ENFORCEMENT DECREE OF THE VENTURE INVESTMENT PROMOTION ACT
Presidential Decree No. 30934, Aug. 11, 2020
Amended by Presidential Decree No. 31553, Mar. 23, 2021
Presidential Decree No. 31611, Apr. 6, 2021
CHAPTER I GENERAL PROVISIONS
| Article 2 (Scope of Application) |
"Cases prescribed by Presidential Decree" in the proviso of Article 3 of the Venture Investment Promotion Act (hereinafter referred to as the "Act") means cases where an investment is made in any of the following types of business. In such cases, the types of business shall be classified based on the Korean Standard Industrial Classification (hereinafter referred to as “Korean Standard Industrial Classification") publicly notified by the Commissioner of the Statistics Korea in accordance with the Statistics Act: | 1. | General entertainment bar business; |
| 2. | Dancing entertainment bar business; |
| 3. | Other businesses of managing and operating gambling facilities; |
| 4. | Types of business determined and publicly notified by the Minister of SMEs and Startups, which are similar to those prescribed in subparagraphs 1 through 3. |
| Article 3 (Fact-Finding Survey) |
| 1. | Korean Venture Capital Association established with permission from the Minister of SMEs and Startups under Article 32 of the Civil Act (hereinafter referred to as the "Korean Venture Capital Association"); |
| 2. | Korea Business Angels Association established with permission from the Minister of SMEs and Startups under Article 32 of the Civil Act (hereinafter referred to as the "Korea Business Angels Association"); |
| 3. | Korea Accelerator Association with permission from the Minister of SMEs and Startups under Article 32 of the Civil Act (hereinafter referred to as the "Korea Accelerator Association"); |
| 4. | Korea Venture Business Association established with permission from the Minister of SMEs and Startups under Article 32 of the Civil Act. |
CHAPTER II INDIVIDUAL INVESTMENT AND PROFESSIONAL INDIVIDUAL INVESTORS
| Article 4 (Requirements for Registration of Professional Individual Investors) |
“Requirements prescribed by Presidential Decree in terms of investment performance, experience, qualifications, etc.” in Article 9 (2) of the Act means any of the following: <Amended on Apr. 6, 2021> | 1. | The sum of the investments which satisfy the following requirements (where a person falling under any item of subparagraph 2 is an operating partner of an individual investment association, the amount of the investment made by the relevant association shall include the amount obtained by multiplying the investment amount meeting all of the following requirements by the investment ratio) is at least 100 million won for the most recent three years, which is at least the amount determined and publicly notified by the Minister of SMEs and Startups; |
| (c) | The person shall hold the stocks or equity for at least six months from the acquisition or it shall have passed six months since the payment for investment upon conclusion of a simple agreement for future equity; |
| 2. | Any of the following persons: |
| (a) | A person who meets one of the following qualifications: |
6) A person with a doctoral degree (limited to majors in science and engineering or in business and economics);
7) A person with a bachelor's degree (limited to majors in science and engineering or in business and economics) who has worked at any of the following institutions for at least four years:
| a) | A national or public research institute; |
| (b) | A person who has engaged in investment examination for at least two years or any business related to investment for at least three years at any of the following companies: |
1) An investment company for the establishment of small and medium enterprises;
2) A private limited company or limited liability company under Article 50 (1) 5 of the Act (hereinafter referred to as “private limited company or limited liability company”); | (d) | A person who is, or was, the founder of a venture business, the annual sales of which recorded at least 100 billion won while he or she was in office; |
| (e) | Other persons who meet the standards determined and publicly notified by the Minister of SMEs and Startups, in terms of the completion of training courses, investment-related career backgrounds, etc. |
| Article 5 (Calculation of Amount of Investment by Professional Individual Investors) |
The amount of investment made by professional individual investors under Article 10 (1) of the Act shall be calculated by summing up the amounts of investments that satisfy all the requirements prescribed in the items of subparagraph 1 of Article 4 (including the amount obtained by multiplying investments that meet all the requirements prescribed in the items of subparagraph 1 of Article 4 by the investment ratio, where the professional individual investor is an operating partner of an individual investment association).
CHAPTER III INDIVIDUAL INVESTMENT ASSOCIATION
| Article 6 (Organization and Registration of Individual Investment Associations) |
| (1) | “Persons meeting the criteria prescribed by Presidential Decree in terms of the purpose of investment, the equity amount, etc." in Article 12 (1) 2 of the Act means persons who satisfy all of the following criteria: |
| 1. | Their business line shall include investment in a founder or a venture business, or equity commitment to any association making investment therein; |
| 2. | They shall not fall under any of the following: |
| (a) | A new technology venture capital company; |
| (2) | “Requirements prescribed by Presidential Decree in terms of the total partners’ equity amount, the number of partners, the term of existence, etc.” in Article 12 (2) of the Act means the following: |
| 1. | The total partners’ equity amount shall be at least 100 million won; |
| 2. | A unit of equity shall be at least one million won; |
| 3. | The number of partners shall not exceed 49 persons; |
| 4. | The term of existence shall be at least five years. |
| (3) | "Requirements prescribed by Presidential Decree” in the latter part of Article 12 (3) means the following requirements: |
| 1. | The equity interest shall be at least five percent of the total partners’ equity amount; |
| 2. | In commercial transactions, including financial transactions, the debts overdue for at least three months without justifiable grounds shall not exceed ten million won. |
| Article 7 (Individual Investment Associations’ Obligation to Invest) |
| (1) | "Ratio prescribed by Presidential Decree" in subparagraph 1 of Article 13 of the Act means 50 percent. |
| (2) | "Investment ratio prescribed by Presidential Decree" in subparagraph 3 of Article 13 of the Act means 10 percent. |
| Article 8 (Restrictions on Acts by Operating Partners of Individual Investment Associations) |
| 2. | An office exclusively for investment business, which meets the standards determined and publicly notified by the Minister of SMEs and Startups. |
| 1. | Making an investment in any of the following types of business falling under any subparagraph of Article 2: |
| 2. | Acquiring or holding the equity or stocks of any of the following persons: |
| 3. | Selling assets held by an association to any of the following persons or purchasing stocks or equity issued or held by any of the following persons with the property of the association: |
| (a) | The relevant operating partner; |
| (b) | A person affiliated with the relevant operating partner; |
| (c) | The major shareholder (referring to a person who holds stocks or equity interests amounting to at least 10 percent of the total voting stocks or equity interests on his or her account, in whosesoever name, or a person who exercises de facto control over key management issues by means of appointment or dismissal of executive officers; hereinafter the same shall apply) of the relevant operating partner and a person affiliated therewith; |
| (d) | A major investor of an individual investment association organized by the relevant operating partner (referring to an investor who holds at least 10 percent of the equity interests on his or her account, in whosesoever name; hereinafter the same shall apply) and a person affiliated therewith; |
| (e) | Any of the following associations or collective investment schemes for which the relevant operating partner serves as an operating partner or general partner; |
| 1(i) | An individual investment association; |
| (ii) | A venture investment association; |
| (iii) | A private equity fund for improving corporate structure; |
| (iv) | A private equity fund; |
| 4. | Extending credit (referring to the lending of property with an economic value, such as money and securities, providing guarantee for the performance of debt obligations, or purchasing securities for financial support; hereinafter the same shall apply) to a person who falls under any item of subparagraph 3: Provided, That this shall not apply to credit extension made for purposes of exercising security rights; |
