market price manipulation.39 However, in the Hyundai Electronics case, the Korean Supreme Court recognised 'the difference between the price that would have been set if there had been no market price manipulation (normal stock price) and the price set as a result of the market price manipulation at which the victim actually conducted the transaction (manipulated stock price)' as the amount of damages for the market price manipulation under general Korean legal principles concerning the calculation of the amount of damages (the 'difference theory').40 However, the Korean Supreme Court, in many instances, reduces the actual amount of damages by applying the legal principle regarding limitation on liability based on comparative negligence or the principle of fairness in determining the amount of such damages.41
There is no special provision within the FSCMA regarding the amount of damages for unfair trading.42 As such, general Korean legal principles concerning the calculation of the amount of damages also apply to unfair trading cases, and the amount of damages will be equal to 'the difference between the price that would have been set if there had been no unfair trading and the price set as a result of unfair trading at which the victim actually conducted the transaction'. Likewise, the actual amount of damages may be reduced based on comparative negligence or fairness principles.
i Forms of action
Under the FSCMA, the FSC is charged with supervising financial institutions to protect investors and maintain a sound system involving transactions. In practice, the FSS (not the FSC) supervises financial institutions under the guidance and supervision of the FSC.43 In particular, the FSC (or the SFC) may investigate or cause the FSS to investigate securities-related wrongdoings.44
In addition, KRX established the Market Oversight Commission to conduct surveillance of the securities market, and when it becomes aware of securities-related violations, it is obligated to notify the FSC (or the SFC).45
If a financial institution engages in the use of material non-public information, market manipulation or unfair trading, the FSC may revoke the financial investment business licence or the financial investment business registration of the financial institution.46
According to the FSCMA, securities-related false statements may result in an administrative fine not exceeding 3/100ths of the public offering or sale amount entered to the relevant registration statement (capped at 2 billion won if the amount exceeds 2 billion won).47 However, the FSCMA does not provide for monetary sanctions (e.g., fines) for negligence with respect to securities-related insider trading, market manipulation or unfair trading (activities set forth in Articles 172, 174, 177 and 178 of the FSCMA). On the other hand, the FSCMA provides that unfair trading by use of material non-public information48 may be subject to an administrative fine not exceeding 500 million won.49
A person who uses material non-public information, engages in market manipulation, disseminates a rumour, uses a deceptive scheme or coerces someone by violence or threat with intent to fluctuate the market price may be criminally punished.50 Further, if a representative of a corporation or its agent, employee or any other employed by a corporation is criminally punished pursuant to the provision above, such corporation may also be fined, unless the corporation proves that it has paid due attention to or diligently supervised the relevant business to prevent such violation.51
In general, the FSS investigates any violation of the FSCMA under the guidance and supervision of the FSC, whereas the SFC is responsible for the investigation of securities-related violations (false statement, insider trading, market manipulation or unfair trading, i.e., activities set forth in Articles 172, 174, 177, 178 and 426 of the FSCMA).
The SFC may, if deemed necessary when conducting the investigation, make a demand on a financial institution to submit statements and other documents and evidence, and may, if deemed necessary, seize evidence or search offices.52 Details on procedures involving such investigations are set forth in the Regulations on Return of Short-Swing Profit, Investigations and Report on Unfair Trades, etc.
FSC resolutions and sanctions
Matters relating to FSC deliberations, resolutions and sanctions regarding FSCMA violation are set forth in the Regulation on Investigation of Capital Markets (RICM). The RICM provides that the FSC (or the SFC) may, after review on findings of an investigation of securities-related violations by the capital market investigation and deliberation committee, elect to (1) file a report or send a notice to an investigation agency (e.g., the Prosecutor's Office) concerning the violation; (2) issue a corrective order; or (3) issue a warning.53 In addition, when the SFC discovers an accrual of short-swing profits of an insider as a result of the investigation, it is required to notify the relevant corporation.54
If the FSC (or the SFC) intends to issue any of the sanctions above, it must give 10 days' prior notice to the subject person, and that person may submit an opinion to the FSC (or the SFC).55 In sum, the FSC (or the SFC) may only take the above measures after duly completing relevant procedures.
