(1) Reasons for Proposal

As the Venture Investment Promotion Act (Act No. 16998, promulgated on Feb 11, 2020, and to be implemented on Aug. 12, 2020) has been enacted, this Enforcement Rules aims to enact the Ordinance of the Ministry of SMEs and Startups to prescribe matters mandated by the Act and the Enforcement of the same Act and other matters necessary for the enforcement of other Acts.

(2) Major Provisions

A. Investment in businesses developed and manufactured by small or medium enterprises (SMEs) (Article 2) 

Define equity investment in businesses developed and manufactured by SMEs as project investments and specify the scope of each business.

B. Requirements of simple agreements for future equity (Article 3) 

Prescribe that the simple agreement for future equity, a new type of investment, shall be issued with the consent of all shareholders under the condition that there is no interest incurred to the payment of the investment amount and no repayment maturity date.

C. Individual investors and professional individual investors (Articles 4 through 5) 

As the professional individual investor registration system has been established, determine procedures for the registration and change registration and prescribe how to apply for the issuance of investment performance confirmation for tax reductions of individual investors and professional individual investors.

D. Individual investment associations (Articles 6 through 11) 

Specify the scope of investors and registration procedure for the formation of an individual investment association and clarify the criteria for calculating the required investment ratios of individual investment associations as unlisted startup founders, the acquisition of new stocks or shares issued for venture companies, and the signing of a simple agreement for future equity.

E. Accelerators (Articles 12 through 17) 

Specify the procedures for the registration and change registration of accelerators and the support methods for early startup founders and determine the requirements for management governance and the procedures for reporting the succession of accelerators’ rights and obligations.

F. Small or medium business start-up investment Company (Articles 18 through 23) 

Specify the procedures for registration and change registration and the content of differentiated required investment ratios by the size of total assets of small or medium business start-up investment companies and determine the requirements for management governance and the procedures for reporting the succession of rights and obligations of small or medium business start-up investment companies.

G. Venture investment associations (Articles 24 through 27) 

Specify the procedures for the registration and change registration of venture investment associations and lower the barriers to entry so that securities companies and asset management companies may also participate as joint executive members when forming a venture investment association.