The Ministry of SMEs and Startups (Minister Oh Young-joo, hereinafter referred to as the MSS) announced that it will conduct an administrative notice for 20 days from May 28 to June 17 on the revision of the ‘Venture Investment Association Registration and Management Regulations,’ ‘Startup Planner Registration and Management Regulations,’ and ‘Individual Investment Association Registration and Investment Confirmation Issuance Regulations’ in order to create a healthy and dynamic venture investment ecosystem.
◆ Establishment of new regulations prohibiting joint liability of startup planners and individual investment associations ('Regulations on registration and management of startup planners', 'Regulations on registration and issuance of investment confirmation certificates for individual investment associations')
In the past, there were cases where startup representatives were jointly liable for the repayment of investment funds and the founder's assets were seized, and the need for sanctions against excessive joint liability in venture investment was raised. Accordingly, the mother fund ('18) and venture capital companies/associations ('23) have reflected regulations prohibiting third-party joint liability.
This revision prohibits third-party joint liability actions by startup planners and individual investment associations, expanding and applying the regulations to all venture investment companies and associations under the Ministry of SMEs and Startups. Through this, entrepreneurs and others will be less burdened, and investors will be able to focus on their original investment, which is expected to strengthen the soundness of the venture investment ecosystem.
◆ Expansion of the investment limit of M&A venture funds in listed companies ('Venture Investment Association Registration and Management Regulations')
In order to activate the venture investment recovery market, the 'Dynamic Venture Investment Ecosystem Creation Plan ('22)' announced an expansion of the investment limit for M&A venture funds in listed companies (previously: 20% of the fund contribution amount). Accordingly, the investment limit for venture investment associations formed for the purpose of M&A and venture company acquisition and merger, which is currently delegated in the Enforcement Decree of the 'Act on Promotion of Venture Investment', is set at 60%. This is expected to be an important opportunity to flexibly merge and merge M&A funds, thereby activating recovery and strengthening the virtuous cycle of investment funds.
◆ Simplification of the intermediate distribution procedure of venture capital funds for smooth reinvestment ('Venture Capital Fund Registration and Management Regulations')
Existing venture capital associations require the consent of members for each intermediate distribution of capital, which has led to difficulties such as requiring the approval of the general meeting of members each time even for distribution of small amounts of recovered capital to investors, making it complicated and time-consuming.
This amendment allows distribution after reporting to members 14 days in advance in cases where there is a method of distribution of capital in advance stipulated in the regulations of a venture capital association. This is expected to simplify the intermediate distribution procedure of a venture capital association, thereby inducing smooth reinvestment and contributing to increasing the liquidity of venture investment funds.
Kim Bong-deok, director of venture policy, said, “We expect this revision to enhance the soundness of the venture investment ecosystem and create an investment environment where recovery and reinvestment are smooth,” adding, “We plan to finalize the final revision by collecting various opinions during the administrative notice period and implement it promptly after going through procedures such as regulatory review.”
- See more related articles
You must be logged in to post a comment.