Relaxation of University Technology Holding Company Investment Regulations... Expectation of Investment Activation

Ministry of Education Announces Improvement Measures for Industry-Academia Cooperation Technology Holding Company System

Some requirements applied when university-industry cooperation foundations establish technology holding companies for technology commercialization have been partially relaxed, raising expectations for the activation of commercialization of excellent technologies owned by universities.

The Ministry of Education announced on the 15th the "Improvement Plan for the University-Industry-Research Cooperation Technology Holding Company (Technology Holding Company) System," which includes these measures to help commercialize excellent technologies owned by universities.

A technology holding company is a corporation established and operated by a university-industry cooperation foundation using the technologies it owns to establish (incorporate) subsidiaries, and reinvests the profits gained through this into research. Since the establishment of Hanyang University’s technology holding company in 2008, the number has steadily increased, with 80 companies established and operating last year.

In 2021, technology holding companies distributed 21 billion KRW out of 46.8 billion KRW in sales to university-industry cooperation foundations, reinvesting in university research activities.

However, various regulations have been pointed out as obstacles that suppress investment and hinder technology commercialization. Accordingly, the Ministry of Education has relaxed the regulation requiring university-industry cooperation foundations to invest more than 30% of the total capital (cash + in-kind) of the technology holding company, so that this rule only needs to be followed at the time of establishing the technology holding company, enabling active attraction of external investment.

Additionally, the regulation requiring technology holding companies to hold at least 10% of the shares of their subsidiaries will also be improved to apply only at the time of subsidiary establishment, preventing restrictions on follow-up investments. This aims to eliminate the burden of additional costs incurred by technology holding companies to meet mandatory shareholding ratios when the value of subsidiaries increases due to external investment attraction.

Furthermore, to create an efficient management environment for technology holding companies, the scope of companies that can be incorporated as subsidiaries (through stock or equity acquisition) will be expanded. Currently, when incorporating a small or medium-sized enterprise (SME) as a subsidiary, only companies utilizing technologies owned by the university operating the technology holding company are allowed. This will be expanded to include SMEs utilizing technologies owned by other universities, enabling convergence and fusion commercialization of technologies.

The use of technology holding company dividend profits, which was limited to "research and development planning tasks," will be broadened to cover "overall research and development tasks."

Meanwhile, the Ministry of Education plans to prepare an accounting manual tailored to the characteristics of technology holding companies and provide consulting for companies with insufficient commercialization performance.

Choi Eun-hee, Director of the Talent Policy Office at the Ministry of Education, explained, "Excellent technologies owned by universities shine when transferred to industries or utilized through startups, so we will boldly improve regulations that act as obstacles to the growth of technology holding companies and their subsidiaries."