The Ministry of SMEs and Startups (MSS ) announced a new venture investment system for 2026, based on revisions to the Act on Promotion of Venture Investment and its subordinate statutes. This overhaul incorporates the revised 2025 version and the follow-up legislative tasks for the Comprehensive Plan to Elevate Korea to One of the Four Major Venture Powerhouses, which will be revised in 2026. It focuses on improving venture investment regulations, expanding tax support, and strengthening the investment ecosystem.
First, investment regulations will be relaxed to improve the venture investment environment. The investment obligation period for venture capital firms will be extended from three to five years, and annual investment obligations will also be relaxed. Accordingly, the initial investment burden will be reduced by allowing at least one investment within three years of registration and at least one additional investment within five years. Furthermore, if a company invested by a venture capital firm or corporate venture capital firm is subsequently incorporated into a cross-shareholding restricted enterprise group, the sale obligations will be relaxed or granted a grace period. The administrative disposition transfer period for mergers and acquisitions between venture capital firms will also be reasonably adjusted.
For venture capital funds, investment obligations previously imposed on individual funds have been abolished, and obligations are now applied only to the entire fund, enhancing operational autonomy. Furthermore, the legal basis for foreign investors to contribute in US dollars has been established, facilitating the inflow of overseas capital. For private venture funds, the minimum formation size and initial investment amount requirements have been relaxed, and individual investment funds are now also subject to the investment obligation.
The systems related to private investment associations and startup planners will also be improved. The investment targets of private investment associations managed by startup planners will be expanded to include companies in their fourth or fifth year of operation without a track record of attracting investment, and the upper limit on investment in listed companies will be raised. Registration requirements for professional individual investors will be relaxed, and the percentage of corporate investment will be increased for investments in regionally based early-stage startups.
Tax incentives for venture investment will also be strengthened. The tax deduction rate for corporations investing in private venture funds will increase based on the increase in investment. Venture capital associations investing through investment-purpose companies will also receive the same tax benefits as direct investments.
Furthermore, to strengthen the venture investment foundation, the scope of statutory funds' participation in venture investment has been expanded to include all funds under the National Finance Act, and the basis for extending the lifespan of mother funds by 10 years has been established. Furthermore, regulations prohibiting excessive joint liability will be expanded across the board to strengthen trust between entrepreneurs and investors.
Through this system reform, the Ministry of SMEs and Startups plans to increase the flexibility and sustainability of the venture investment environment and expand private capital inflow and investment in strategic areas.
- See more related articles
You must be logged in to post a comment.