| 5. | Acquiring stocks or acting as a broker for funding for a third party, in the name of an individual investment association; |
| 6. | Receiving funds through any transaction other than normal transactions arising from investment, such as borrowing money from a company in which the individual investment association invests or selling off assets; |
| 7. | Making investments on conditions other than those prescribed in an investment contract; |
| 8. | Other acts involving direct or indirect transactions that might harm the sound asset management of the individual investment association or pose any credit risk in conducting a transaction, as determined and publicly notified by the Minister of SMEs and Startups. |
| Article 9 (Exceptions to Restrictions on Acts by Operating Partners of Individual Investment Associations) |
"Cases prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 14 (2) of the Act means acts referred to in Article 8 (2) 3 or 4 and any of the following cases: | 1. | Where consent of all partners is obtained; |
| 2. | Where any unavoidable circumstances exist as recognized by the Minister of SMEs and Startups, such as the dissolution of the individual investment association or recovery of investment equity that cannot be sold to a third party; |
| 3. | Where a major shareholder of the relevant operating partner or a major investor of an individual investment association organized by the relevant operating partner falls under any of the following items and where a person affiliated with the major shareholder or major investor is a counterpart to such act (limited to a person prescribed by the following statutes or regulations as a subsidiary or invested company (excluding subsidiaries or invested companies affiliated with a person who exercises de facto control over key management issues of major shareholders or major investors); |
| (c) | A company specializing in the start-up of new technology-based businesses; |
| 4. | Where the major investor of an individual investment association organized by the relevant operating partner is a fund of funds for venture investment referred to in Article 70 (1) of the Act (hereinafter referred to as the "Fund of Funds") and where another venture investment association or individual investment association affiliated with the major investor is a counterpart to such act. |
| Article 10 (Annual Reporting by Individual Investment Associations) |
Pursuant to Article 16 of the Act, an operating partner shall submit to the Minister of SMEs and Startups an annual report, accompanied by a written audit opinion of an accounting firm prescribed in Article 23 of the Certified Public Accountant Act (hereinafter referred to as "accounting firm") within three months from the end of each business year.
| Article 11 (Dissolution of Individual Investment Associations) |
| 1. | Where all partners agree that the objectives of the individual investment association are accomplished; |
| 2. | Where a majority of its partners and those holding a majority of the total equity of the association consent to a decision of dissolution, as deemed necessary by the Minister of SMEs and Startups to protect its partners in light of the suspension of business of the association caused by conflict of interest between partners or other events. |
| (2) | A person who intends for an individual investment association to continue under Article 18 (2) of the Act shall submit to the Minister of SMEs and Startups a report, including the following information, accompanied by a statement on the grounds for such continuance and the consent of all limited liability partners: |
| 1. | The name of the individual investment association and location of its office; |
| 2. | The names and locations of new operating partners, and names of their representatives; |
| 3. | Respective amounts of the investments made by partners and number of units of equity. |
| (3) | Where a report is submitted under paragraph (2), a report for changes referred to in the latter part of Article 12 (1) of the Act shall be deemed filed. |
| Article 12 (Appropriation of Profit of Individual Investment Associations) |
| (1) | The return on investment for the payment of a bonus under Article 21 of the Act shall be calculated by deducting the equity amount and the operating expenses determined and publicly notified by the Minister of SMEs and Startups from the assessed value of the assets of the individual investment association. |
| (2) | Upon receipt of a bonus under Article 21 of the Act, an operating partner may give an incentive to executive officers or employees for their contribution to the return on investment, not exceeding the amount of such bonus. |
| Article 13 (Requirements for Registration of Accelerators) |
| 1. | A person authorized to represent the relevant accelerator; |
| 3. | A person who gives instructions to commit an act constituting a ground for the revocation of registration. |
| 1. | The person shall have at least two full-time professionals who fall under any of the following: Provided, That any person falling under Article 37 (2) 2 (g) or (h) of the Act, for whom three years have not passed since the revocation of registration or since he or she was notified of the grounds for such revocation (five years from the cancellation of registration, where five years have elapsed since the date of such cancellation), shall be excluded herefrom: |
| (a) | A person falling under subparagraph 2 (a) of Article 4: Provided, That a person falling under subparagraph 2 (a) (v) of Article 4 shall have at least three years of experience in the relevant field; |
| (b) | A person falling under subparagraph 2 (b) through (d) of Article 2; |
| (c) | A person with a master’s degree (limited to majors in science and engineering or in business and economics) who has engaged in the relevant field for at least three years; |
| (d) | A person with a bachelor’s degree, who conducted, or has conducted, investment examination (excluding loan examination) for at least three years at an institution subject to inspection (excluding new technology venture capital companies) under Article 38 of the Act on the Establishment of Financial Services Commission or at a foreign company (including its affiliated companies and branches) engaging in businesses equivalent to those of an investment company for the establishment of small and medium enterprises; |
| (e) | A director of a company (limited to a registered person), who has sold the company to another company for at least five billion won; |
| (f) | A professional individual investor; |
| (g) | A person who has served as an operating partner of an individual investment association for at least three years; |
| (h) | A person who has at least three years of experience in planning for early business start-ups, such as the selection of, and investment in, business start-ups, and incubation thereof at any of the following companies or institutions: |
| (ii) | An investment company for the establishment of small and medium enterprises; |
| (iii) | A business incubator; |
| (i) | A person who has engaged in management or technology development for at least three years at an institution recognized and publicly notified by the Minister of SMEs and Startups, such as a company under the Commercial Act, and who has completed training courses for professional accelerators recognized by the Minister of SMEs and Startups; |
| (j) | Other persons who meet the standards determined and publicly notified by the Minister of SMEs and Startups in terms of incubation of business start-ups and investment business; |
| 2. | An office space for incubating early business start-ups, which satisfies the standards determined and publicly notified by the Minister of SMEs and Startups. |
| (5) | A person who intends to organize a venture investment association under Article 24 (3) of the Act shall meet all of the following requirements: |
| 1. | Where the venture business investment association is organized with the amount of at least ten billion won, the capital referred to in each item of Article 24 (2) 1 of the Act, or the property contributed for, or invested in, the business prescribed in Articles 25 and 26 of the Act shall account for at least one percent of such amount; |
| 2. | The debt ratio shall not exceed 200 percent; |
| Article 14 (Methods for Selecting Business Starters at Early Stage) |
Where an accelerator intends to select persons eligible for support, from among the business starters at early stage under Article 25 of the Act, he or she shall prepare criteria and procedures for selection. In such cases, no person eligible for support shall be offered any transaction disadvantageous on condition of selection.
