Interim Distribution Procedures for Venture Investment Associations Simplified... Revised Regulation Implemented

If a predetermined fund distribution method exists,
distributions can be made after prior notification to members at least 14 days in advance
Investment limit for listed companies by M&A venture funds expanded

On June 26, the Ministry of SMEs and Startups announced that it will implement a revised version of the "Regulations on Registration and Management of Venture Investment Associations," which includes provisions to simplify the interim distribution procedures of venture investment associations, in order to enhance fund liquidity and promote reinvestment.

First, the interim distribution procedures for venture investment associations have been simplified to facilitate smooth reinvestment. Previously, venture investment associations were required to obtain the consent of members for every interim distribution of investment funds, which meant that even for small recovery amounts, approval from the general meeting of members was necessary each time. This resulted in a complicated and time-consuming process.

With this revision, the Ministry of SMEs and Startups will now allow distributions to be made after prior notification to members at least 14 days in advance, provided that the method of fund distribution has been predetermined in the association’s regulations. This is expected to encourage smooth reinvestment and contribute to increasing the liquidity of venture investment funds.

The investment limit for listed companies by M&A venture funds will also be expanded. The investment limit for listed companies by venture investment associations established for the purpose of SME and venture company M&A, as delegated by the Enforcement Decree of the "Act on the Promotion of Venture Investment," will be set at 60%. The Ministry expects that by making the acquisition and merger methods of M&A funds more flexible, it will be possible to facilitate exits and strengthen the virtuous cycle of investment capital.

Kim Bongdeok, Director of Venture Policy at the Ministry of SMEs and Startups, stated, "With the implementation of this revised regulation on the registration and management of venture investment associations, the flexibility of fund management for venture investment associations will be increased, creating a healthier and more dynamic venture investment environment." He added, "We will continue to listen to on-site feedback and make ongoing efforts to improve systems for the development of the venture investment ecosystem."