Korea Legislates to enter Crowdfunding Space

By Henry Thomas on Thursday 9 July 2015

Savings and Investment

On Monday the Korean government passed the Financial Investment Services and Capital Markets Act. The act has legalised equity crowdfunding in South Korea - under restrictions. Each individual can invest no more than 5 million won ($4,412) per company per year and, in a move to prevent major shareholders from dumping stock on smaller investors, owners and major shareholders cannot sell their stock for one year after they are issued.

The legislation came among 61 bills - including rules that relaxed regulation on operating private equity funds - that were aimed to revitalize the faltering economy and boost SME activity. Alongside the crowdfunding rule, the government also introduced further protection for SMEs when doing business with conglomerates - requiring conglomerates to pay additional payments if they did not pay for SME services within 60 days of the service being rendered.

The news bodes well for Korean platforms which, until now, were forced into exceptionally niche areas. Nathan Millad - CEO at G3 Partners' – called the development:

"A critical legislative milestone for pioneering Korean crowdfunding platforms like Tumblebug, which have until now been limited to helping artists raise money for their projects".

South Korea is (finally) entering the equity crowdfunding market. Whilst other regional players may be far more developed, such as Malaysia and Australia, the measures introduced should help boost activity from SMEs and help to boost entrepreneurialism in Korea's economy.

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