| Article 15 (Accelerators’ Obligation to Invest) |
| (2) | The investment ratio referred to in Article 26 (1) of the Act shall be calculated in accordance with the following standards: |
| 1. | The total amount of investment shall be calculated by summing up the investments made based on the capital of the relevant accelerator or the property contributed for, or invested in, the business prescribed in Articles 25 and 26 of the Act: Provided, That where the total amount of investment is zero (0) by the date three years have elapsed since the registration of an accelerator, it shall be deemed that the accelerator has failed to meet the investment ratio requirement; |
| 2. | The amount invested in business starters at early stage shall be calculated based on the amount invested in the business starters not listed on the securities market at the time of such investment in a manner prescribed by Ordinance of the Ministry of SMEs and Startups. |
| (3) | An accelerator shall maintain the investment ratio referred to in paragraph (1) even after the lapse of three years from registration. |
| Article 16 (Restrictions on Acts of Accelerators) |
| 1. | Making an investment into types of business falling under Article 2: |
| 2. | Acquiring or holding the equity or stocks of any of the following persons: |
| (a) | Financial companies, etc: Provided, That any of the following financial companies, etc. shall be excluded herefrom: |
| (i) | Financial companies, etc. providing financial and insurance services, whose main business is to provide financial services utilizing information and communications technology determined and publicly notified by the Minister of SMEs and Startups (excluding other credit financial businesses according to the Korean Standard Industrial Classification); |
| (ii) | A venture investment association; |
| (b) | A private equity fund for improving corporate structure; |
| (c) | A private equity fund; |
| (e) | A major shareholder of the relevant accelerator; |
| 3. | Extending credit to a major shareholder (including a person affiliated therewith) or an affiliated company of the relevant accelerator: Provided, That this shall not apply to credit extension made for purposes of exercising security rights; |
| 4. | Making an investment for purposes of attaining management control as prescribed by Ordinance of the Ministry of SMEs and Startups; |
| 5. | Providing security or offering guarantee for debt obligations with the assets of an accelerator for a third party; |
| 6. | Acquiring stocks or acting as a broker for funding for a third party, in the name of an accelerator; |
| 7. | Receiving funds through any transaction other than normal transactions arising from investment, such as borrowing money from a company in which the individual investment association invests or selling off assets; |
| 8. | Making an investment on conditions other than those prescribed in an investment contract; |
| 9. | Any act that might harm the soundness of an accelerator’s asset management due to loans extended to executive officers and employees by the accelerator; |
| 10. | Other acts involving direct or indirect transactions that might harm the soundness of an accelerator’s asset management or pose any credit risk in conducting a transaction, as determined and publicly notified by the Minister of SMEs and Startups. |
| Article 17 (Exceptions to Restrictions on Acts of Accelerators) |
"Cases prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 27 (1) of the Act means any of the following cases of holding the equity or stocks of an affiliated company under subparagraph 2 (d) of Article 16: | 1. | Where a major shareholder of the relevant accelerator falls under any of the following cases and the shareholder acquires the equity or stocks of a company deemed to be a subsidiary or invested company (excluding a subsidiary or invested company affiliated with a person who exercises de facto control over key management issues of major shareholders) as prescribed by the following statutes or regulations: |
| (c) | A company specializing in the start-up of new technology-based businesses; |
| 2. | Where investment is made for purposes of management control as prescribed by Ordinance of the Ministry of SMEs and Startups and all of the following requirements are satisfied: |
| (a) | The object of management control shall be a business starter at early stage who has been selected or incubated directly by the relevant accelerator; |
| (b) | The accelerator shall continue to hold the stocks or equity of the relevant business starter at early stage until six months from the acquisition of management control (such period may be shortened where the Ministry of SMEs and Startups deems that holding the stocks or equity is likely to pose a clear threat to the interests of the accelerator); |
| (c) | The accelerator shall sell off all the stocks or equity of the relevant business starter at early stage within seven years from the acquisition of management control (such period may be extended by up to one year where the Ministry of SMEs and Startups deems that there are justifiable grounds for delayed sell-off such as prolonged agreement for sale between the parties). |
| Article 18 (Scope of Large Shareholders and Affiliated Persons of Accelerators) |
| 1. | The person himself or herself, where the person and a person affiliated own the largest portion of outstanding voting stocks or equity interests and where the number of such stocks or equity interests exceeds 10 percent of the total number of outstanding voting stocks or equity interests; |
| 2. | A person who holds at least 30 percent of the total number of the outstanding voting stocks or equity interests, in whosesoever name, on his or her own account; |
| 3. | A shareholder who exercises de facto control over key management issues of the relevant accelerator by means of appointment or dismissal of executive officers, etc. |
| Article 19 (Restrictions on Acts of Large Shareholders of Accelerator) |
| Article 20 (Standards for Accelerators’ Sound Management) |
“Standards prescribed by Presidential Decree for the management soundness” in Article 29 (1) of the Act means that the capital impairment ratio (referring to the percentage of the total capital falling short of the paid-in capital; hereinafter the same shall apply) shall be lower than 100 percent: Provided, That such ratio shall be lower than 50 percent for an accelerator who intends to organize, or has organized, a venture investment association.
| Article 21 (Major Shareholders Not Allowed to Use Information on Accelerator’s Duties) |
"A major shareholder of an accelerator prescribed by Presidential Decree" in subparagraph 2 of Article 30 of the Act means a shareholder of an accelerator who falls under any of the following: | 1. | A person who holds at least 10 percent of the total number of the outstanding voting stocks or equity interests, in whosesoever name, on his or her own account; |
| 2. | A shareholder who exercises de facto control over key management issues of the relevant accelerator by means of appointment or dismissal of executive officers, etc. |
| Article 22 (Annual Reporting by Accelerators) |
| (1) | An accelerator shall submit to the Minister of SMEs and Startups an annual report, accompanied by an audit report of an accounting firm, within three months from the end of each business year, under Article 31 of the Act. |
| (2) | Upon review of the annual report submitted under paragraph (1), the Minister of SMEs and Startups may order the relevant accelerator to offset reserves for losses on investments or loans against unrecoverable investment assets or to write off such assets as bad debts, where he or she deems that such measures are necessary to promote investment by the accelerator and improve its financial structure. |
CHAPTER V INVESTMENT COMPANIES FOR ESTABLISHMENT OF SMALL AND MEDIUM ENTERPRISES
| Article 23 (Requirements for Registration of Investment Companies for Establishment of Small and Medium Enterprises) |
| 1. | The paid-in capital shall be at least two billion won; |
| 2. | The borrowed funds shall be less than 20 percent of the paid-in capital. |
| (2) | "Any other finance-related statute or regulation prescribed by Presidential Decree" in Article 37 (2) 2 (e) and (f) of the Act means any of the statutes listed in the subparagraphs of Article 13 (2) (hereafter in this Article referred to as "finance-related statutes or regulations"). |
| 1. | A chief executive officer; |
| 3. | A person who gives an instruction to commit an offense that constitutes a ground for the revocation of registration. |
| (4) | "Person prescribed by Presidential Decree" in Article 37 (2) 2 (j) of the Act means a person whose debts of more than 10 million won remain overdue for at least three months after the agreed-upon repayment deadline. |
| 1. | The person himself or herself, where the largest portion of the outstanding voting stocks is held by such person and a person affiliated and where the number of such stocks exceeds more than 10 percent of the total number of the outstanding voting stocks; |
