For public funds applicable to ordinary investors, the Amendment aims to build investor trust by improving the system to enhance profitability and reduce costs. For private funds applicable to professional investors, the Amendment aims to further increase autonomy and promote competition by reducing unnecessary regulations.

The Amendment also improves the system to stimulate financial assistance for startups and small to medium enterprises through crowdfunding, strengthens investor protection by improving the relevant systems to enable the prompt elimination of poor-performing investment advisory business entities, discretionary investment business entities and hedge fund investment business entities, thereby addressing and improving upon a number of weaknesses that have emerged from the operation of the current system.

A. Expand the scope of business categories eligible for crowdfunding (Article 14-5, paragraph 1)

Directly prescribe in the Act the business categories eligible for crowdfunding rather than referring to the current Enforcement Decree of the Support for Small and Medium Enterprise Establishment Act, and expand the scope to include all business categories except financial and insurance activities, real estate activities, general amusement drinking places, etc.

B. Tighten registration maintenance requirements for investment advisory business entities and discretionary investment business entities (Article 23, subparagraph 1)

Increase the frequency for determining whether an investment advisory business entity or discretionary investment business entity has maintained the minimum equity capital from the end of each fiscal year (current) to the end of every month, and reduce the recognition period for meeting the minimum equity capital requirement from 1 year to 6 months.

C. Relax diversification regulations for state and public bonds (Article 80, paragraph 1, subparagraph 3-2)

Under the currnet Act, where up to 25 percent of the total assets of a fund has been invested in securities issued by a single corporation, etc., at least 50 percent of the total assets of the fund concerned shall be separately invested in securities issued by another single corporation, etc., in amounts not exceeding 5 percent of the total assets of the fund concerned. Prescribe an exception that the amounts not exceeding 30 percent and 10 percent may be invested in state bonds and municipal/special bonds, respectively.

D. Allow the proxy exercise of voting rights by discretionary investment business entities (Article 99, paragraph 2, subparagraph 5, item (i))

Allow discretionary investment business entities to exercise voting rights delegated by a pension fund or mutual aid fund, etc., but prohibit the exercise of voting rights and cross-voting, etc., with respect to affiliated companies, etc.

E. Diversify the delivery method of discretionary investment reports (Article 100, paragraph 2)

Diversify the delivery method of discretionary investment reports by discretionary investment business operators to enable the use of text messages, smart phone applications, etc., in addition to electronic mail.

F. Expand the scope of application of relaxed investment limits for crowdfunding (Article 118-17, paragraph 3)

To the scope of individual investors who are subject to a higher crowdfunding investment limit compared to ordinary investors, add persons who have invested in securities sold through crowdfunding at least five times in the past 2 years and whose cumulative investments for the past 2 years are at least 15 million won.

G. Relax the minimum equity capital requirement for hedge fund investment business entities (Article 271-2, paragraph 3)

Relax the minimum equity capital requirement from 2 billion won (current) to 1 billion won for hedge fund investment business entities that mainly target professional investors.

H. Tighten registration maintenance requirements for hedge fund investment business entities (Article 271-3, subparagraph 1)

Increase the frequency for determining whether a hedge fund investment business entity has maintained the minimum equity capital from the end of each fiscal year (current) to the end of every month, and reduce the recognition period for meeting the minimum equity capital requirement from 1 year to 6 months.