(1)Reasons for Proposal

This aims to enact the Enforcement Decree of the Venture Investment Promotion Act to prescribe matters mandated by the Presidential Decree in the enactment of the Venture Investment Promotion Act (Act No. 16998, promulgated on Feb 11, 2020, and to be implemented on Aug. 12, 2020) and other matters necessary for the enforcement of other Acts.

(2) Major Provisions

A. Professional individual investor registration requirements, etc. (Articles 4 through 5) 

Ensure that any person who intends to register as a professional individual investor shall have the investment performance, experience, and qualification requirements set out in this Enforcement Decree.

B. Criteria for calculating the required investment ratio of private investment associations (Article 8) 

(1) Require to use at least 50 percent of the invested funds of each private investment association for investment in venture enterprises and startup founders.

(2) Allow investments within 10% of corporations listed on the securities market, which shall be determined and announced by the Minister of SMEs and Startups.

C. Determine the criteria for calculating the required investment ratios of small or medium business start-up investment companies and the scope of major shareholders who shall be prohibited from using job-related information as a prohibition on the use of job-related information has been established (Articles 25 and 31)

(1) Request investing 40% or more based on the sum of the capital of an small or medium business start-up investment company and the invested funds of all the venture capital associations in operation.

(2) Disallow the employees, etc., of small or medium business start-up investment companies to use job-related information not disclosed to the public for their own or a third party's interest without justifiable reasons; and define the scope of major shareholders, in any name, who are prohibited from using job-related information of small or medium business start-up investment companies as the shareholders who own more than 10 percent of the total number of voting stocks issued or who are actually exercising control over the major management matters of the small or medium business start-up investment companies, including the appointment and dismissal of executives.

D. Venture investment association formation requirements of startup accelerators and criteria for required investment ratio of venture investment associations (Articles 14 and 36)

(1) Ensure that when any accelerator intends to form a venture investment association, he/she shall meet the formation requirements of the accelerator’s capital, property contributed in business, debt ratio, etc., prescribed in this Enforcement Decree.

(2) Require using 40% or more of the sum of invested funds of all venture investment associations managed by the same executive member of a venture capital association and 20% or more of invested funds of each venture investment association for investment in startup founders and venture enterprises.

E. Specify the basis for the establishment of Korea Venture Investment Corp. in the Venture Investment Promotion Act and determine matters on the business scope and operation of Korea Venture Investment Corp. in this Enforcement Decree