| 2. | A person who holds at least 30 percent of the total number of the outstanding voting stocks, in whosesoever name, on his or her own account; |
| 3. | A shareholder who exercises de facto control over key management issues of the relevant accelerator by means of appointment or dismissal of executive officers, etc. |
| (6) | "Social credit as prescribed by Presidential Decree" in Article 37 (2) 3 of the Act means cases where all the following requirements are met: Provided, That this shall not apply where a violation is deemed to be minor by the Minister of SMEs and Startups: |
| 1. | A large shareholder shall not have any criminal record of having been imposed a fine or heavier punishment for violating the Act, any of the finance-related statutes or regulations, the Monopoly Regulation and Fair Trade Act, or the Punishment of Tax Offenses Act for the latest three years: Provided, That this shall not apply where the shareholder was punished under the joint penalty provisions in Article 79 of the Act or any other relevant statute; |
| 2. | A large shareholder shall not have any record of disrupting order in credit transactions by defaulting on debts, etc. for the latest three years; |
| 3. | A large shareholder shall not have any record of having been designated as a failing financial institution under the Act on the Structural Improvement of the Financial Industry or having permission, authorization, or registration of his or her business revoked under the Act or finance-related statutes or regulations. |
| 1. | The person shall have at least two full-time professionals who fall under any of the following: Provided, That a person falling under Article 37 (2) 2 (g) or (h) of the Act, for whom three years have not passed since the revocation of registration or since he or she was notified of the grounds for such revocation (five years from the cancellation of registration, where five years have elapsed since the date of such cancellation), shall be excluded herefrom: |
| (a) | A person falling under subparagraph 2 (a) of Article 4: Provided, That a person falling under subparagraph 2 (a) 5) of Article 4 shall have at least three years of experience in the relevant field: |
| (b) | A person falling under subparagraph 2 (b) through (d) of Article 4; |
| (c) | A person with a master's degree (limited to majors in science and engineering or in business and economics) who has engaged in the relevant field for at least three years; |
| (d) | A person with a bachelor’s degree, who conducted, or has conducted, investment examination (excluding loan examination) for at least three years at an institution subject to inspection (excluding new technology venture capital companies) under Article 38 of the Act on the Establishment of Financial Services Commission or at a foreign company (including its affiliated companies and branches) engaging in businesses equivalent to those of an investment company for the establishment of small and medium enterprises; |
| (e) | A person who has engaged in management or technology development for at least three years at an institution recognized and publicly notified by the Minister of SMEs and Startups, such as a company under the Commercial Act, and who has completed training courses for professional accelerators recognized by the Minister of SMEs and Startups; |
| (f) | Any other person who meets the qualifications determined and publicly by the Minister of SMEs and Startups; |
| 2. | The person shall have an office exclusively for the investment business, which satisfies the standards determined and publicly notified by the Minister of SMEs and Startups. |
| Article 24 (Investment Obligations of Investment Companies for Establishment of Small and Medium Enterprises) |
| (2) | The investment ratio of an investment company for the establishment of small and medium enterprises referred to in Article 38 (1) of the Act shall be calculated according to the following criteria: |
| 1. | The ratio shall be calculated based on the amount of the investment made by the method prescribed by Ordinance of the Ministry of SMEs and Startups, which is used for the business activities prescribed in Article 37 (1) 1 through 3, 6, and 7 of the Act: Provided, That this shall not include the amount invested after listing on the securities market; |
| 2. | Notwithstanding subparagraph 1, where an investment company for the establishment of small and medium enterprises acquires the stocks of a business starter that an individual or an individual investment association has held for at least three years (limited to the acquisition of the stocks newly issued at the time of acquisition by the individual or individual investment association), the amount of such acquisition shall be included in the calculation; |
| 3. | Any of the following investment amount or capital shall not be included in the total assets under management by an investment company for the establishment of small and medium enterprises (referring to the sum of the capital and amounts of investments made by all venture investment associations; hereafter in this paragraph the same shall apply): |
| (a) | The amount of investment made by a venture investment association with less than three years of history; |
| (b) | The amount of investment made by a venture investment association which satisfies the standards determined and publicly notified by the Minister of SMEs and Startups, such as a venture investment association, which merges or acquires small and medium enterprises or venture businesses or which purchases stocks or other assets held by another venture investment association; |
| (c) | The amount of investment made by a venture investment association whose investment ratio is separately determined by the Minister of SMEs and Startups under Article 70 (5) of the Act; |
| (d) | The capital of the relevant investment company for the establishment of small or medium enterprises, where the sum of the investments by a venture investment association operated by the investment company for the establishment of small and medium enterprises amounts to at least 200 percent of the paid-in capital of such investment company; |
| 4. | Where there is an increase or decrease in the total assets managed by the investment company for the establishment of small and medium enterprises, compared with the total assets at the time of registration, they shall be calculated as follows: |
| (a) | In the case of an increase, the investment ratio for the increase shall be calculated by year as of the date of such increase; |
| (b) | In the case of a decrease, the investment ratio shall be calculated on the basis of the total assets after such decrease. |
| Article 25 (Restrictions on Acts of Investment Companies for Establishment of Small and Medium Enterprises) |
| 1. | Making an investment in the type of business falling under any subparagraph of Article 2; |
| 2. | Acquiring or holding the equity or stocks of any of the following persons: |
| (a) | Financial companies, etc.: Provided, That financial companies, etc. falling under any of the following shall be excluded herefrom: |
1) Financial companies, etc. providing financial and insurance services, whose main business is to provide financial services utilizing information and communications technology determined and publicly notified by the Minister of SMEs and Startups (excluding other credit financial businesses according to the Korean Standard Industrial Classification);
2) A venture investment association;
| (b) | A private equity fund for improving corporate structure; |
| (c) | A private equity fund; |
| (d) | An affiliated company, from among the persons affiliated with the relevant investment company for the establishment of small and medium enterprises; |
| (e) | A major shareholder of the relevant investment company for the establishment of small and medium enterprises; |
| 3. | Extending credit to a major shareholder of the relevant investment company for the establishment of small and medium enterprises (including a person affiliated) and an affiliated company: Provided, That this shall not apply to credit extension made for purposes of exercising security rights; |
| 4. | Making an investment for purposes of acquiring management control as prescribed by Ordinance of the Ministry of SMEs and Startups; |
| 5. | Providing a collateral or debt guarantee with the assets of the investment company for the establishment of small and medium enterprises for a third party; |
| 6. | Acquiring stocks or brokering funds, in the name of the investment company for the establishment of small and medium enterprises, for a third party; |
| 7. | Receipt of funds by an investment company for the establishment of small and medium enterprises through any transaction other than normal transactions arising from investment, such as borrowing money from a company it has invested in or selling off assets; |
