Korea Overhauls Its Venture Investment Standard Contracts (2026): Five Points Every Biotech Founder and Cross-Border Investor Should Know

On June 30, 2026, Korea's Ministry of SMEs and Startups (MSS) and the Korea Venture Investment Corp. (KVIC) released a full revision of the country's Venture Investment Standard Contracts — the first comprehensive overhaul in three years, announced at a "Venture Investment Contract Culture Development" ceremony. The revision is more than cosmetic: it re-architects the structure of Korean venture financing documents and recalibrates how much liability a founder personally carries.

For a foreign audience, this matters more than it may first appear. Overseas venture funds co-investing alongside Korean investors, foreign strategics and pharmaceutical companies partnering with or licensing from Korean biotech startups, and international counsel advising on cross-border rounds all routinely encounter these standard forms. Understanding what changed — and, importantly, what did not automatically change — is essential to reading a Korean cap table and term sheet correctly.

This article summarizes the key changes with a particular focus on the pharmaceutical and biotech sector, where long development timelines, high clinical-failure risk, and licensing-driven value creation make each contractual term unusually consequential. Where useful, it draws comparisons to the U.S. NVCA model documents that many international readers will already know.

A note on the author's context: these themes are the subject of a lecture I will deliver on July 22, 2026 at the Bio iCORE Business Growth School (Daejeon University), comparing the U.S. NVCA framework with Korean venture investment contracts for biotech founders.

Executive Summary

•   Who and when: The MSS and KVIC released a full revision of the Venture Investment Standard Contracts on June 30, 2026 — the first in three years.

•   Structure: The former "all-in-one" contract is split into a Share Subscription Agreement (SPA) and a Shareholders' Agreement (SHA), and the number of contract types is streamlined to five.

•   Consent rights: The de facto unanimous investor consent model shifts toward a round-based collective consent mechanism.

•   Preferred shares: The default moves from Redeemable Convertible Preferred Shares (RCPS) toward Convertible Preferred Shares (CPS), treating redemption rights as optional rather than automatic.

•   Anti-dilution (refixing): The full-ratchet approach is discouraged in favor of a weighted-average method as the baseline.

•   IPO covenant: Reframed from a hard obligation to achieve listing into a best-efforts obligation.

•   Founder liability: Blanket joint-and-several liability is narrowed to cases involving the founder's willful misconduct or gross negligence. A statutory restriction on imposing third-party joint liability took effect on December 30, 2025 under the amended Venture Investment Promotion Act.

1.  Why the Revision — the Limits of the "All-in-One" Contract

Historically, a single Korean venture financing document bundled together share subscription terms, investor governance rights, founder transfer restrictions, put options, penalty (liquidated-damages) clauses, and the personal liability of "interested parties." Practitioners loosely called this the "investment agreement," but in substance it fused a share subscription agreement and a shareholders' agreement into one instrument.

This bundled structure rarely causes problems in the first round or two. But as a company moves through seed and Series A, B, and C rounds, the rights of earlier and later investors begin to collide, and it becomes unclear which obligations sit with the company versus the founder. In biotech in particular — where cross-border co-investment and international syndicates are increasingly common — managing every relationship through a single all-in-one contract had reached its practical limits.

The guiding principle of the revision is clear: reduce structures that place excessive liability on founders, while protecting investors' legitimate rights and not obstructing the company's normal growth and follow-on financing.

2.  Splitting the Documents — SPA and SHA, Streamlined to Five Types

The most fundamental change is structural. The former set of bundled forms (previously numbering in the dozens) is now divided into a Share Subscription Agreement (SPA) and a Shareholders' Agreement (SHA), with the overall number of contract types streamlined to five.

•   Share Subscription Agreement (SPA): governs the issuance and subscription of new shares — conditions precedent, representations and warranties, closing conditions, and the structure of the preferred class. In short, "how the shares are acquired."

•   Shareholders' Agreement (SHA): governs post-investment operation and rights — use of proceeds, consent rights over major corporate actions, reporting obligations, transfer restrictions, rights of first refusal and co-sale (tag-along), put options, indemnification and penalty clauses, and the liability of interested parties.

This modular structure aligns Korean practice more closely with U.S. venture norms, where documents are typically separated by function — Stock Purchase Agreement, Investors' Rights Agreement, Voting Agreement, and Right of First Refusal / Co-Sale Agreement. For biotech companies contemplating overseas fundraising, this convergence toward global practice is a welcome development.

3.  Consent Rights — from Unanimity to Collective Consent

Consent rights are among the most litigated provisions in Korean venture contracts. They require investor approval before the company undertakes major actions — amending the articles of incorporation, changing capital, issuing convertible bonds, granting stock options, mergers and divisions, business transfers, related-party transactions, establishing subsidiaries, and the like.

