The Start - Up industry welcomed the passage in a National Assembly standing committee of a bill that bans the practice of imposing joint liability on founders.
Korea Startup Forum said on the 26th, "We welcome the amendment to the Act on Special Measures for the Promotion of Venture Investment that passed the Trade. Industry Energy. SMEs. and Startups Committee on the 21st."
Since 2014, the government has expanded the scope of founders exempt from joint guarantees to financial institutions, and in 2018 extended it to policy finance institutions. However, some private venture capital companies and financial institutions demanded joint liability from founders in the form of "investment contracts." The industry pointed to this as a factor that makes it difficult for founders who failed to try again.
Korea Startup Forum assessed the amendment, saying, "By elevating the provision that banned joint liability, which had remained at the notice level, to the level of law and by prohibiting the investment contracts themselves that demand joint liability from individual investment partnerships and startup accelerators, it has clearly established a legal basis that substantively protects founders."
It added, "This legislation will play a decisive role in building a re-challenge ecosystem where people can get back up even after failure," and explained, "The confidence that a single failure does not lead to a lifetime of debt will encourage more talent to try founding companies, and this will lead to the dynamism of Korea's overall innovation ecosystem."
It continued, "It will establish a healthy investment culture in which founders and investors, as true partners, share risks and outcomes," adding, "KOSPO will add support so that this bill can pass the plenary session and be implemented quickly, and we will continue to convey voices from the field."