Venture Industry "Promoting BDC Introduction and Additional Work System"

Venture Business Association to Hold Second Half Press Briefing on 24th
Activation of Venture Finance, Talent Innovation, Globalization, Regulatory Innovation

The venture business sector has presented the introduction of Business Development Companies (BDC), securing labor flexibility, the introduction of performance-based stock systems, and granting special exceptions as key tasks for the second half of the year.

Seong Sang-yeop, chairman of the Korea Venture Business Association, held a press conference for the second half of the year on the 24th at the Lahan Hotel in Jeonju, Jeollabuk-do, during the 'Venture Summer Forum,' stating, “We propose ‘venture finance revitalization,’ ‘talent innovation,’ ‘globalization,’ and ‘regulatory innovation’ as core tasks for venture companies to overcome the recent complex crisis and achieve a leap forward through voluntary innovative growth.”

Seong Sang-yeop, Chairman of the Korea Venture Business Association (center), is holding a press conference for the second half of the year on the 24th at Lahan Hotel in Jeonju, Jeonbuk, explaining the key promotion tasks. (From left) Kim Sun-oh, Senior Vice Chairman; Yoon Mi-ok, Chairwoman of the Korea Women Venture Association; Chairman Seong; Ko Young-ha, Chairman of the Korea Angel Investment Association; Jo Jun-hee, Chairman of the Korea Software Industry Association. Photo by Korea Venture Business Association

First, he emphasized the introduction of the BDC system. BDC is a system that raises private funds through public offering funds, lists the funds on the stock exchange, and allows individuals to invest in unlisted venture companies. The amendment to the “Capital Markets and Financial Investment Services Act” containing this is currently pending in the National Assembly’s Political Affairs Committee. Chairman Seong explained, “In a situation where policy finance is shrinking, BDC is a good alternative that can attract large-scale private funds to promote corporate growth and reduce dependence on policy finance.”

They will also work to expand tax support for domestic corporations investing in venture funds. Although domestic corporations, including financial institutions, are investors who can help expand venture funds, they are currently excluded from major tax benefits such as capital gains tax exemption on stock transfers.

Efforts will also be made to secure labor flexibility for venture companies. The grace period for the “8-hour additional work system for workplaces with fewer than 30 employees,” which was allowed until the end of last year, will end this year, raising concerns about difficulties in workforce management for ventures and startups. Chairman Seong emphasized, “Ventures and startups need to create results through concentrated work during specific periods for their own research and development (R&D) or industry-academia-research joint technology development, and flexible working hour systems are absolutely necessary in this process.” In this regard, Lee Jeong-min, secretary general of the Korea Venture Business Association, also voiced criticism toward the government. Secretary General Lee pointed out, “The current government announced this as a campaign pledge during the presidential election and treated it importantly during the transition committee process, so we were reassured, but there has been no progress for a year and a half. Companies with fewer than 30 employees are already in a gray zone.”

The issue of software specialists, which has high demand but insufficient supply, is planned to be resolved through the recruitment of foreigners. For this, improvements in the E-7 visa requirements and other startup and employment visa systems are necessary.

The Korea Venture Business Association also argued for the introduction of a performance-based stock system and granting special exceptions. Chairman Seong said, “Due to the financial characteristics of venture companies, there is no distributable profit, making the use of performance-based stocks practically impossible. Also, since it is recognized as income immediately upon receipt and taxed, it is more burdensome compared to stock options, which defer income tax payment by postponing the exercise timing. When unlisted venture companies acquire treasury stocks for the purpose of granting performance-based stocks, conditions should be relaxed and tax benefits similar to stock options should be provided.”

In addition, the Korea Venture Business Association plans to focus on expanding tax benefits to activate mergers and acquisitions (M&A), expanding support for trade finance for venture companies, supporting private global cooperation networks, supporting global investment attraction, and shifting the regulatory paradigm to negative regulation.

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