Case Analysis / Legal Updates

Does the Loss Arise the Moment the Acquisition Price Is Paid in a Listed-Company Acquisition? A Supreme Court Decision Clarifying the Starting Point of the Statute of Limitations

2026.05.29김국일

A Supreme Court decision has been issued that sets an important standard on when a loss arises where a party participates in an acquisition by relying on false financial information during a listed-company acquisition.

The lower court held that the loss arose at the point when the securities companies underwrote the securities and paid the price during the listed-company acquisition, and it determined that the claim for damages, filed more than ten years thereafter, was extinguished by prescription.

The Supreme Court likewise accepted this reasoning and held that in a listed-company acquisition, the loss does not arise after the transaction but has already actually arisen at the point when the acquisition price is paid. (Supreme Court, Decision of January 8, 2026, 2025 Da 211537 and 2025 Da 211538)

1. Listed-Company Acquisition | Overview of the Case

This case, in which a problem arose during a listed-company acquisition, is a claim for damages filed by securities companies asserting that they suffered a loss after underwriting securities in reliance on false financial information.

A Chinese company, X, undertook the procedure for listing on the domestic securities market depositary receipts based on shares listed on the Singapore Exchange.

In this process, several securities companies participated as the lead manager and co-managers.

Under the structure of a listed-company acquisition, the securities companies bear the responsibility of underwriting any unsubscribed portion (forfeited shares) that arises during the public offering.

In this case as well, the subscription rate was low and forfeited shares arose, and the plaintiff securities companies underwrote that portion in accordance with the contract and paid the acquisition price on January 17, 2011.

The problem came to light afterward. Trading was suspended immediately after listing, and a special audit revealed that the company's actual bank balance differed significantly from its financial statements.

Ultimately, the securities were delisted.

The key point revealed in this process was that the bank confirmation letter issued by a bank employee was a forged or falsely prepared document.

Based on this false material, the accounting firm's audit report was prepared, and it was also reflected in the securities registration statement.

Accordingly, the securities companies filed a claim for damages, asserting that "the false material caused them to misjudge the listed-company acquisition."

Summary of the Issues

The key issues in this case are as follows.

When the loss arises in a listed-company acquisition
How the starting point of the statute of limitations for a claim for damages based on false financial information is calculated
Whether circumstances arising after the transaction, such as delisting, affect the point at which the loss arises

2. Listed-Company Acquisition | The Supreme Court's Determination

The Supreme Court made the following determination in this case.

The Loss Arises at the Point When the Acquisition Price Is Paid

The Supreme Court held that if an erroneous valuation was made because of false material during a listed-company acquisition, the loss actually arises immediately at the point when the acquisition price is paid.

In other words, even if circumstances such as delisting or trading suspension occur thereafter, these do not constitute grounds for postponing the point at which the loss arises.

Having "Already Overpaid" Based on an Erroneous Valuation Is Itself the Loss

The Supreme Court's reasoning is as follows.

False bank confirmation letter → distortion of the financial statements
Erroneous corporate valuation
Acquisition at a price higher than the actual value

Under this structure, the Court found that the loss does not arise later when the value declines but arises at the moment of acquisition at the erroneous price.

Trading Suspension and Delisting Do Not Affect the Point at Which the Loss Arises

The Supreme Court also rejected the following arguments.

The loss materialized only after the trading suspension
The value was fixed only after the delisting

In response, the Supreme Court held that trading suspension and delisting are merely factors that fix the loss and are not grounds for postponing the occurrence of the loss itself.

In addition, with respect to certain remedial measures (for example, the grant of warrants), the Court determined that the loss was merely reduced later and that this had no bearing on the point at which the loss arose.

In other words, this is solely a matter of calculating the amount of the loss, not a matter of when the loss arises.

The Statute of Limitations Runs from the Date the Acquisition Price Is Paid

Ultimately, the Supreme Court reached the following determination.

Point at which the loss arises: the date the acquisition price is paid (January 17, 2011)
Long-term extinctive prescription: ten years from that point

Accordingly, the Court determined that the lawsuit filed thereafter was extinguished by prescription and dismissed the final appeal.

3. Listed-Company Acquisition | Key Practical Standards

The legal standards regarding listed-company acquisitions clarified through this decision are as follows.

Factor of Determination	Content
Point at which the loss arises	The point when the acquisition price is paid
Structure of the loss	Acquisition at a price higher than the actual value
Subsequent events	Trading suspension and delisting have no effect
Recovery of the loss	Merely a factor in adjusting the amount of the loss
Extinctive prescription	Runs from the date the acquisition price is paid

When participating in a listed-company acquisition or an IPO, the following matters must be reviewed without fail.

Strengthening Due Diligence

Verify the authenticity of external confirmation materials, such as bank confirmation letters
Establish a double-verification structure for accounting materials
Build a procedure to directly confirm key assets, such as cash

Risk Management

Design a structure for allocating responsibility in the acquisition contract
Clarify the scope of liability if false information arises
Utilize an insurance or guarantee structure

Litigation Response

Respond immediately based on the point at which the loss arises
Build a system for managing the statute of limitations
Conduct a legal review at an early stage

Liability Structure and Response Points

Party	Risk Point	Response Strategy
Securities company	Insufficient due diligence, reliance on false material	Strengthen verification procedures
Bank	Issuance of a false confirmation letter	Strengthen internal control systems
Accounting firm	Reliability of the audit	Advance the verification process
Company	Provision of false financial information	Manage disclosure risk

This decision is an important case that established the standards for the point at which a loss arises and for the statute of limitations in the course of a listed-company acquisition.

In corporate practice in particular, it carries the following significance.

The risk in a listed-company acquisition already arises at the time of the transaction, not after it
Preparing for litigation by interpreting the point at which the loss arises as later is risky
If the initial response is delayed, the claim itself may be extinguished

In short, it was reaffirmed that a listed-company acquisition is not a simple investment but a high-risk transaction that combines legal liability with the management of the statute of limitations.

Daeryun Law Firm LLP provides specialized legal advisory across the entire process, from listed-company acquisitions, IPOs, securities underwriting contracts, and the review of due diligence risk to financial disputes and damages litigation.

If you need assistance with a related matter, you are welcome to schedule a 🔗corporate-law legal consultation.