If the subject person has any objection to the sanctions issued by the FSC (or SFC), he or she may file an objection within 30 days of the date of the notice, and if the sanction is eligible to become a subject matter of an administrative litigation as an exercise of administrative authority, the subject person may file administrative litigation within 90 days of the date on which he or she becomes aware of the relevant measures.56
If the SFC files a report or issues a notice of securities-related violations to an investigation agency (i.e., the Prosecutor's Office), the agency will proceed with an investigation and may file an indictment against the offender. The offender may be criminally punished after a criminal trial.
In principle, under Korean law, no settlement, mediation or plea bargaining is allowed for administrative measures and criminal punishment for securities-related violations. However, if administrative litigation is filed with respect to the FSC sanctions, these sanctions may be subject to change by way of mediation or settlement during the course of litigation. In addition, the Prosecutor's Office or the court may apply a lighter sentence to any offender who cooperates during the investigation.
iv Sentencing and liability
With respect to securities-related violations (false statement, insider trading, market manipulation or unfair trading, i.e., activities set forth in Articles 172, 174, 177, and 178 of the FSCMA), if the offender is a financial investment firm, the FSC (or the SFC) may:
- revoke the financial investment business licence or the financial investment business registration;
- suspend its business entirely or partially for no more than six months;
- order it to transfer certain contracts to third parties;
- order it to correct or discontinue violation;
- order it to publicly disclose or notify of the fact that it is subject to certain sanctions because of its violation;
- issue a warning; or
- issue a reprimand.57
Criminal punishment for securities-related wrongdoings are as follows under Article 443 of the FSCMA.
|Base level punishment||If the profit is 500 million won or more, but less than 5 billion won||If the profit is 5 billion won or more|
|Using material non-public information||Imprisonment for up to 10 years or a fine equivalent to one to three times the profit accrued or the loss avoided by a violation; suspension of qualification for not more than 10 years may be imposed concurrently.||Punishment shall be aggravated to imprisonment for no less than three years.||Punishment shall be aggravated to imprisonment for life or for no less than five years.|
|Disseminating a rumour, using a deceptive scheme, violence a threat, with an intention to attempt to fluctuate the market price|
Under the vicarious liability provisions, a corporation may also be subject to a fine equivalent to one to three times the profit accrued or the loss avoided by a violation.58
i Private actions
Under the FSCMA, any activities conducted in a foreign country the effects of which extend to the territory of Korea shall be governed by the FSCMA,59 thereby introducing the 'effects doctrine' regarding the extraterritorial application under US securities law. Accordingly, theoretically, if securities-related violations were committed abroad in relation to overseas securities issued in a foreign country, and it had a foreseeable and material adverse effect on Korean domestic investors or markets, Korean civil courts will have jurisdiction over a claim for damages filed by the investors.
However, if the issuer of overseas securities is engaged in market price manipulation60 or unfair trading61 in connection with exchange-traded derivatives, and such activities have an adverse effect on Korean domestic investors or markets, it is debatable whether Korean civil courts have jurisdiction over a claim for damages against the issuer of the overseas securities.
ii Public enforcement
Theoretically, Korean domestic regulatory authorities, such as the FSC, could have the authority to conduct an investigation into and take administrative measures against securities-related violations committed by the issuer of overseas securities. However, in practice, it appears that Korean domestic regulatory authorities have never conducted any investigation into or taken any administrative measures against securities-related violations committed abroad by the issuer of overseas securities.
Further, in principle, the Korean Criminal Act applies to both Korean nationals and aliens who commit crimes within the territory of Korea (i.e., the territorial principle), and exceptionally applies to all Korean nationals who commit crimes outside the territory of Korea (i.e., the personal principle).62 Thus, securities-related violations committed by the issuer of overseas securities in Korea or securities-related violations committed by Korean nationals may be criminally punished.
Year in review
i Leading cases
A leading case concerned certain equity-linked security (ELS), which was designed in such a way that if the closing prices of both underlying assets (i.e., common shares of Kookmin Bank and common shares of Samsung Electronics on the base date of 26 August 2009) are not less than 75 per cent of the initial base price, the principal amount and a 28.6 per cent return on investment was to be paid to investors (paid at maturity), but if the closing price of any of the underlying assets is less than 75 per cent of the initial base price, then investors were to bear the risk of losing the principal.
On the base date of 26 August 2009, the defendant Deutsche Bank intentionally sold common shares of Kookmin Bank so that the condition for payment of returns at maturity could not be fulfilled.