The problem is that these provisions had come to operate, in practice, as a unanimous veto right held by every investor. In a company with many investors across multiple rounds, a single dissenting investor could block an important decision — a result that goes beyond investor protection and can impede the company's normal growth.

To address this, the revised standard contract introduces a round-based collective consent mechanism: instead of requiring each investor's individual approval, consent is deemed given when a defined threshold within a round or investor group is met, curbing the ability of a single investor to hold a de facto veto. The exact threshold — whether a simple majority or a specified ownership percentage — should be confirmed against KVIC's official explanatory guide.

Biotech takeaway:  For biotech companies, where timing-sensitive decisions such as follow-on financing, out-licensing, strategic alliances, and co-development are frequent, this change is especially significant. The timing of a licensing deal can determine negotiating leverage, and needing every investor's individual sign-off for each action risks missing the window.

4.  From RCPS to CPS — Redemption Is No Longer a Default

Korean venture financing has long relied heavily on Redeemable Convertible Preferred Shares (RCPS) — preferred stock carrying both a redemption right and a conversion right, giving investors downside protection while preserving upside participation.

From the company's perspective, however, the redemption feature is a considerable burden. Although the capital is received as equity, once the redemption window opens the investor can demand repayment, creating cash-outflow pressure. Moreover, under the Korean Commercial Act, redemption (like share buybacks) is permitted only within legal limits such as distributable profits — and startups rarely have sufficient distributable profits, making actual redemption difficult to perform.

Reflecting this reality, the revised standard contract moves away from reflexively attaching redemption rights and presents a CPS-centered baseline (Convertible Preferred Shares). Redemption is not eliminated outright, but it is no longer a default term — rather, an optional feature whose necessity and scope must be assessed separately.

Biotech takeaway:  Clinical-stage biotech companies take a long time to reach revenue and struggle to accumulate distributable profits. An over-engineered redemption right effectively imposes debt-like obligations on a growth company. Founders should confirm, when reviewing a contract, whether a redemption right exists, when it can be exercised, what the redemption source of funds is, and whether it overlaps problematically with a put option.

5.  Refixing (Anti-Dilution) — from Full Ratchet to Weighted Average

The most important element of the conversion provision is "refixing" — Korea's term for anti-dilution adjustment. Refixing adjusts an existing investor's conversion price when the company later issues shares at a lower price, or when the IPO offering price falls below a set benchmark.

Korean practice at one time frequently used the full-ratchet method: if a later round prices below the earlier round, the earlier investor's conversion price is immediately reset down to that lower price. For example, an investor who paid KRW 10,000 per share sees their conversion price fall to KRW 5,000 if a subsequent round is done at KRW 5,000. This is a powerful protection for investors, but it places a heavy dilution burden on founders and existing shareholders.

The revised standard contract discourages full ratchet and presents a weighted-average method as the baseline. A weighted-average adjustment accounts not only for the new issue price but also for the size of the issuance and the existing share count, so the drop in conversion price is moderated and the founder's dilution is comparatively reduced. Note that weighted-average adjustments themselves come in broad-based and narrow-based variants depending on the share count used in the formula; the specific formula and variables adopted (e.g., whether options and other potential shares are included) should be confirmed against KVIC's official explanatory guide.

Refixing does not disappear entirely. Early-stage valuation is inherently difficult and investors accept real uncertainty, so eliminating anti-dilution outright is impractical. What matters is scope and calibration: which events trigger an adjustment, whether employee-incentive issuances are carved out, whether the IPO-linked adjustment ratio is reasonable, and whether a floor prevents the price from falling below par value.

6.  Founder Joint Liability — Narrowed, but Not Eliminated

The change with the greatest practical impact concerns the liability scope of "interested parties" — typically the founder, the CEO, and major shareholders.

Under prior practice, if the company breached the contract, interested parties were frequently held liable alongside it — a structure close to joint-and-several liability or a personal guarantee. This broadened the pool of recoverable assets for investors but transferred an outsized share of business-failure risk onto founders personally.

The revised standard contract narrows this blanket liability and limits interested-party liability to what is necessary. The core is to impose liability only where a defined material event occurs and the interested party acted with willful misconduct or gross negligence — for example, allowing the company to receive investment despite unmet conditions precedent, breaches of representations and warranties, misuse of proceeds, or transferring shares in violation of the contract.

Conversely, holding a founder personally liable for the entire investment merely because of market deterioration, technical failure, or delayed revenue — despite diligent operation of the company — is discouraged. Venture capital is inherently risk capital; investors, in exchange for high expected returns, are expected to bear a portion of the downside as well.

Separately, the statutory restriction on imposing third-party joint liability took effect on December 30, 2025 under the amended Venture Investment Promotion Act.

Biotech takeaway:  Given the high failure rate of drug development, the burden of personal founder liability weighs far more heavily in biotech than in most sectors. The shift to a "willful misconduct or gross negligence" standard is particularly meaningful for biotech founders, and is a concrete occasion to review blanket joint-liability clauses that remain in existing contracts.

