Vice Minister Gi Jae: "Allowing Large Corporation CVC, Promoting Fair Trade Act Legislation Within the Year"

12th Regular Briefing of the Central Economic Countermeasures Headquarters

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, stated on the 30th that "we will pursue legislation within this year during the regular National Assembly session through the amendment of the Fair Trade Act" regarding the allowance of venture capital (CVC) ownership by holding companies.

At the 12th regular briefing of the Central Economic Countermeasures Headquarters held at the Government Seoul Office on the same day, Vice Minister Kim said, "We will discuss a little more about what legislative form would be best."

Regarding the amendment of the Fair Trade Act instead of the Venture Investment Promotion Act, he explained the background of the decision, saying, "Basically, allowing venture investment by general holding companies is a limited allowance of the separation of capital and industry, and the Fair Trade Commission will conduct post-supervision on this."

Kim Jae-shin, Secretary General of the Fair Trade Commission, addressed concerns about side effects from allowing 40% external funding, saying, "Conversely, more than 60% must be invested in the fund from retained funds within the holding company system," and added, "We will try to ensure that money locked within the holding company system flows into investment destinations as much as possible." He also said, "We have completely banned CVC investments within the holding company system for venture companies in which the controlling family holds even a single share," and added, "Because of these safeguards, we believe there will be no circumvention or tricks arising from external funding."

Meanwhile, the government decided to strengthen holding companies' responsibility for CVCs by establishing them as wholly owned subsidiaries (100% shareholding) and restricting investment destinations by prohibiting investments in companies where the controlling family holds shares. On the other hand, up to 40% external funding will be allowed when forming funds.

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