Joint Liability for Venture Founders to Disappear… Bipartisan Consensus on Regulating NTBFs

Opposition Lawmakers Propose Amendments to the Credit Business Act
Ruling Party’s Kim Hankyu: “Pursuing Legislative Ban on Joint Liability”

As Shinhan Capital, a new technology business finance company (NTBF), held a startup CEO responsible for investment failures, voices in the National Assembly are emphasizing the need for legislative revisions. Since opposition parties have already submitted bills, the passage of the law seems to be a matter of time once discussions begin.

According to the National Assembly's bill information system as of August 7, 2026, three amendments to the Specialized Credit Finance Business Act (“Credit Finance Act”) related to preventing third-party joint liability for NTBFs have been proposed in the 22nd National Assembly. These include bills sponsored by Sungwon Kim and Chulsoo Ahn of the People Power Party and Jongmin Kim, an independent. All of these bills add provisions to limit third-party joint liability for NTBFs.

Hankyu Kim, a Democratic Party lawmaker who serves as the Deputy Policy Chief of his party, recently wrote on his Facebook page, "Shinhan Capital won a lawsuit holding the former CEO of Urbanbase responsible for the business failure, but this outcome does not align with the National Assembly's legislative intention to prohibit joint liability for founders who acted without intent or negligence." He continued, "Contrary to the court's ruling, the National Assembly is discussing expanding the prohibition of joint liability from venture (investment) companies to new technology business investments and will soon move forward with legislative revisions." This indicates that the ruling party also sees the need for swift enactment of the relevant law. Assemblyman Kim is also the co-representative of the parliamentary startup research group "Unicorn Farm."

Previously, Shinhan Capital—an NTBF—filed a lawsuit against Urbanbase founder and former CEO Jinwoo Ha, holding him responsible for the company’s business failure. Urbanbase, an architectural platform startup founded in 2014, had been growing to the point where it was preparing for a technology-based IPO, but due to the deterioration of the startup investment market and resulting liquidity issues, the company filed for restructuring in December 2023. Shinhan Capital, which had invested KRW 500 million in Redeemable Convertible Preferred Shares (RCPS), exercised a put option against Ha. This led to a legal dispute, with the Supreme Court ruling in favor of Shinhan Capital and ordering Ha to pay approximately KRW 1.3 billion (including interest).

Under current law, venture investment companies and company builders are subject to joint liability limitations for third parties, but NTBFs are not. This is because NTBFs fall under the Credit Finance Act, rather than the Venture Investment Promotion Act. This provision, which was explicitly stated in the "Regulation on the Registration and Management of Venture Investment Associations" as of April 13, 2023, was elevated to the Venture Investment Promotion Act and has been in force since December 30, 2023. However, as the Credit Finance Act lacks this provision, a regulatory gap remains.

Triggered by this case, the Credit Finance Association has also moved to revise its existing voluntary standards ahead of the legal amendment. According to a recent association notice, the scope of joint liability limitation has been expanded from "early-stage" NTBFs to all NTBFs. Additionally, the phrase previously referring to "third-party individuals" has been revised to simply "third parties," expanding the scope of those protected from joint liability. These new voluntary standards are scheduled to take effect from September 2026.

However, since these are not statutory measures, the swift passage of the pending amendment bills is viewed as urgent. As formal discussions proceed in the National Assembly, the bills are expected to pass easily. Since the same content is already reflected in the Venture Investment Promotion Act and related bills have been proposed by opposition lawmakers, few disagreements are expected. Assemblymen Chulsoo Ahn and Sungwon Kim of the People Power Party submitted their respective amendments to the Credit Finance Act in November 2025 and February 2026.

This content was produced with the assistance of AI translation services.