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Home > LAWREVS > WILJ > Vol. 13 > No. 2 (2004)

 

Washington International Law Journal

Eugene Kim

Abstract

Because U.S. venture capital contracting techniques are well developed and highly effective, the appeal of adopting such techniques in venture capital transactions outside the United States is enormous to globally minded investors and legal practitioners. South Korea has yet to develop venture capital contracting practices as extensive as those found in the United States. In response to its burgeoning venture capital industry, however, South Korea will likely continue to adopt U.S. venture capital techniques in transactions governed by Korean corporate law. Such transactions can benefit the South Korean venture capital industry, leading to more profitable investments and financially successful companies operating on Korean soil. Although the Korean Commercial Code ("KCC") is typically perceived as rigid and ambiguous, it provides a sufficient legal framework under which virtually all of the contracting techniques commonly used in U.S. venture capital transactions can be implemented with varying degrees of success. Because transactions that are impermissible under the KCC are generally regarded as null and void, the enforceability of U.S. techniques under Korean law requires strict statutory compliance. Certain notable differences therefore exist between venture capital contracting documentation in South Korea and the United States. While such differences further reinforce the overall desirability of adopting U.S. techniques in South Korean venture capital transactions, it does not follow that these techniques are without legal force or effect. With careful planning and drafting by legal practitioners, U.S. techniques can both achieve their desired effect and comply with all relevant KCC provisions.

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