Hello, this is attorney Kim Kwang-sik of Cheongchul Law Firm.

On June 30, 2026, the Ministry of SMEs and Startups and the Korea Venture Investment Corporation held a "Venture Investment Contract Culture Development Ceremony" and released the revised "Standard Venture Investment Contracts," updated for the first time in three years. Produced by the Venture Investment Contract Culture Development Forum launched last December with the participation of startups, VCs, accelerators and legal experts, the revision focuses on correcting recurring unfair contracting practices and building a contractual framework aligned with global standards.

Venture investment contracts have long been structurally disadvantageous to early-stage founders with limited fundraising experience. Without the consent of every investor, even routine management decisions such as issuing new shares or appointing officers could be blocked; an initial public offering (IPO) was treated as an obligation that had to be achieved; and where a later round was priced lower, the resulting dilution burden fell mostly on the founders.

Below we summarize the six key changes, their practical impact on founders and investors respectively, and how the revision applies to investment contracts already executed.

[Question]

Our company (or our fund) is about to raise investment, and we hear that the standard venture investment contracts have been revised. What exactly has changed? And do the revisions automatically apply to investment contracts we have already signed?

[Answer]

1. Restructuring the contract suite — from 32 integrated forms to 5 forms split into SPA and SHA

The previous standard contracts used an integrated structure that placed all investment-related rights and obligations in a single agreement, resulting in as many as 32 forms. Matters concerning execution of the investment were mixed with matters concerning post-investment operations and governance, making it difficult to distinguish the character and application of each provision — a point raised repeatedly.

The revised standard contracts separate these into a Share Purchase Agreement (SPA) and a Shareholders' Agreement (SHA), simplifying the overall suite to five forms. The SPA governs the terms of share subscription at the investment execution stage, while the SHA governs shareholders' rights and obligations and company operations after investment. This division is regarded as improving consistency with the structures commonly used in global venture investment practice.

📝 Card news summary ▶ The former 32 integrated contract forms are separated into a share purchase agreement (SPA) and a shareholders' agreement (SHA) and simplified to five forms, clearly distinguishing rights and obligations at the investment execution stage from those at the post-investment governance stage.

2. Shifting consent rights to "collective consent" — preventing deadlock from a single veto

The most symbolic change is how prior consent rights are exercised. Previously, individual consent from every investor was required before matters subject to prior consent — issuing new shares, disposing of major assets, appointing officers — could be implemented. The problem was that as rounds accumulated and investor numbers grew, opposition from even one small investor frequently delayed or effectively paralyzed normal management decisions for long periods.

The revised standard contracts convert this into a collective consent structure requiring "consent of holders of at least a specified percentage of voting shares." By aggregating the intentions of the investor group for each round into a single standard, the design prevents an individual investor's veto from dictating the overall decision. That said, this is only a standard form; in actual contracts, negotiating the specific consent thresholds and exceptions remains important depending on the relative bargaining power of lead and follow-on investors.

📝 Card news summary ▶ Individual consent from every investor is replaced by collective consent for each round (consent of holders of at least a specified percentage of voting shares), improving the problem of a single small investor's veto paralyzing the entire decision-making process.

3. From RCPS to CPS — redemption rights become an option used only when needed

Korean venture investment practice has effectively treated redeemable convertible preferred stock (RCPS) as the standard. RCPS includes a redemption right allowing the investor to demand that the company redeem the shares to recover the investment upon satisfaction of certain conditions, which was criticized as a financial burden and potential liability for the company that could adversely affect follow-on fundraising and assessments of financial soundness.

The revised standard contracts present convertible preferred stock (CPS) without redemption rights as the default form, restructuring the redemption right as an optional feature to be added only where the investment structure warrants it. This reflects the fact that conversion-centered rather than redemption-centered preferred structures are the norm in global VC practice, and is also expected to ease the burden of recognizing liabilities on the company's financial statements.

📝 Card news summary ▶ Convertible preferred stock (CPS) replaces the customary redeemable convertible preferred stock (RCPS) as the default form, with redemption rights demoted to an option added only where warranted, easing the company's financial burden.

4. Improving refixing — from full ratchet to weighted average

Refixing (adjustment of the conversion price) is the mechanism that adjusts the conversion price of preferred shares held by existing investors to a new, lower price when a "down round" occurs — that is, when a later round is valued below the previous round. The full-ratchet method commonly used in past practice reset the conversion price directly to the new issue price, which favors investor protection but had the side effect of sharply diluting existing shareholders, including founders.

The revised standard contracts improve this by presenting a broad-based weighted average method as the default. Calculating the conversion price by weighting the number and price of newly issued shares against the total number of shares already issued preserves the investor-protection function while substantially cushioning the dilution shock to existing shareholders, including founders, in a down round.

📝 Card news summary ▶ The refixing method for adjusting the conversion price in a down round changes from full ratchet to a weighted average method, easing the dilution burden on existing shareholders including founders.

5. Softening IPO provisions and limiting joint liability

Under the previous standard contracts, IPO provisions were often operated as an "obligation of result" requiring listing to be achieved, so that a delay beyond the agreed deadline triggered investor put options or penalty payments. In reality, however, the timing of a listing depends heavily on market conditions, an external variable the company cannot control.

The revised standard contracts convert the IPO provision into a best-efforts obligation to "use good-faith efforts toward listing." In addition, the broad joint liability of founders and third parties (often including family members such as spouses) that had been widely accepted in investment contracts is now clearly narrowed to cases involving serious grounds attributable to intent or gross negligence. The aim is to ease the excessive burden previously shifted onto founders personally and their families.

📝 Card news summary ▶ IPO provisions are relaxed from an "obligation of result" compelling listing to a "best-efforts obligation," and the joint liability of founders and third parties is limited to cases of intent or gross negligence, substantially reducing founders' burden.

6. Practical points — no retroactive effect, and greater judgment burden on VCs

Above all, note that the revision does not automatically apply retroactively to investment contracts already executed. To reflect the revised standard in the course of follow-on investment or IPO preparation, separate legal steps are required — renegotiation with existing investors, amendment of the articles of incorporation, a resolution of the class shareholders' meeting, and corrective registration. Revising the standard contracts merely presents a new "default framework"; it does not automatically reset existing contractual relationships.

A more flexible standard also means more options for VCs. As contract structures diversify — individual or collective consent rights, separate or integrated SPA and SHA, redemption rights added or not — VCs now bear the practical burden of reviewing and judging for each deal whether a departure from the standard is a reasonable choice. Founders, too, increasingly need to enter negotiations with an accurate understanding of which structure serves their company best.

📝 Card news summary ▶ The revised standard contracts do not apply retroactively to existing investment contracts, so separate steps such as amending the articles of incorporation are required; and as contractual options multiply, both VCs and founders bear a greater burden to review and negotiate the merits of individual provisions themselves.

Cheongchul Law Firm provides comprehensive legal advice across venture investment contracts — from advising startups at the fundraising stage, to drafting and negotiating share purchase agreements (SPA) and shareholders' agreements (SHA), designing and reviewing key provisions such as prior consent rights, refixing and redemption rights, diagnosing risks in IPO trigger and joint liability provisions, advising on procedures such as amending articles of incorporation and class shareholders' meeting resolutions needed to align existing investment contracts with the revised standard, and advising VCs and accelerators at the investment screening stage. If you need a contract review ahead of raising or making an investment, we recommend analyzing the contract structure and provision-level risks systematically from the earliest stage to design your negotiating approach.