Venture investment fund overseas investment strategy, smoothly with Law firm Veat’s legal consultation!

Law firm Veat received a request from Private Investment Fund A (hereinafter referred to as "the Client") to review the legal possibilities of overseas investment for private investment funds and venture investment funds.

The Client intended to invest in overseas entities using capital. However, due to the regulatory difficulties related to the 「Venture Investment Promotion Act」 (hereinafter "the Venture Investment Act"), they inquired of Law firm Veat, a law firm with extensive experience in legal advice related to private investment fund operation.

The investment team of Law firm Veat first reviewed whether private investment funds and venture investment funds could invest overseas. In particular, they focused on whether investment was possible in a foreign parent company, considering the Client's fund usage amount, and explained the legal limits and regulations.

The investment team of Law firm Veat analyzed whether the investment method planned by the Client was legally permissible, focusing on the Venture Investment Act. According to the Venture Investment Act, the use of fund assets by a private investment fund for the benefit of itself or a third party is prohibited, and investment is only possible within the limits that do not violate the law, so they reviewed and advised whether the Client's planned investment in an unlisted company met these conditions. They also explained the restrictions on investing in listed companies for the Client.

The investment lawyers of Law firm Veat also thoroughly reviewed the possibility of the Client investing in overseas entities. According to the Venture Investment Act, venture investment funds are restricted until three years after registration to conduct business with a certain percentage stipulated in the same Act, such as newly established companies, technology innovation-type and management innovation-type small and medium enterprises in accordance with the Small and Medium Enterprise Basic Act, venture companies, and companies that develop or manufacture businesses with independent accounting and business from other businesses, therefore, they advised that whether a foreign entity is eligible for investment under the Venture Investment Act should be determined, and that if the requirements are not met, there may be restrictions on investment.

Investment Requirements for Private Investment Funds and Venture Investment Funds: Legal Considerations

When private investment funds and venture investment funds consider overseas investment, they must understand several key requirements in law, such as regulations under the Venture Investment Promotion Act and the Small and Medium Enterprise Basic Act.

According to Article 13, Paragraphs 1 and 2 of the Venture Investment Act, a private investment fund is obligated to invest more than 50% of its capital within three years after registration in newly established companies and venture companies. In particular, when a startup planner participates as a GP (general member), investment in an initial startup company must also be fulfilled.

Also, newly established companies and venture companies as stipulated in the Venture Enterprise Act are recognized under the Small and Medium Enterprise Basic Act, and when a fund invests in overseas entities, a comprehensive review is necessary, including decisions from the Tax Tribunal.

Therefore, please receive assistance from a legal advisor with extensive experience in private investment fund operations to review the requirements of the Venture Investment Act from various perspectives, verify whether the requirements of the Venture Investment Act are met, and whether there are any legal risks when investing in foreign entities, and to minimize legal risks.

Law firm Veat provides clear guidance on the legal requirements of the Venture Investment Act and private investment funds related to overseas investment, and provides specific legal advice necessary for investment strategy development.

Law firm Veat has supported various reviews based on advisory experience accumulated through reviewing several private investment fund cases, and will provide Veat’s exclusive legal advice related to private investment funds.

If you need legal advice regarding the operation of a private investment fund, please contact Law firm Veat.

Thank you.

Sincerely,

Law firm Veat