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Kang, Hee Jeu; Kim, Hyun --- "Private Equity in Korea: Legal Issues" [2012] ELECD 876; in Kim, Hwa-Jin (ed), "Korean Business Law" (Edward Elgar Publishing, 2012)

Book Title: Korean Business Law

Editor(s): Kim, Hwa-Jin

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781003398

Section: Chapter 10

Section Title: Private Equity in Korea: Legal Issues

Author(s): Kang, Hee Jeu; Kim, Hyun

Number of pages: 19

Extract:

10. The present and future of private
equity funds (PEF) in Korea
Hee Jeu Kang and Hyun Kim

I. INTRODUCTION

With the enactment of the Indirect Investment Asset Management
Business Act (Asset Management Act) on January 5, 2004, asset manage-
ment companies became able to form mutual funds and investment trusts
to manage assets. Such types of funds could not play a significant role as
investment tools for mergers and acquisitions (M&A), however, because
they were subject to various regulatory restrictions. Notable restrictions
included their inability to essentially function as limited liability partner-
ships despite being private funds; as well as their obligation to treat inves-
tors equally and their obligation to engage outside custodians and other
outside service providers.
To promote corporate restructuring and M&A markets and be in line
with global standards, amendments to the Asset Management Act were
made on October 5, 2004 and went into effect on December 6, 2004. These
amendments scaled back certain restrictions and introduced private equity
funds (PEF) in Korea.
With its enactment on February 4, 2009, the Financial Investment
Services and Capital Markets Act (FSCMA), designed to be the over-
arching body of law governing all aspects of capital markets, replaced
and took over the functions of the Asset Management Act. Even under
the FSCMA, PEFs are regulated separately from other types of collec-
tive investment schemes. Corporate restructuring funds and M&A funds,
being organizational forms provided for under the Asset Management
Act, were abolished under the FSCMA ...