(1) Reasons for Proposal

The amendment aims to require periodic disclosure of management performance and the compensation system for fund managers of collective investment entities to increase investor confidence in collective investment schemes; allow even small and medium-sized enterprises (SMEs) more than seven years after their establishment to act as crowdfunding issuers; allow discretionary investment business entities to conduct investment advisory business without additional registration; and otherwise improve and complement some of shortcomings that have emerged in the operation of the current system.

(2) Major Provisions

A. Expand the scope of crowdfunding issuers (Article 9 (27) 1) 

Currently, only start-up companies within 7 years of doing business after the start-up may raise funds through crowdfunding. However, facilitate the settlement of the crowdfunding system as a financing market for SMEs by expanding the scope of crowdfunding issuers so that SMEs under the Framework Act on Small and Medium Enterprises may raise funds through crowdfunding regardless of their age of business.

B. Allow discretionary investment business entities to conduct investment advisory business without additional registration (the latter part other than the subparagraphs of Article 18 (1) and the latter part of Article 20, newly inserted) 

To promote competition between discretionary investment business and investment advisory business and to facilitate customized asset management services, allow a person who has registered for discretionary investment business to cover the contents of the investment advisory business for the nature of the business, to be able to engage in the investment advisory business without additional registration. Also, it is considered that if a person who runs both discretionary investment business and investment advisory business maintains the registration requirements for discretionary investment business, the registration requirements for the investment advisory business shall be maintained.

C. Disclose fund managers of collective investment entities (Article 91 (4) newly inserted and attached Table 1 No. 102) 

To enhance the effectiveness of the disclosure system for fund managers of collective investment entities and to support rational investment judgment by investors, require that the management performance and compensation system of collective investment entities shall be disclosed in accordance with the standards, methods, and cycles prescribed by Presidential Decree, and provide sanctions to be made if any of these are not disclosed or falsely disclosed.

D. Allow business start-up investment companies to establish and operate private equity funds specializing in start-up or venture business companies (the proviso to the part other than the subparagraphs of Article 249-23 (1) shall be deleted) 

To facilitate investment in start-up or venture business companies, allow even investment entities for the start-up of SMEs to establish and operate private equity funds specializing in start-up or venture business companies.