"Small Business Owners Can Now Forfeit Grace Period Status"... Amendment to the Enforcement Decree of the Framework Act on Small Enterprises

Grace Period Forfeiture Now Allowed for Small Business Owners
Revitalization Zone Criteria Eased in Depopulated Areas

A revised bill that allows small business owners to voluntarily forfeit their status and relaxes the criteria for designating revitalization zones in depopulated areas has been approved by the Cabinet.

On August 26, the Ministry of SMEs and Startups announced that the Cabinet had approved partial amendments to the Enforcement Decree of the Framework Act on Small Enterprises and the Enforcement Decree of the Local Commercial District Act.

The small business owner grace period system allows those who exceed the criteria for small business status, such as by increasing sales or employment, to retain their status for three years. Until now, this grace period was applied uniformly, regardless of the company's wishes.

In response, the Ministry has improved the system to allow small business owners to forfeit the grace period if they wish, such as when they want to participate in government or local government support programs that are only available to small and medium-sized enterprises. However, to prevent confusion in the application of the system, companies that forfeit the grace period cannot reverse their decision. The revised bill will take effect on September 1.

Revitalization zones include local coexistence zones, which are at risk of gentrification, and autonomous commercial zones, which focus on declining commercial districts. To be designated as a revitalization zone, there must be at least 100 stores clustered within the area.

The Ministry has significantly relaxed the store count requirement for revitalization zone designation, distinguishing between depopulated areas and other regions. In the case of commercial districts within depopulated areas, the threshold has been lowered to at least 50 stores. This amendment will take effect on September 2.

Lee Daegun, Director of Small Business Policy, stated, "By allowing small business owners to forfeit the grace period, we have expanded their options and established a rapid growth ladder for transition to small and medium-sized enterprises. In addition, with this amendment to the Enforcement Decree of the Local Commercial District Act, we expect that the blind spots of small alleyway businesses in depopulated areas will be alleviated and that it will contribute to balanced regional development."

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