Chairman Yim Jong-yong of Financial Services Commission(FSC).(Photo: FSC)

The Financial Services Commission (FSC) has been working to ease the laws on the capital market and financial investors. The moves are an attempt to diversify access funding for SMEs and venture businesses. 

The FSC said it will put up a pre-legislation notice on the laws from July 26 to Aug. 16. After the notice expires, the draft reform laws will be examined by the FSC before they are submitted to Cabinet for approval, after which they will be sent to the National Assembly for legislative approval and become law. The parliamentary approval for the reformed financial laws is likely to be made at the end of the year during the plenary session of the National Assembly. In the first half of next year, PEFs exclusively for start-ups and venture business firms can be set up under the revised financial laws. The revised financial laws also require more than 50 percent of investments made by PEF in start-ups and venture enterprises be invested in other start-ups and venture enterprises within two years, or within seven years since the start-ups and venture enterprises were launched.

In the case of start-ups, cooperatives set up by the existing venture capital, more than 40 percent of the invested capital should be reinvested in start-ups and venture enterprises within three years. PEFs that are qualified to invest in start-ups and venture enterprises will be given tax favors equivalent to those given to venture capital.

When start-ups and PEFs exclusively for venture enterprises are allowed to be set up, the channels for investments in start-ups and venture enterprises will be expanded, as they would include existing start-up cooperatives. 

The Financial Services Commission was established in 2008 after a series of changes in Korea’s financial supervisory system. In the wake of the 1997 Asian financial crisis, there was a growing need for an integrated supervisory authority to oversee the financial industry.

The Financial Supervisory Commission, the predecessor to the current Financial Services Commission, was founded in April 1998 as a single supervisory authority integrating financial supervisory functions of the former Ministry of Finance and Economy - currently Ministry of Strategy and Finance, MOSF - and the Bank of Korea. 

In January 1999, the Financial Supervisory Service (FSS) was founded under the guidance and supervision of the FSC to carry out examination of financial institutions along with enforcement and other oversight activities as directed or charged by the FSC. In February 2008, the Financial Supervisory Commission was integrated with the Financial Policy Bureau of the then Ministry of Finance and Economy to become the Financial Services Commission (FSC).