The government has decided to prohibit joint liability between startup planners and individual investment associations to invigorate venture investment and expand investment limits.

Small and Medium Business Administration plaque. /Courtesy of Small and Medium Business Administration

The Ministry of SMEs and Startups announced on the 28th that it will give administrative notice of amendments to the 'Venture Investment Association Registration and Management Regulations,' 'Startup Planner Registration and Management Regulations,' and 'Individual Investment Association Registration and Investment Confirmation Issuance Regulations' by the 17th of next month.

First, a new regulation prohibiting third-party joint liability burdens for startup planners and individual investment associations will be established. This measure comes in response to criticism that excessive joint liability was required for the repayment of investment funds, which previously applied the same restrictions to the Korea Venture Investment Corporation and venture investment companies and associations. The Ministry of SMEs and Startups expects that this measure will alleviate the burden on entrepreneurs and allow investors to focus on their investment activities.

A new regulation called 'Venture Investment Association Registration and Management Regulations' will also expand the investment limit for public companies by venture funds engaging in mergers and acquisitions (M&A) from the existing 20% to 60%. This is aimed at making the merger and acquisition process more flexible for M&A funds and enhancing the recovery process, thereby strengthening the circular structure of investment funds.

In addition, to facilitate smooth reinvestment, a new 'Venture Investment Association Registration and Management Regulations' will simplify the interim distribution process of venture investment associations. Previously, associations had to obtain consent from the members each time they distributed investment funds, but if the amendment is implemented, distributions will be possible with just a 14-day prior notice to members if the fund distribution method has been predetermined.