Lee So-young, nominee for Minister of SMEs and Startups, stated on the 15th that if there are insufficient exception provisions for venture companies regarding the amendment to the Commercial Act mandating the cancellation of treasury shares, she will proceed with discussions to broaden those exceptions.
During the confirmation hearing held at the National Assembly Industry, Trade and Energy and Small and Medium Venture Company Committee on that day, when People Power Party lawmaker Yoon Han-hong asked, "SMEs utilize treasury shares in various ways; if the Commercial Act amendment forces their mandatory cancellation, it will become extremely dangerous. As one of the key figures who pushed forward this amendment, what is your view?" Lee So-young responded accordingly.
The nominee said, "Even under the amended law, long-term holding is possible through shareholder meeting approval when necessary for employee compensation or business operations," adding, "In particular, venture companies can hold shares long-term to implement stock option compensation."
She further emphasized, "There remains a 1-year and 6-month grace period from the enforcement date of the amended Commercial Act in March, providing time for (additional) institutional improvements. If there are insufficient parts under such exceptions, we can fully keep open discussions to broaden those exceptions."
Meanwhile, the venture company sector has raised concerns that although treasury shares held for employee compensation purposes were included as an exception target, they still pose a burden. Unlisted venture and startup companies utilize treasury shares not only for employee compensation but also in acquiring other companies or as equity negotiation tools during partnerships with strategic investors (SIs).
Additionally, from the perspective of management stability, if treasury shares acquired through methods such as exercising call options when co-founders or key personnel leave face cancellation burdens, there are concerns about potential outflow of equity to external parties. Furthermore, there are criticisms that flexibility may be reduced due to the possibility of failing to obtain approval for long-term holding of treasury shares at annual shareholder meetings each year.
[MoneyToday startup media platform Unicorn Factory]
in FUTURE