| 8. | Making an investment on conditions other than those prescribed in an investment contract; |
| 9. | Any act that might harm the soundness of asset management by an investment company for the establishment of small and medium enterprises due to the extension of loans to its executive officers or employees; |
| 10. | Other acts involving direct or indirect transactions that might harm the sound asset management by an investment company for the establishment of small and medium enterprises or might pose any credit risk in conducting a transaction, as determined and publicly notified by the Minister of SMEs and Startups. |
| Article 26 (Exceptions to Restrictions on Acts of Investment Company for Establishment of Small and Medium Enterprises) |
“Cases prescribed by Presidential Decree” in the proviso, with the exception of the subparagraphs, of Article 39 (1) of the Act means any of the following cases: | 1. | Holding equity or stocks of a person falling under any item of subparagraph 2 of Article 25, which also falls under any of the following cases: |
| (a) | Where an investment company for the establishment of small and medium enterprises acquires stocks of another investment company for the establishment of small and medium enterprises for purposes of acquisition or merger: Provided, That, where such acquisition or merger does not happen within six months from the date of initial acquisition of stocks, it shall dispose of the acquired stocks within nine months from the date of initial acquisition of stocks; |
| (b) | Where it serves as an operating partner of an association or as a general partner of a collective investment scheme, falling under any of the following: |
| (i) | A private equity fund; |
| (ii) | An association or company established under other statutes or regulations, whose business affairs are deemed by the Minister of SMEs and Startups to be suitable for an investment company for the establishment of small and medium enterprises and publicly notified by the Minister; |
| (c) | Holding equity or stocks of a person falling under subparagraph 2 (d) of Article 25, which also falls under any of the following cases: |
| (i) | Making an investment for purposes of management control as prescribed by Ordinance of the Ministry of SMEs and Startups, meeting the following requirements: |
| a. | Holding the stocks or equity of the relevant small or medium enterprise until six months from the establishment of such management control (the period may be shortened where the Ministry of SMEs and Startups deems that such holding is likely to pose a clear threat to the interests of the investment company for the establishment of small and medium enterprises); |
| b. | Selling all stocks or equity of the relevant small or medium enterprise within seven years from the establishment of management control (such period may be extended by up to one year where the Minister of SMEs and Startups deems that there are reasonable grounds for a failure to sell off the stocks or equity such as delayed talks for sell-off); |
| (ii) | Where a major shareholder of the relevant investment company for the establishment of small and medium enterprises falling under any of the following acquires the equity or stocks of a company prescribed as a subsidiary or invested company by any of the following statutes (excluding a subsidiary or invested company affiliated with a person who exercises de facto control over key management issues of major shareholders), from among the companies under his or her control: |
| c. | A company specializing in the start-up of new technology-based businesses; |
| (d) | Incorporating a company determined and publicly notified by the Minister of SMEs and Startups, such as an accelerator, as an affiliated company; |
| 2. | Making an investment in the projects recognized and publicly notified by the Minister of SMEs and Startups, such as a cultural content project, via a company engaged in cultural industries referred to in Article 43 of the Framework Act on the Promotion of Cultural Industries (hereinafter referred to as “company engaged in cultural industries”): Provided, That this shall not apply where an investment company for the establishment of small and medium enterprises, which belongs to a business group subject to limitations on cross-shareholding, makes an investment by means of acquiring or holding the stocks or equity of a company engaged in cultural industries belonging to the same business group subject to limitations on cross-shareholding; |
| 3. | Owning the real property where the head office of an investment company for the establishment of small and medium enterprises is located (limited to cases where at least 10 percent of the floor area is directly used by the investment company for the establishment of small and medium enterprises as real property for business purposes (referring to the real property for business purposes prescribed in Article 8 (1)): Provided, That the real property shall be, in principle, the object of a single ownership and, in the case of split ownership in a single building, multiple floors subject to split ownership shall be connected to each other or shall be recognized as single real property in a physical sense. |
| Article 27 (Scope of Persons Affiliated with Large Shareholders of Investment Companies for Establishment of Small and Medium Enterprises) |
| Article 28 (Restrictions on Acts of Large Shareholders of Investment Companies for Establishment of Small and Medium Enterprises) |
"Acts prescribed by Presidential Decree" in Article 40 (1) 5 of the Act means exercising influence over an investment company for the establishment of small and medium enterprises in the course of preparing a report on the status of business operations and investment performance under Article 72 (1) of the Act.
| Article 29 (Management Soundness Standards for Investment Companies for Establishment of Small and Medium Enterprises) |
"Standards prescribed by Presidential Decree for the management soundness" in Article 41 (1) of the Act means that the capital impairment ration shall be less than 50 percent.
| Article 30 (Major Shareholders Prohibited from Using Information on Businesses of Investment Companies for Establishment of Small and Medium Enterprises) |
"A major shareholder of an investment company for the establishment of small and medium enterprises prescribed by Presidential Decree" in subparagraph 2 of Article 42 of the Act means any of the following persons: | 1. | A person who holds at least 10 percent of the outstanding voting stocks, in whosesoever name, on his or her account; |
| 2. | A person who exercises de facto control over key management issues by means of appointment or dismissal of executive officers. |
| Article 31 (Annual Reporting by Investment Companies for Establishment of Small and Medium Enterprises) |
| (1) | Under Article 44 of the Act, an investment company for the establishment of small and medium enterprises shall submit to the Minister of SMEs and Startups an annual report, accompanied by a written audit opinion of an accounting firm, within three months from the end of each business year. |
| (2) | Upon review of an annual report submitted under paragraph (1), the Minister of SMEs and Startups may order the relevant investment company for the establishment of small and medium enterprises to offset reserves for losses on investments or loans against unrecoverable investment assets or to write off such assets as bad debts, where he or she deems that such measures are necessary to promote investment by such investment company and to improve its financial structure. |
| Article 32 (Exceptions to Revocation of Registration of Investment Companies for Establishment of Small and Medium Enterprises) |
| 1. | The investment company for the establishment of small and medium enterprises shall make an investment prescribed in Article 38 (1) of the Act; |
| 2. | A venture investment association, for which the relevant investment company for the establishment of small and medium enterprises serves as a general partner, shall make an investment prescribed in Article 37 (1) 1 through 3, 6 and 7 for the latest one year. |
CHAPTER VI VENTURE INVESTMENT ASSOCIATIONS
| Article 33 (Requirements for Private Limited Companies or Limited Liability Companies to Organize Venture Investment Association) |
| 1. | The total partners’ equity amount shall account for at least one percent of the funds for the organization of the association; |
| 2. | It shall secure professionals falling under any of the following: |
| (a) | At least one person with at least five years of experience, and at least two persons with at least three years of experience, in investment-related businesses at an institution falling under subparagraph 2 (b) (i) through (v) of Article 4; |
| (b) | At least two persons with at least five years of experience in investment-related businesses at an institution falling under subparagraph 2 (b) (i) through (v) of Article 4; |
