Venture capital investors generally negotiate the following protections: The rationale behind investing in these securities is to (i) secure their investments by obtaining priority in terms of distribution payment and repayment upon liquidation and (ii) realize potential upside in the invested company by having a right to convert those securities into common stock.Ħ) Is there any restriction on rights available to venture capital investors in public companies?ħ) What protections are generally available to venture capital investors in your jurisdiction? It also not uncommon for them to invest in convertible bonds (CB) or bonds with warrants (BW). Venture capital funds prefer to invest in redeemable convertible preferred shares (RCPS) (i.e., preferred shares with both a redemption and conversion right) or convertible preferred shares (CPS) (i.e., preferred shares with just a conversion right).
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However, if either the buyer (together with its affiliates worldwide) or the target company (together with its affiliates worldwide) had total assets or gross revenue of KRW 2 trillion (approximately USD 1.67 billion) or more as of the most recent fiscal year-end, the buyer must file the business combination report prior to the closing of the acquisition and the parties are not permitted to close the transaction until the KFTC grants clearance.ĥ) What are the preferred structures for investment in venture capital deals? What are the primary drivers for each of these structures?
In general, filing of the business combination report is a post-closing requirement and the buyer is only required to file a business combination report within 30 days of the closing of the acquisition. the target company (together with its affiliates worldwide) had total assets or gross revenue of KRW 30 billion (approximately USD 25 million) or more as of the most recent fiscal year end. the buyer (together with its affiliates worldwide) had total assets or gross revenue of KRW 300 billion (approximately USD 250 million) or more as of the most recent fiscal year-end and the buyer acquires at least 20% of the issued and outstanding voting shares of the unlisted target company, or at least 15% of the issued and outstanding voting shares of the public target company An antitrust analysis needs to be cleared by filing a business combination report with the Korea Fair Trade Commission (KFTC) in respect of an acquisition of shares if: Note that venture capital funds do not typically invest in the above sectors.Ĥ) Would an investor be required to undertake an antitrust analysis prior to investment? When would such a requirement be triggered? foreign investment ratios to be greater than 50% in certain sectors, including (a) media broadcasting, (b) newspaper/magazine publications and (c) air transportation businesses.
foreign investments in certain sectors, including (a) postal services, (b) education (pre-primary, primary, secondary, higher education, universities, graduate schools and schools for the disabled) and (c) artists’, religious, business, professional, environmental advocacy, political, labor and other specialized organizations and There are no particular legal limitations, except that South Korea does not permit: Venture capital funds typically invest in the following industries: internet/mobile software, bio/healthcare and semiconductor-related businesses.Ģ) Do venture capital funds require any approvals before investing in your jurisdiction?ģ) Are there any legal limitations to an offshore venture capital fund acquiring control or influencing the business, operations, or governance of an investee entity? SOUTH KOREA Bae, Kim & Lee LLCġ) In your jurisdiction, which sectors do venture capital funds typically invest in?
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In particular, it does not replace professional and detailed legal advice, as facts and circumstances vary on a case-by-case basis and country-specific regulations may change. The guide does not claim to be comprehensive, and laws in this area are quickly evolving. World Law Group member firms recently collaborated on a Global Venture Capital Guide that covers more than 30 jurisdictions on investment approval processes, typical investment sectors and investment structures on Venture Capital deals (and more!).
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