Hong Nam-ki "Allow Large Corporations to Own CVCs, Prohibit Financial Activities Other Than Investment" (Comprehensive)

'The 12th Emergency Economic Central Countermeasures Headquarters Meeting'

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki stated on the 30th, "We will, in principle, allow general holding companies to own corporate venture capital (CVC)."

In his opening remarks at the 12th Emergency Economic Central Countermeasures Headquarters meeting and the 30th Economic Ministers' Meeting on the same day, Deputy Prime Minister Hong said, "CVCs will be established as wholly-owned subsidiaries with general holding companies holding 100% of the shares."

Two types are possible: the existing venture capital form of Small and Medium Business Startup Investment Companies (Changtu companies) and New Technology Business Financial Companies (Shingisa). CVCs owned by general holding companies can borrow up to 200% of their equity capital, and external financing is allowed within 40% of the fund raised when forming a fund.

Deputy Prime Minister Hong also announced that safeguards have been put in place due to concerns about side effects. He said, "The scope of work will be limited to investment activities in line with the purpose of introducing CVCs to promote venture investment and innovative finance, and other financial activities will be prohibited."

He explained, "When forming funds, investments from the controlling family and affiliates in financial companies are prohibited, and investments in companies, affiliates, and large business groups related to the controlling family will be restricted." He added, "We will pursue legislation through amendments to the Fair Trade Act and ensure prompt legislation within this year through the regular National Assembly session."

Regarding the extension of the Korea-US currency swap agreement for six months on the same day, he said, "The extension of the Korea-US currency swap agreement will have a significant effect in preemptively blocking market instability," adding, "It is especially meaningful that the extension agreement was reached when only two months remained until maturity, thereby resolving market uncertainties that could arise at the maturity point early."

Finally, Deputy Prime Minister Hong announced that the eight major consumption coupons targeting 18 million people will be fully implemented. He said, "To rebound the economy in the second half, strengthening the momentum for consumption recovery, which accounts for about half of our economy, is more important than ever," and added, "We will promote consumption worth about 1 trillion won through the implementation of the eight major consumption coupons."

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