| (c) | Meeting the requirements determined and publicly notified by the Minister of SMEs and Startups, which are equivalent to those listed in subparagraphs 1 and 2. |
| Article 34 (Requirements for Registration of Venture Investment Associations) |
"Requirements prescribed by Presidential Decree with respect to the total partners’ equity amount, the number of partners, the term of existence, etc." in Article 50 (2) of the Act means the following: | 1. | The total partners’ equity amount shall reach at least two billion won. In the case of payment in installments under Article 50 (6) of the Act, the initial equity payment shall be at least one billion won; |
| 2. | A unit of equity shall be at least one million won; |
| 3. | The number of limited liability partners shall not exceed 49 persons. In such cases, the number of limited liability partners shall be calculated using the following methods: |
| (c) | A person determined and publicly notified by the Minister of SMEs and Startups, such as the Fund of Funds, shall be excluded from the number of limited liability partners; |
| 4. | The equity interests of operating partners shall be at least one percent of the total partners’ equity amount; |
| 5. | The term of existence shall be at least five years. |
| Article 35 (Venture Investment Associations’ Obligation to Invest) |
| (5) | The investment ratio of a venture investment association under Article 51 of the Act shall be calculated in accordance with the following standards: |
| 1. | Article 24 (2) 1 and 2 shall apply mutatis mutandis to the detailed standards and methods for calculating the investment ratio. In such cases, "investment company for the establishment of small and medium enterprises" shall be construed as "venture investment association"; |
| 2. | The amount of mandatory investment by a special-purpose company determined and publicly notified by the Minister of SMEs and Startups shall be included in the calculation of the investment ratio; |
| 3. | Notwithstanding subparagraph 1, any of the following investments by a venture investment association shall be excluded from the calculation of the investment ratio: |
| (a) | Investments made by a venture investment association with less than three years of history; |
| (b) | Investments by a venture investment association which satisfies the standards determined and publicly notified by the Minister of SMEs and Startups, such as a venture investment association which acquires or merges with a small or medium enterprise or a venture company or which purchases stocks or other assets held by another venture investment association, etc.; |
| (c) | Investments by a venture investment association whose investment ratio is separately determined by the Minister of SMEs and Startups under Article 70 (5) of the Act; |
| 4. | Where there is any increase or decrease in the sum of the investments under management by a venture investment association, the investment ratio shall be calculated according to the following classification: |
| (a) | In the case of an increase: The investment ratio for the increase shall be calculated by year as of the date of such increase; |
| (b) | In the case of a decrease: The investment ratio shall be calculated based on the amount of investment after such decrease; |
| 5. | The investment ratio of a venture investment association to be liquidated or dissolved within three years from its registration shall be calculated based on the date of such liquidation or dissolution; |
| Article 36 (Restrictions on Acts of Operating Partners of Venture Investment Associations) |
| 1. | Making an investment in any of the types of business falling under any subparagraph of Article 2; |
| 2. | Acquiring or holding the equity or stocks of a person falling under any of the following: |
| (a) | Financial companies, etc.: Provided, That any of the following financial companies, etc. shall be excluded herefrom: |
| (i) | Financial companies, etc., whose main business is to provide financial and insurance services utilizing information and communications technology determined and publicly notified by the Minister of SMEs and Startups (excluding other credit financial businesses according to the Korean Standard Industrial Classification); |
| (ii) | Venture investment associations; |
| (b) | Private equity funds for improving corporate structure; |
| (c) | Private equity funds; |
| 3. | Selling assets held by an association to any of the following persons or purchasing stocks or equity issued or held by any of the following persons with the property of the association: |
| (a) | The relevant operating partner; |
| (b) | An executive officer or employee of the relevant operating partner and his or her spouse; |
| (c) | A major shareholder of the relevant operating partner and his or her spouses; |
| (d) | An affiliated company of the relevant operating partner: Provided, That any of the following shall be excluded herefrom: |
| (ii) | A company invested by a venture investment association operated by the relevant operating partner; |
| (ii) | Other corporations or organizations, such as a special-purpose company, determined and publicly notified by the Minister of SMEs and Startups, as being unlikely to pose a threat to the interests of the venture investment association and its partners and to the sound transaction order; |
| (e) | A major investor and affiliated companies of the relevant venture investment association; |
| (f) | An association or collective investment scheme falling under any of the following, for which the relevant operating partner serves as an operating partner or general partner: |
| (i) | An Individual investment association; |
| (ii) | A venture investment association; |
| (iii) | A private equity fund for improving corporate structure; |
| (iv) | A private equity fund; |
| 4. | Extending credit to a person who falls under any item of subparagraph 3: Provided, That this shall not apply to credit extension made for purposes of exercising security rights; |
| 5. | Acquiring stocks in the name of an individual investment association or acting as a broker for funding for a third party; |
| 6. | Receiving funds through any transaction other than normal transactions arising from investment, such as borrowing money from a company in which the individual investment association invests or selling off assets; |
| 7. | Making investments on conditions other than those prescribed in an investment contract; |
| 8. | Other acts involving direct or indirect transactions that might harm the sound asset management of the individual investment association or pose any credit risk in conducting a transaction, as determined and publicly notified by the Minister of SMEs and Startups. |
| Article 37 (Exceptions to Restrictions on Acts by Operating Partners of Venture Investment Associations) |
"Cases prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 52 (2) of the Act means any of the following cases: | 1. | Where an operating partner conducts an act prescribed in subparagraph 3 or 4 of Article 36 and falls under any of the following cases; |
| (a) | Where the consent of all partners is obtained; |
| (b) | Where any unavoidable circumstances exist as recognized by the Minister of SMEs and Startups, such as the dissolution of a venture investment association or recovery of investment equity that cannot be sold to a third party; |
| (c) | Where a major investor of a venture investment association organized by the relevant operating partner falls under any of the following cases and where a company affiliated with the major investor (limited to a person prescribed by the following statutes as a subsidiary or invested company (excluding subsidiaries or investment companies affiliated with a person who exercises de facto control over key management issues of major investors) is a counterpart to such act; |
| (iii) | A company specializing in the start-up of new technology-based businesses; |
| 2. | Making an investment in projects recognized and publicly notified by the Minister of SMEs and Startups, such as a cultural content project, via a company engaged in cultural industries: Provided, That this shall not apply where an operating partner of a venture investment association belonging to a business group subject to limitations on cross-shareholding makes an investment by means of acquiring or holding the stocks or equity of a company engaged in cultural industries belonging to the same business group subject to limitations on cross-shareholding; |
| 3. | Other cases determined and publicly notified by the Minister of SMEs and Startups. |
| Article 38 (Annual Reporting by Venture Investment Associations) |
An operating partner of a venture investment association shall submit to the Minister of SMEs and Startups an annual report, accompanied by an audit report of an accounting firm, within three months from the end of each business year, under Article 54 of the Act.
