The Ministry of SMEs and Startups (Minister Oh Young-joo, hereinafter referred to as the Ministry of SMEs and Startups) announced on the 4th that it had passed a partial revision of the 'Enforcement Decree of the Small and Medium Enterprise Startup Support Act' at the Cabinet meeting to expand the scope of recognition as a start-up even if an entrepreneur who has failed in management due to conscientious management starts a new business in the same industry.
Previously, in the case of re-establishing a business in the same industry, even if the business was started within 3 years (2 years in the case of closure due to insolvency or bankruptcy) from the date of closure, it was not recognized as a business start-up, and thus there were restrictions on participation in government business start-up support programs. Accordingly, there have been voices in the field demanding that businessmen with excellent recovery capabilities be recognized as start-ups immediately, even if they are re-establishing a business in the same industry.
Accordingly, the Ministry of SMEs and Startups revised Article 2, Paragraph 1, Item 3 of the Enforcement Decree of the same Act. Accordingly, if a businessperson who has failed in management due to conscientious management is recognized as having excellent revival capabilities, such as adopting a new business model or new technology, he or she will be legally recognized as a new business even if he or she re-establishes a business in the same industry.
Whether or not a re-established entrepreneur has excellent revival capabilities is determined through an honest management evaluation to confirm whether the business was managed faithfully without any violations of related laws such as fraudulent accounting, intentional bankruptcy, or unfair dismissal before re-establishment, and through an in-depth honest management evaluation to analyze the causes of failure and evaluate future business viability for those who passed.
The revised ordinance is scheduled to go into effect starting in June, and entrepreneurs who pass the in-depth evaluation of sincere management and are recognized as startups will be able to participate in startup support projects implemented by the government and local governments (101 organizations and 429 projects as of 2025).
Kyung-won Cho, the Director of Startup Policy, said, “I expect that this expansion of opportunities for excellent entrepreneurs to start a business again will provide real help to entrepreneurs who dream of a comeback,” and “We will continue to establish and implement various policies to ensure smooth re-challenges for failed entrepreneurs and to create a virtuous startup ecosystem.”
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