Crowdfunding for HNWs to be extended in South Korea

Chris Hamblin

19 August 2015

In their final shape the amendments, open for public comment until 1 September, might take effect as early as January next year. They are expected to allow start-ups and small/medium-sized businesses to obtain crowdfunding, through which high-net-worth investors might contribute.

Investors will be subject to different caps on the amounts they are allowed to put into this-or-that company or during a particular year, depending on their professional investment knowledge and/or risk-absorbing capacity.

Professional investors will, if the rules go through unchanged, be subject to no cap at all. HNWs or "investors who meet certain income requirements" will be subject to a cap of 10 million won on their investments in any one company and 20 million won in any given year. The general public will be capped at 2 million won per company and 5 million won per annum.

In principle, investors will be prohibited from selling securities within a year of issuance. In exceptional cases, investors will be allowed to sell securities within a year of issuance to those who acquire sufficient information about the company - e.g professional investors and securities issuers.

The minimum amount of equity capital will be set at 500 million won for an online brokerage firm to be registered as a ‘crowdfunding business.'