| Article 39 (Dissolution of Venture Investment Associations) |
| 1. | Where all partners agree that the objectives of the organization of the Korea Venture Fund are accomplished; |
| 2. | Where the Minister of SMEs and Startups deems dissolution is necessary to protect partners of an association in light of the impairment of its assets or other events, where the combined equity of the partners present accounts for a majority of the total equity, and where consent is obtained for at least 2/3 of the equity of the partners present and at least 1/3 of the total equity. |
| (2) | A person who intends for a venture investment association to continue under Article 56 (2) of the Act shall submit to the Minister of SMEs and Startups a report, including the following information, accompanied by a statement on the grounds for such continuance and the consent of all limited liability partners: |
| 1. | The name of the venture investment association and location of its office; |
| 2. | The names and locations of new operating partners, and names of their representatives; |
| 3. | Respective amounts of the investments made by partners and number of equity units. |
| (3) | Where a report is submitted under paragraph (2), a report for changes referred to in the latter part of Article 50 (1) of the Act shall be deemed filed. |
| (4) | An operating partner of a venture investment association shall notify the Minister of the SMEs and Startups of its dissolution within 14 days therefrom. |
| Article 40 (Appropriation of Profit of Venture Investment Associations) |
| (1) | The return on investment to be determined for paying a bonus prescribed in Article 59 of the Act shall be calculated by deducting the amount of investment and the operational expenses determined and publicly notified by the Minister of SMEs and Startups from the assessed value of the assets of the venture business investment association. |
| (2) | Upon receipt of a bonus tied to the return on investment under Article 59 of the Act, an operating partner may give an incentive to the executive officers and employees for their contribution to such return on investment, not exceeding the amount of such bonus. |
| Article 41 (Requirements for Registration of Publicly Placed Venture Investment Association) |
| (1) | An association to be registered as a publicly placed venture investment association under the latter part of Article 63 (2) of the Act shall meet the following requirements: |
| 1. | The total partners’ equity amount shall be at least 20 billion won; |
| 2. | A unit of equity shall be at least one million won; |
| 3. | The equity interests of operating partners shall account for at least five percent of the total partners’ equity paid-in; |
| 4. | The term of existence shall be at least five years. |
| (2) | A person eligible as an operating partner of a publicly placed venture investment association under the latter part of Article 63 (2) of the Act shall be an investment company for the establishment of small and medium enterprises which meets all of the following requirements: |
| 1. | Its paid-in capital shall be at least four billion won; |
| 2. | It shall retain at least five professionals falling under any item of Article 23 (7) 1. In such cases, at least one professional falling under each of the following shall be included: |
| (a) | A person with at least three years of experience in investment-related businesses at an institution recognized by the Ministry of SMEs and Startups, such as an investment company for the establishment of small and medium enterprises; |
| (b) | A person engaged in management or technology development for at least three years at an institution recognized by the Minister of SMEs and Startups, such as a company under the Commercial Act, who has completed courses designed to train professionals for investment companies for the establishment of small and medium enterprises recognized by the Minister of SMEs and Startups; |
| (c) | An attorney-at-law, certified public accountant, or patent attorney; |
| 3. | The person shall satisfy the standards publicly notified by the Minister of SMEs and Startups, in terms of electronic systems, means of telecommunications, business spaces, office equipment, and other ancillary equipment to ensure business continuity. |
CHAPTER VII ESTABLISHMENT OF KOREA VENTURE INVESTMENT CORPORATION AND ORGANIZATION AND OPERATION OF FUND OF FUNDS FOR VENTURE INVESTMENT
| Article 42 (Business Activities of Korea Venture Investment Corporation) |
| 1. | Providing support for compliance with statutes or regulations relating to venture investment; |
| 2. | Providing support to venture businesses in the attraction of investments home and abroad; |
| 3. | Conducting surveys and research on venture investment; |
| 4. | Educational and public relations activities relating to venture investment; |
| 5. | Other projects entrusted by the Minister of SMEs and Startups. |
| Article 43 (Guidance and Supervision over Business Operations of Korea Venture Investment Corporation) |
| (1) | The Minister of SMEs and Startups shall guide and supervise the Korea Venture Investment Corporation over the following matters under Article 69 (1) of the Act, and where deemed necessary, he or she may require a report on its business operations or may have a public official under his or her control conduct an inspection thereon: |
| 1. | The status of business performance of the Fund of Funds; |
| 2. | Matters regarding execution of a business plan and formulation of the budget for each fiscal year; |
| 3. | Changes in professionals and facilities necessary for the operation of the Fund of Funds; |
| 4. | Matters regarding the submission of an annual report, accompanied by an audit opinion of an accounting firm. |
| (2) | Except as provided in paragraph (1), matters regarding guidance and supervision over business operations of the Korea Venture Investment Corporation shall be determined and publicly notified by the Minister of SMEs and Startups. |
| Article 44 (Organization of Fund of Funds for Venture Investment) |
| (3) | The Minister of SMEs and Startups shall prepare guidelines for operating the Fund of Funds for the following year, including the following matters, by December 31 each year under Article 70 (4) of the Act. In such cases, opinions of investors in the Fund of Funds may be heard, where necessary for the preparation of the guidelines for operating the Fund of Funds: |
| 1. | Standards for distributing the assets of the Fund of Funds; |
| 2. | Limitation on investment of the Fund of Funds in any of the associations listed in the subparagraphs of Article 70 (1) of the Act; |
| 3. | Limitation on payment of an incentive to executive officers and employees of an operating partner of the Fund of Funds; |
| 4. | Major issues to be included in a plan for operating the Fund of Funds. |
| (4) | The Korea Venture Investment Corporation shall submit to the Minister of SMEs and Startups a plan for operating the Fund of Funds for the relevant year, by January 31 each year, and a report on the operational performance of the Fund of Funds for the preceding year by April 30 each year. |
| (5) | Except as provided in paragraphs (1) through (4), matters necessary for operating the Fund of Funds shall be determined and publicly notified by the Minister of SMEs and Startups. |
CHAPTER VIII SUPPLEMENTARY PROVISIONS
| Article 45 (Issuance of Investment Confirmations) |
| (1) | Any individual or an operating partner of an individual investment association, who intends to get reduction or exemption of income tax, etc. under the tax-related statutes such as the Act on Regulation of Tax Reduction and the Exemption and Restriction of Special Local Taxation Act, may request the Minister of SMEs and Startups to verify investment performance. |
| (2) | Upon receipt of a request for confirmation of investment performance under paragraph (1), the Minister of SMEs and Startups shall verify investment performance and issue a written confirmation thereof. In such cases, the Minister may request a venture business, etc. invested by an individual or individual investment association to submit data for purposes of such verification. |
| (3) | Except as provided in paragraphs (1) and (2), matters regarding the procedures for verification of investment performance shall be determined and publicly notified by the Minister of SMEs and Startups. |
| Article 46 (Investment of Fund in Venture Investment Associations) |
| (1) | "Fund prescribed by Presidential Decree" in Article 71 (1) of the Act means any of the funds prescribed in attached Table 1. |
| (2) | The Minister of SMEs and Startups may request a person in charge of managing any of the funds in attached Table 1 to invest in a venture investment association, where necessary to finance investment in venture businesses. |
| (3) | "A portion of the fund up to the ratio prescribed by Presidential Decree" in Article 71 (1) of the Act means the amount of 10 percent of the operating fund of the relevant fund. |
| Article 47 (Reporting and Inspection) |
| (1) | A person falling under any subparagraph of Article 72 (1) of the Act shall report to the Minister of SMEs and Startups on the status of business operations and others in accordance with the following classification: |
| 2. | A person falling under any subparagraph of Article 72 (1) 3 through 5 and 7: Reporting on a monthly basis: Provided, That a person falling under Article 72 (1) 5 of the Act shall file a separate report on the investment amount and period in accordance with the procedures and methods determined and publicly notified by the Minister of SMEs and Startups where he or she makes an investment in another venture investment association. |
| 2. | A certified copy of the corporate register; |
| 3. | Documents evidencing professionals the person has secured and their qualifications; |