On 24 March 2016, the Korean Supreme Court held that Deutsche Bank's sale of the shares constituted market manipulation or unfair trading intended to lower the closing prices of the above shares as of the base date and was intended to prevent the fulfilment of the condition, and further held that Deutsche Bank was liable for damages sustained by the investors who invested in the ELS.63
On 2 March 2012, the investors to the ELS discussed above filed a securities-related class action against Deutsche Bank under the SCA, and on 27 May 2016, the Korean Supreme Court granted permission for the securities-related class action,64 and the Seoul Central District Court rendered a judgment in favour of the investors on 20 January 2017.65 This case is significant in that it is the first judgment on securities-related class action following the introduction of the securities-related class action system in Korea in 2005.
In the case reversed and remanded, Deutsche Bank was held liable for damages and judgment was rendered in favour of the investors. However, Deutsche Bank filed an appeal and the trial is currently pending before the Korean Supreme Court (Korea Supreme Court Case No. 2016Da54612).
ii Overview of securities-related violations
The number of cases of securities-related violations (false statement, insider trading, market manipulation or unfair trading) reported between 2014 and 2016 as announced by KRX's Market Oversight Commission is set out in the table below.
|Number of cases/ratios|
|Type of allegation|
|No. of cases||Ratio (per cent)||No. of cases||Ratio (per cent)||No. of cases||Ratio (per cent)|
|Using non-public information||50||37.9||48||37.5||88||49.7|
According to the above table, the number of cases of securities-related wrongdoings increased in 2016 compared to 2014 and 2015, and the ratio of cases of using non-public information increased.
Outlook and conclusions
As the number of cases involving securities-related violations (false statement, insider trading, market manipulation or unfair trading) have been increasing as shown above, it is expected that the number of securities litigations will also increase in the future. In particular, there have been a number of securities-related class action filings in recent years (i.e., one case for each year from 2009 to 2012, two cases in 2013 and 2014, respectively, and one case in 2016).
|Plaintiff (representative plaintiff)||Defendant||Description||Filing date||Date of grant of permission for action||Progress|
|Yun-Bae Park and 1 other||Jinsung TEC and two others||Action involving Jinsung TEC's accounting fraud related to KIKO||29 April 2009||January 2010||Settled (April 2010)|
|Il-Nam Yang and 1 other||Royal Bank of Canada||Action involving ELS hedge manager's yield manipulation||31 December 2010||March 2016||Settlement pending|
|Jae-Hyung Lee and 185 others||Dongbu Securities and one other||Action involving a false statement in a registration statement of C-motech against relevant arranger and securities company||22 October 2011||May 2016||Litigation on the merits pending|
|Soon-Deok Kim and 5 others||Deutsche Bank||Action involving ELS hedge manager's yield manipulation||9 March 2012||May 2016||Plaintiff won the first trial (20 January 2017)|
|Tae-Eung Kim and 14 others||GS E&C||Action involving an omission in a registration statement of GS E&C||16 October 2013||November 2016||Litigation on the merits pending|
|Ji-Woon Kim||GeneMatrix and two others||Action involving manipulation of price of stock of GeneMatrix||2 December 2013||Waiting for permission|
|Won-Il Suh and 1253 others||Tong Yang Securities and 20 others||Action involving accounting fraud of Tongyang Inc.||20 June 2014||Waiting for permission|
|Jong-Ku Kang and 19 others||Tong Yang Securities and 10 others||Action involving fraudulent issuance of CP by an affiliate of Tong Yang Group||July 2014||Waiting for permission|
|Jun-Shik Lee||Samil PricewaterhouseCoopers||Action involving an accounting firm's poor auditing of Tongyang Networks||28 January 2016||Waiting for permission|
In particular, as discussed above, the class action filed in relation to Deutsche Bank's market price manipulation is particularly significant in that a judgment was rendered in favour of investors for the first time in the history of securities-related class action under the SCA.
Furthermore, securities-related class actions were filed in relation to a false statement or an omission in registration statements prepared by C-motech and GS E&C, respectively, and deliberation on the merits is pending following a grant of permission from the relevant court.
However, securities-related class actions under the SCA currently in effect generally take 51.5 months on average to obtain a court's permission. In that regard, some commentators point out that this is an efficient means to remedy damage sustained by investors. In addition, as the system of discovery under the Anglo-American law is not recognised in a Korean securities-related class action, investors generally face difficulty in proving relevant facts. In this respect, there is a view that the SCA should be amended to remedy such defects.
