Holding Company CVC Allowed Under '100% Equity Stake' Condition... 40 Trillion Won Financial Support for 1,000 Innovative Companies (Update)

December 30th '12th Emergency Economic Central Countermeasures Headquarters Meeting' Held
Acceleration of 8 Major Consumer Coupon Execution... Full Effort to Boost Consumption Vitality

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the "12th Emergency Economic Central Countermeasures Headquarters Meeting" held at the Government Seoul Office in Jongno-gu, Seoul on the 30th. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Kim Hyunjung] The government has decided to allow general holding companies to own corporate venture capital (CVC) to promote large corporations' investments in ventures and startups and to revitalize innovative finance, setting the condition of '100% ownership of shares.' To prevent private profit extraction, investments in companies or affiliates where the controlling family holds shares are prohibited. Along with this, to boost consumption vitality, the government plans to fully implement consumption coupons and select 1,000 innovative companies leading changes in industries such as non-face-to-face and digitalization, providing a total of 40 trillion won in financial support.

On the morning of the 30th, the government held the '12th Emergency Economic Central Countermeasures Headquarters Meeting' at the Government Seoul Office to discuss these matters. Before the meeting, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki stated in his opening remarks, "After long discussions to avoid falling behind global trends and to expand venture investments by large corporations, establish a virtuous cycle ecosystem for venture investments through revitalizing the recovery market, and strengthen the innovation and dynamism of our economy, we have decided to allow limited ownership of CVC."

CVCs will be established as wholly-owned subsidiaries of general holding companies with 100% share ownership, allowing two types: the existing venture capital type of Small and Medium Business Startup Investment Companies (Changtu companies) and New Technology Business Financial Companies (Singisa). CVCs owned by general holding companies can borrow up to 200% of their equity capital, and when raising funds, external capital can be procured within 40% of the raised amount (detailed ratios are stipulated in the enforcement decree). However, to prevent side effects from relaxing the principle of separation between finance and industry, the scope of work is limited to 'investment,' and investments in companies related to the controlling family, affiliates, or large corporate groups are prohibited. When raising funds, investments from financial companies among the controlling family and affiliates are also banned. The government plans to amend the Fair Trade Act and ensure legislation within this year through the regular National Assembly session.

During the meeting, economic revitalization measures such as the implementation of consumption coupons, investment promotion plans for venture and innovation activation, and financial support plans for innovative companies were also discussed. To recover consumption, the government will first fully implement eight types of consumption coupons benefiting 18 million people from the end of July, aiming to stimulate consumption worth about 1 trillion won. Deputy Prime Minister Hong said, "We will actively promote consumption stimulation measures utilizing the summer peak season, summer vacation period, and temporary holidays." To support innovative companies, 1,000 national representative innovative companies with innovation and technological capabilities in various industries such as digital and green new deals, new industries, materials, parts, equipment, and services will be selected to receive comprehensive financial support totaling 40 trillion won over three years through loans, guarantees, and investments. To revitalize public institution-led innovative cities, the government plans to discover and promote ten collaborative projects including ▲Busan-type Youth Startup Hub creation ▲Daegu Green Energy Campus construction ▲Gwangju and Naju Energy Valley development ▲Wonju Silver Medical Device Mecca creation.

This content was produced with the assistance of AI translation services.