Requirements for General Partners in Private Investment Partnerships Relaxed to 3% of Total Capital Contribution

Amendment to the Enforcement Decree of the Venture Investment Act Passed at the Cabinet Meeting

[Asia Economy Reporter Kim Cheol-hyun] Starting as early as the first half of next year, the qualification requirements for general partners forming personal investment associations will be relaxed from owning at least 5% of the total capital to at least 3%.

The Ministry of SMEs and Startups (Minister Lee Young) announced that the amendment to the "Enforcement Decree of the Act on the Promotion of Venture Investment" (hereinafter referred to as the Enforcement Decree), which improves the qualification requirements for general partners of personal investment associations, was passed at the Cabinet meeting on the 13th. The change in qualification requirements is scheduled to take effect three months after the Enforcement Decree is promulgated.

Personal investment associations are partnerships formed by individuals for investment purposes. Until now, general partners forming personal investment associations had to contribute at least 5% of the total capital to establish the association. In contrast, for venture investment associations, general partners are required to contribute at least 1% of the total capital. This meant that when forming large-scale personal investment associations, the capital contribution burden on general partners was relatively higher compared to venture investment associations, causing difficulties in forming sizable associations.

Going forward, the capital contribution share required of general partners in personal investment associations will be relaxed to at least 3% of the total capital, reducing the burden on general partners aiming to form large-scale personal investment associations.

New professional qualification requirements have also been introduced for individuals acting as general partners forming personal investment associations. As of the end of September, among 2,943 operating associations, 2,076 (70.5%) have individuals as general partners, but there were many concerns about poor management due to the lack of separate qualification requirements for association operation and management. Accordingly, the Ministry of SMEs and Startups included qualification criteria in the Enforcement Decree such as: ▲ being a professional individual investor registered with the Ministry of SMEs and Startups, or ▲ having at least five years of experience as a general partner managing associations, or ▲ having performed investment screening duties for at least two years at a startup investment company, technology holding company, etc., or having at least three years of experience in investment-related work.

If these requirements are not met, individuals must complete training courses designated and announced by the Minister of SMEs and Startups, such as general partner training programs, to become general partners of personal investment associations. Additionally, going forward, startup planners and others will be allowed to become general partners managing personal investment associations even if they belong to companies within mutual investment-restricted corporate groups.

Minister Lee Young stated, "This amendment to the Enforcement Decree is expected to resolve difficulties in forming personal investment associations while enhancing the professionalism of those managing them, thereby revitalizing the angel investment market and contributing to its soundness."

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