| 4. | Documents on the status of offices secured. |
| 5. | A register of shareholders; |
| 6. | A list of investors of a private investment association, venture investment association, or Fund of Funds; |
| 8. | A contract on the transaction; |
| 9. | A general ledger (referring to an accounting book detailing all accounts in corporate accounting); |
| 10. | A register of shareholders of the company, which is a contractual party, and a certified copy of the corporate register. |
| 1. | Where it is necessary to ascertain whether there is any registered change in important matters regarding regarding professional individual investors under the latter part of Article 9 (1) of the Act; |
| 2. | Where it is necessary to ascertain whether there is any registered change in important matters regarding an individual investment association under the latter part, with the exception of the subparagraphs, of Article 12 (1) of the Act; |
| 3. | Where it is necessary to ascertain whether there is any registered change in important matters regarding an accelerator under the latter part, with the exception of the subparagraphs, of Article 24 (1) of the Act; |
| 4. | Where it is necessary to ascertain whether there is any registered change in important matters regarding an investment company for the establishment of small and medium enterprises under the latter part, with the exception of the subparagraphs, of Article 37 (1) of the Act; |
| 5. | Where it is necessary to ascertain whether there is any registered change in important matters regarding a venture investment association under the latter part, with the exception of the subparagraphs, of Article 50 (1) of the Act. |
| Article 48 (Entrustment of Authority) |
| (1) | The Minister of SMEs and Startups shall entrust the Korea Venture Investment Corporation with the following duties under Article 76 (2) of the Act: |
| 2. | Management of the data on registration of professional individual investors, individual investment associations, accelerators, investment companies for the establishment of small and medium enterprises, and venture investment associations and registration for changes under Articles 9, 12 (1), 24 (1), 37 (1) and 50 (1) of the Act; |
| 3. | Management of the data on administrative dispositions such as the revocation of registration of professional individual investors, individual investment associations, accelerators, investment companies for the establishment of small and medium enterprises, and venture investment associations under Articles 11, 22, 36 (1), 49 (1), and 62 (1) of the Act; |
| 4. | Management of the data on an annual report submitted by individual investment associations, investment companies for the establishment of small and medium enterprises, and venture investment associations under Articles 16, 31, 44, and 54 of the Act |
| 7. | Management of the data on succession to the status of an accelerator and an investment company for the establishment of small and medium enterprises and cancellation of registration under Articles 33, 35, 46, and 48 of the Act; |
| 8. | Management of the data on disciplinary action against executive officers, employees, or operating partners of accelerators, investment companies for the establishment of small and medium enterprises, and venture investment associations under Articles 36 (2), 49 (2), 62 (2) through (4) of the Act; |
| 9. | Duties regarding surveys on the management status of investment companies for the establishment of small and medium enterprises under Article 41 (2) of the Act; |
| 12. | Preservation and management of the data on the duties listed in the subparagraphs of paragraph (4). |
| 6. | Receipt and confirmation of a report on investment performance and business operation status of accelerators under Article 72 (1) of the Act. |
| (3) | The Minister of SMEs and Startups shall entrust the Korea Venture Capital Association with the duties regarding the following under Article 76 (2) of the Act: |
| 1. | Analysis of domestic and international venture investment trends, support for enhancing the performance of venture investment, training of professionals in venture investment, and expansion of international exchange under Article 5 (2) through (5) of the Act; |
| 2. | Confirmation of whether the requirement of professionals under Article 37 (2) 4 of the Act is satisfied and, if any, management of such professionals; |
| 3. | Receipt and confirmation of an annual report submitted by investment companies for the establishment of small and medium enterprises and venture investment associations under Articles 44 and 54 of the Act; |
| 4. | Operation of public disclosure by investment companies for the establishment of small and medium enterprises under Article 45 of the Act; |
| 5. | Receipt and confirmation of the registration of venture investment associations and registration for changes under Article 50 of the Act; |
| 7. | Receipt and confirmation of a report on investment performance and business operation status of investment companies for the establishment of small and medium enterprises and venture investment associations under Article 72 (1) of the Act. |
| (4) | The Minister of SMEs and Startups shall entrust the Korea Business Angels Association with the following duties under Article 76 (2) of the Act: |
| 2. | Receipt and confirmation of the registration of professional individual investors and registration for changes under Articles 9 and 11 of the Act; |
| 3. | Receipt and confirmation of the registration of individual investment associations, registration for changes, and an annual report under Articles 12 and 16, and duties relating to dissolution and liquidation under Articles 18 and 19; |
| 4. | Receipt and confirmation of a report on investment performance by professional individual investors and individual investment associations under Article 72 (1) of the Act; |
| 5. | Assistance in the issuance of written investment confirmations under Article 45. |
| (5) | Where necessary, the Minister of SMEs and Startups may request a person entrusted with the duties under paragraphs (1) through (4) to submit the data thereon. |
| Article 49 (Processing of Sensitive Information and Personally Identifiable Information) |
| 4. | Registration of investment companies for the establishment of small and medium enterprises under Article 37 of the Act; |
| Article 50 (Re-Examination of Regulation) |
The Minister of SMEs and Startups shall examine the appropriateness of the following matters every three years, counting from the base date of August 12, 2020 (referring to the period that ends on the day before the base date of every third year) and shall take such measures as making improvements:
| 1. | Requirements for the registration of professional individual investors under Article 4; |
| 2. | Requirements for the registration of investment companies for the establishment of small and medium enterprises under Article 6; |
| 3. | Investment ratio of individual investment associations under Article 7; |
| 4. | Restrictions on acts of operating partners of individual investment associations under Article 8; |
| 5. | Requirements for the registration of accelerators under Article 13; |
| 6. | Investment ratio of an accelerator and standards for the calculation thereof under Article 15; |
| 7. | Restrictions on acts of accelerators under Article 16; |
| 8. | Scope of large shareholders and affiliated persons of accelerators under Article 18; |
| 9. | Restrictions on acts of large shareholders of accelerators under Article 19; |
| 10. | Standards for accelerators’ sound management under Article 20; |
| 11. | Major shareholders not allowed to use information on accelerators’ duties under Article 21; |
| 12. | Requirements for the registration of investment companies for the establishment of small and medium enterprises under Article 23; |
| 13. | Investment ratio of investment companies for the establishment of small and medium enterprises and standards for calculation thereof under Article 24; |
| 14. | Restrictions on acts of investment companies for the establishment of small and medium enterprises under Article 25; |
| 15. | Restrictions on acts of large shareholders of investment companies for the establishment of small and medium enterprises under Article 28; |
| 16. | Exceptions to the revocation of registration of investment companies for the establishment of small and medium enterprises under Article 32; |
| 17. | Requirements for the registration of venture investment associations under Article 34; |
| 18. | Investment ratio of venture investment associations and standards for calculation thereof under Article 35; |
| 19. | Restrictions on acts of operating partners of venture investment associations under Article 36; |
| 20. | Requirements for the registration of publicly placed venture investment associations under Article 41. |
CHAPTER IX PENALTY PROVISIONS
| Article 51 (Standards for Imposing Administrative Fines) |
The standards for the imposition of administrative fines under Article 80 (2) of the Act shall be as prescribed in attached Table 2.
ADDENDA <Presidential Decree No. 30934, Aug. 11, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 12, 2020.
Article 2 (Applicability to Restrictions on Acts of Accelerators)
The provisions of subparagraph 2 of Article 16 shall begin to apply to acquisition or holding of equity or stocks after this Decree enters into force. Article 3 (Transitional Measures concerning Professional Individual Investors)
Article 4 Omitted.
Article 5 (Relationship to Other Statues or Regulations)
ADDENDA <Presidential Decree No. 31553, Mar. 23, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 25, 2021. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Presidential Decree No. 31611, Apr. 6, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on April 8, 2021.
Articles 2 through 6 Omitted.