[Outstanding] Does 'business approval right' included in the investment agreement have legal effect? _An Il-won Partner Lawyer
Article posted in 2023-08-09 17:14:52 | VEAT
Veat’s An Il-Won Partner Attorney has contributed content through ‘Outstanding’, a leading IT specialist media, regarding ‘Business Consent’ – a key issue for venture capitalists and startups – and explained in detail the legal effect of this right.
Notably, many venture capitalists and startups were paying close attention to the recent Supreme Court ruling (Case No. 2021da293213 regarding the claim for repayment) and, based on this ruling, explained step-by-step what ‘Business Consent’ means in an investment agreement, why the legal validity of ‘Business Consent’ is a problem, and what the Supreme Court’s judgment was.
Recently, the Supreme Court issued a ruling on a case that many venture capitalists and startups were interested in. This ruling was regarding ‘Is ‘Business Consent’ included in investment agreements legally valid?’ – the key issue was the case (Case No. 2021da293213 regarding the claim for repayment).
This case arose from a situation where an RCPS (Cumulative Convertible Preferred Stock) investment of 20 billion KRW was made to a small IT company, with a ‘Business Consent’ clause in the investment agreement stating that ‘the company must obtain the prior consent of the investor to issue new shares.’ The investor then conducted an additional fundraising (issuing new shares to a new investor) without prior consent, violating this clause, leading to a lawsuit seeking repayment of the investment and a penalty for breach of contract.
To put it briefly, the conclusion is as follows,...Source: Outstanding (https://outstanding.kr/)
An Il-Won Partner Attorney, who is also a Legal Mentor Attorney for ICT Startups by the Ministry of Science and ICT and a Lecturer at the ‘2020 Venture Start-up Investment Academy’ by the Korea Bar Association, provides legal advisory services based on his high expertise in the ‘investment’ and ‘startup/company’ fields.
Law Firm Veat has extensive experience in providing legal advisory services related to investment with various venture capital and startup/company clients and has been selected as a ‘Finalist’ in the ‘Korea Deal Firm’ category at ‘ALB Korea Award 2022’, having achieved TOP 5 in the ‘2022 Annual Bloomberg M&A League Table’, thus demonstrating its expertise in ‘investment and M&A legal advisory services’.
Please contact Veat if you need any investment-related legal advisory services, and Law Firm Veat will always do its best to ensure the successful investment and growth of its clients.
Thank you. Law Firm Veat Dream