[Consulting] Legal advice on asset management methods for venture capital fund specializing in startup and venture with management participation

Law firm Veat (hereinafter "Veat") has received inquiries regarding the method of managing surplus assets of a startup/venture specialized management participation type private equity fund (hereinafter "startup/venture PEF") as defined in the 「Act on Capital Markets and Financial Investment」 (hereinafter "Capital Market Act") and has provided legal advice accordingly.

In the case of a startup/venture PEF, it must invest more than 50% of the invested amount in startup/venture companies, etc., in accordance with the Capital Market Act and its Enforcement Decree, and must also comply with the restrictions stipulated in related laws and regulations when managing subsequent surplus assets.

Accordingly, Veat has reviewed the Capital Market Act and its Enforcement Decree, etc., to determine whether there is a possibility of violating related laws and regulations regarding the surplus asset management methods being considered by the startup/venture PEF and has provided legal advice accordingly.

According to the press release released by the Financial Supervisory Service on May 10, 2019, management participation type private equity funds recorded the highest ever levels for the number of newly established PEFs, annual investment amount, and recovery amount as of the end of 2018. Veat is providing legal advice to ensure that there are no disruptions to the surplus asset management of startup/venture specialized management participation type private equity funds by providing prompt legal opinions on Capital Market Act related issues, based on the results of establishing and registering numerous PEFs during the growth process of the PEF industry. Please feel free to contact us if you need legal advice for startup/venture PEFs.

Thank you.

Law firm Veat