The Ministry of SMEs and Startups and Korea Venture Investment Corporation revised the "standard venture investment contract" for the first time in three years to improve unfair practices in venture investment contracting.
The Ministry of SMEs and Startups (MSS) and Korea Venture Investment Corporation on the 30th held a "declaration ceremony for advancing venture investment contract culture" at Startup Venture Campus in Seoul (SVC Seoul) and released the revised standard contract and key improvements.
The revised standard contract reflects the results of discussions by startups, venture capital (VC), accelerators (AC), and legal experts at the forum for advancing venture investment contract culture launched in Dec. last year. It was revised for the first time in three years since 2023 to reflect amendments to venture investment laws and regulations.
The amendment focuses on strengthening the bargaining power of startups, which have relatively less experience with investment contracts, and creating a fair investment environment.
Key points include ▲ separating the investment contract and shareholders' agreement ▲ improving how investors exercise prior consent rights ▲ improving the RCPS-centered contracting practice that grants investors the right, under certain conditions, to have their investment repaid or converted into common shares ▲ improving the "refixing" method that adjusts investors' share conversion prices when corporate value declines ▲ improving forced initial public offering (IPO) clauses ▲ limiting joint liability of third parties.
Korea Venture Investment Corporation also produced the "standard venture investment contract and commentary" containing clause-by-clause explanations and importance ratings to increase the usability of the revised standard contract. The commentary will be released online starting today and, beginning in July, will also be distributed in book form through online and offline bookstores.