1 Tony Dongwook Kang is a partner at Bae, Kim & Lee LLC.
2 Articles 3 and 17 of the AEFSC.
3 Article 19 of the AEFSC.
4 Articles 24 and 37 of the AEFSC.
5 This includes the issuer of the securities or directors of the issuer of the securities; a person who instructed or executed the preparation of the registration statement; a certified public accountant, etc., who has certified with his or her signature that the descriptions of the registration statement or the documents attached thereto are true and correct; an underwriter or intermediary of the securities; etc.
6 Articles 125 and 127 of the FSCMA.
7 Article 159 of the FSCMA.
8 This includes the corporation that submitted the business report and directors of the corporation, a person who gave direction on, or carried out, preparation of the business report, a certified public accountant who has certified with his or her signature that the descriptions of the business report, and the documents attached thereto, are true and correct.
9 Article 162 of the FSCMA.
10 Articles 125 and 162 of the FSCMA.
11 This includes officers, employees, or significant shareholders of the corporation.
12 Article 172 of the FSCMA.
13 This includes the company's officer, employee or agent, significant shareholder, a person having authority to grant permission or authorisation, give instructions and supervise the corporation pursuant to applicable laws and regulations and a person who has entered into a contract with the corporation or is negotiating a contract with the corporation, and their agent or employee.
14 Article 174 of the FSCMA.
15 Article 175 of the FSCMA.
16 Article 176 of the FSCMA.
17 Article 177 of the FSCMA.
18 Article 179 of the FSCMA.
19 Article 180 of the FSCMA.
20 Article 449(1)39 of the FSCMA.
21 Articles 125 and 162 of the FSCMA.
22 Article 170 of the FSCMA. According to Article 170 of the FSCMA, liability arises pursuant to Article 17 of the Act on External Audit of Stock Companies, as opposed to Article 162 of the FSCMA.
23 Article 172(2) of the FSCMA.
24 Article 403 of the Commercial Act.
25 Article 347 of the CPA.
26 Article 4 of the SCA.
27 Article 5 of the SCA.
28 Articles 6 and 32 of the SCA.
29 Article 35 of the SCA.
30 Article 403(6) of the Commercial Act.
31 Article 125 of the FSCMA.
32 Article 162 of the FSCMA.
33 Articles 126 and 162(3) of the FSCMA.
34 Korean Supreme Court judgment, 2006Da16578, 16765, 25 October 2007.
35 Article 172 of the FSCMA.
36 Article 172(1) of the FSCMA, Article 195 (1) of the Enforcement Decree of the FSCMA.
37 Article 174 of the FSCMA.
38 Article 202-2 of the CPA.
39 Article 177 of the FSCMA.
40 Korean Supreme Court judgment, 2003Da69607, 69614, 28 May 2004.
41 Korean Supreme Court judgment, 2013Da11621, 14 May 2015.
42 Article 178 of the FSCMA.
43 Articles 415 and 419 of the FSCMA, Articles 24, 37 and 38 of the AEFSC.
44 Article 426 of the FSCMA.
45 Articles 402 and 426(6) of the FSCMA.
46 Article 420 (1) of the FSCMA, Article 373 (1) of the Enforcement Decree of the FSCMA.
47 Article 429 of the FSCMA.
48 Article 178-2 of the FSCMA.
49 Article 429-2 of the FSCMA.
50 Article 443 of the FSCMA.
51 Article 448 of the FSCMA.
52 Articles 426(3), (4), and 427 of the FSCMA.
53 Articles 21, 24–29 of the RICM.
54 Article 172(3) of the FSCMA, Article 28 of the RICM.
55 Articles 36, 37 of the RICM.
56 Article 39 of the RICM, Administrative Appeals Act, and Administrative Litigation Act.
57 Article 420 of the FSCMA.
58 Article 448 of the FSCMA.
59 Article 2 of the FSCMA.
60 Article 176 of the FSCMA.
61 Article 178 of the FSCMA.
62 Articles 2 and 3 of the Criminal Act.
63 Korean Supreme Court judgment, 2013Da2740, 24 March 2016.
64 Korean Supreme Court judgment, 2016Da251, 27 May 2016.
65 Seoul Central District Court judgment, 2012GaHap17061, 20 January 2017.