Enhancing the Stock Option System to Attract Talent to Venture Companies

Amendment to the Special Act for Fostering Venture Companies Approved at the Cabinet Meeting

[Asia Economy Reporter Kim Cheol-hyun] To facilitate smooth funding for venture companies, the scope of special cases for in-kind contributions is being expanded, and the stock option system will be enhanced to support talent acquisition. The Ministry of SMEs and Startups (Minister Lee Young) announced that the amendment to the "Special Measures for the Promotion of Venture Businesses Act" (hereinafter referred to as the Venture Business Act), which includes these contents, was approved at the Cabinet meeting on the 27th.

With this amendment to the Venture Business Act, copyrights are included in the special cases for in-kind contributions to venture companies. Under the current Venture Business Act, when a contributor invests industrial property rights such as patents or designs in a venture company, the price evaluated by a specialized institution is recognized as the price evaluated by a certified appraiser under the Commercial Act. However, copyrights were excluded from the special price evaluation cases for in-kind contributions, requiring a complicated evaluation process. By including copyrights in the special cases for in-kind contributions to venture companies through this amendment, appropriate price evaluation through specialized institution assessment and prompt contributions will be possible, which is expected to contribute to the smooth cash procurement of venture companies.

The stock option system has also been enhanced. A stock option is a system that grants the right to purchase shares at an agreed price (exercise price). For stock options granted after the enforcement of the amended Venture Business Act, there will be distinctions between employees and external experts in terms of grant limits, exercise prices, and exercise conditions. For employees, the limit remains at 50% of the total issued shares as before, while for external experts, the limit is lowered from the previous 20% to 10%. This differentiation between employees and external experts in stock options aims to promote the use of the system by employees. Venture companies must report to the Ministry of SMEs and Startups when granting, canceling, or withdrawing stock options, and unlisted venture companies must grant stock options according to the Venture Business Act.

The Ministry of SMEs and Startups plans to revise subordinate statutes by collecting opinions from the industry and experts before the enforcement of the amended Venture Business Act. Minister Lee Young said, "Venture companies are facing many difficulties amid the triple high complex crisis," and added, "We will continuously seek measures to support funding and talent acquisition to alleviate the difficulties faced by venture companies even a little." He further stated, "The Ministry of SMEs and Startups will continue to improve systems to support the growth of venture companies," and added, "In February, we plan to hold a policy briefing session on venture company stock options for companies experiencing difficulties in utilizing the stock option system."

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