The South Korea Financial Services Commission published a summary of a roundtable examining whether third-party joint and several liability clauses in new technology business finance investment contracts place excessive burdens on founders and investee companies. The review seeks to distinguish normal business failure from misconduct while balancing responsible investment, safeguards against moral hazard and continued funding for startups and technology companies. Venture representatives favored restricting personal liability where there is no intent or gross negligence and applying consistent protections regardless of the investor’s license. Investors opposed a blanket prohibition, arguing that new technology finance companies also fund small and midsize companies, rely more heavily on private capital and need mechanisms to protect managed funds. Experts called for closer analysis of actual contract practices and alternatives such as investor governance rights and liquidation protections. The commission will review market feedback and investment contracts before determining whether to revise best-practice guidelines or legislation, or promote voluntary changes to contracting practices.

Original source