Excellent Reentry Capability Entrepreneurs Recognized for Re-Entrepreneurship in the Same Industry as Startups

Amendment to the Enforcement Decree of the SME Startup Support Act
Reestablishment in the Same Industry Within 3 Years Was Not Recognized as a Startup
Entrepreneurs with Excellent Recovery Capabilities Immediately Recognized as Startups
Eligible for Benefits Under the Startup Support Act

The Ministry of SMEs and Startups announced on the 4th that it has approved a partial amendment to the Enforcement Decree of the Small and Medium Enterprise Startup Support Act at the Cabinet meeting, expanding the scope in which entrepreneurs who failed in sincere management are recognized as startups even if they reestablish a business in the same industry.

Previously, if an entrepreneur reestablished a business in the same industry, they were not recognized as a startup even if they commenced business within 3 years from the date of closure (2 years in case of closure due to bankruptcy or insolvency), which restricted their participation in government startup support programs. There were voices from the field requesting that entrepreneurs with excellent recovery capabilities be recognized immediately as startups even if they reestablish in the same industry.

The Ministry of SMEs and Startups revised the enforcement decree so that entrepreneurs who failed in sincere management but are recognized as having excellent recovery capabilities, such as adopting new business models or new technologies, can be legally recognized immediately as startups even if they reestablish in the same industry.

The evaluation of whether a reestablished entrepreneur has excellent recovery capabilities involves confirming whether they managed their business sincerely without violating related laws such as accounting fraud, intentional insolvency, or unfair dismissal before reestablishment. Those who pass the evaluation undergo an in-depth sincere management assessment that analyzes the causes of failure and evaluates future business feasibility.

The amended decree is scheduled to take effect from June. Entrepreneurs who pass the in-depth sincere management assessment and are recognized as startups will be able to participate in startup support programs implemented by the government and local governments.

Jo Kyung-won, Director of Startup Policy at the Ministry of SMEs and Startups, said, "Expanding reestablishment opportunities for excellent entrepreneurs is expected to provide practical help to entrepreneurs dreaming of recovery," and added, "We will continue to prepare various policies to facilitate smooth re-challenges by failed entrepreneurs and to create a virtuous startup ecosystem."

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