The South Korean government intends to adjust regulations governing corporate venture capital funds to make establishing a unit easier, The Investor has reported.
Conglomerates are designated as nonfinancial holding companies by the government, which restricts their establishment of financial subsidiaries. The government is reluctant to change that rule but is favouring a law that would permit them to form corporate venturing affiliates.
The new regulation will be bolstered by a decision announced last week to lower the financial threshold for setting up a non-banking special investment holding company from ₩300bn to ₩50bn ($265m to $44m) from April this year.
However, the rule will mandate that investments by the corporate-backed entity must involve it acquiring a stake of at least 20%, and the corporates must make direct investments, as opposed to simply taking a general partner position in a fund.
Korea-based firms that currently operate investment subsidiaries include consumer electronics manufacturer Samsung, steel producer Posco and diversified conglomerate Hanwha.
