1. Reasons for Amendment
This Amendment follows up on the amended Venture Investment Promotion Act (Act No. 19504; partially amended on June 20, 2023) by prescribing requirements for convertible notes and detailed matters necessary for special-purpose company registration/change registration, etc.
2. Major Provisions
A. Specify standards on the operation and management of advanced venture financing mechanisms (Article 3-2, subparagraph 1 of Article 7, Article 24 (2), attached Forms 11 and 12)
1) Specify the linking of equity conversion conditions to the enterprise value of follow-on investments and the signing of a convertible bond issuance agreement as requirements for convertible notes.
2) Prescribe principal and interest repayment obligations for convertible notes depending on whether follow-on investments are made.
3) Prescribe an obligation to obtain consent from all shareholders for convertible notes, and to notify all parties to the convertible note after it has been signed.
4) Add the signing of a convertible note to the scope of recognition of the investment performance of accelerators, individual investment associations, venture investment companies, and venture investment associations
5) Prescribe an obligation to file a venture investment association registration/change registration upon special-purpose company establishment, leveraging, liquidation, or any change in shareholders/employees.
6) Add matters concerning special-purpose companies to the scope of information provided in attachments to applications for registration and registration registers.
B. Modify provisions (Article 15, Article 18, Article 24 (3) (4) and (5), etc.)
1) Change the name “investment company for the establishment of small and medium enterprises” to “venture investment company.”
2) Modify terms in accordance with limited liability companies being allowed to register venture investment companies.
3) Modify article numbers in accordance with the amended Enforcement Rule of the Venture Investment Promotion Act.
C. Simplify the registration procedure for venture investment associations (delete current Article 24 (1)) Abolish the procedure for submitting and obtaining approval for an organization plan prior to registering a venture investment association
