The Ministry of SMEs and Startups (Minister Oh Young-joo) announced that the revised Enforcement Decree of the Act on Promotion of Venture Investment, which eases requirements for the sale of invested companies' shares held by venture capital funds, was passed at the Cabinet meeting on the 25th and is scheduled to take effect immediately upon promulgation.
Accordingly, it is permitted for venture capital funds to sell shares of companies in which they have invested to the fund's major investors and affiliates.
Previously, even if the transaction was in line with the interests of a venture capital association, it was not possible to sell the invested company's shares to the association's major investors or affiliates without the consent of all members. However, the regulation was relaxed to reflect the voices from the field that said that the sale requirements should be relaxed in order to encourage follow-up investment in ventures and startups and to activate M&A.
However, in order to prevent attempts to sell at a low price to stakeholders in advance, conditions such as the sale price that are unfavorable to the venture capital fund compared to normal transactions were excluded from the scope of permitted sales.
Minister Oh Young-joo said, “Through this revision of the enforcement decree, we expect that the investment recovery path will be diversified and follow-up investments and M&As for venture and startups will be made quickly,” adding, “We will do our best to ease investment regulations so that we can leap forward as a world-class venture investment market.”
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