7.  IPO Covenant — from Hard Obligation to Best Efforts

Venture investors ultimately invest on the premise of an exit, principally through an IPO or M&A. Accordingly, investment contracts include a covenant that the company and interested parties will work toward a public listing as early as practicable.

An overly rigid IPO covenant, however, burdens the company. Forcing a listing to match an investor's exit timeline — when the company is not ready or market conditions are poor — can harm company and investors alike. The revised standard contract clarifies the IPO covenant as a best-efforts obligation rather than a hard obligation to achieve listing. At the same time, where a company effectively meets listing requirements yet declines to proceed without good reason, it preserves a balanced mechanism allowing investors to request that the IPO process move forward on specific grounds.

8.  The Key Practical Point — Existing Contracts Do Not Change Automatically

Here is the point that must not be missed: the release of a new standard contract does not automatically alter the terms of investment contracts already signed. A company that has already raised seed or Series A/B capital remains bound by the investment agreements and shareholders' agreements it executed with existing investors.

This matters greatly in practice. Even if a company adopts collective consent with new investors under the revised form, if its contracts with existing investors still require each investor's individual prior consent, the company must follow the stricter existing contract. Adopting the standard form for a follow-on round can, paradoxically, complicate operations where it conflicts with legacy contracts.

Companies preparing for follow-on financing, an IPO, or M&A should therefore use this revision as an occasion to consult existing investors and align consent rights, reporting obligations, use-of-proceeds restrictions, transfer restrictions, put options, penalty clauses, interested-party liability, and refixing provisions with current market practice.

A special caution — changing refixing is not merely a contract amendment

Consent rights and reporting obligations are contractual rights that the parties can settle by amending the shareholders' agreement. But the conversion-price adjustment mechanism (refixing) of convertible or redeemable convertible preferred shares is tied to the content of the shares themselves, not merely to a contract clause.

Under the Korean Commercial Act, for convertible shares the conditions of conversion, the conversion period, and the number and content of shares to be issued upon conversion must be set out in the articles of incorporation (see Article 346 of the Commercial Act). Accordingly, changing an existing RCPS full-ratchet refixing to a weighted-average method may entail the following steps:

1.  Confirm and amend the articles of incorporation: if the conversion terms and refixing method are specified in the articles, an amendment is required, which calls for a special resolution of the general shareholders' meeting.

2.  Class-meeting resolution: where the change is prejudicial to existing preferred shareholders, a separate resolution of that class of shareholders is required under Article 435 of the Commercial Act. In practice, the change is often carried out with the consent of all shareholders.

3.  Registration of the change: because the classes and content of issued shares and the conversion terms of convertible shares are registered matters, a change in the conversion terms must be reflected in a corresponding commercial registration.

Failing to follow these steps properly invites future disputes. Even if the company and some investors agree on a weighted-average method, if the articles and the registry still reflect the old method, a dispute may arise at actual conversion over which standard applies. If some investors did not consent, the class meeting was skipped, or the registration was not updated, the validity of the new refixing clause itself may be challenged.

Closing

The significance of this revision is not limited to drafting new investment contracts well. For a company that has already raised several rounds, the harder — and more important — task is aligning legacy contracts with new ones coherently.

For pharmaceutical and biotech companies that must traverse the long journey of clinical development, restructuring investment contracts is a matter of survival. Easing excessive founder liability, rebalancing redemption and refixing, and enabling faster decision-making — the direction of this revision is well suited to the growth conditions of biotech ventures.

Translating that direction into actual rights, however, is a precise exercise that requires accurate command of Commercial Act procedures — the articles of incorporation, class meetings, and commercial registration. Good contract housekeeping is not one side's unilateral concession, but the process of making rights predictable and stable so the company can advance to its next stage.

The practical implications of this revision, and a comparison with the U.S. NVCA framework, will be discussed in greater depth at the July 22, 2026 Bio iCORE Business Growth School lecture. For a review of investment-contract structures or the housekeeping of existing contracts, please feel free to contact WL LAW.

Frequently Asked Questions

Q. When and by whom was Korea's 2026 venture investment standard contract revised?

The Ministry of SMEs and Startups (MSS) and the Korea Venture Investment Corp. (KVIC) released a fully revised standard contract on June 30, 2026 — the first comprehensive revision in three years — following discussions through a contract-culture development forum launched in December 2025.

Q. How does the revision change a founder's joint liability?

The former blanket joint-and-several liability is narrowed. In principle, an interested party such as a founder is liable only where a defined material event occurs and the party acted with willful misconduct or gross negligence. That said, liability is not eliminated entirely.

Q. How did the refixing (anti-dilution) method change?

The revision discourages the previously common lowest-price (full-ratchet) method and presents a weighted-average method — which balances existing shareholders and investors — as the baseline. The specific formula should be confirmed against KVIC's official explanatory guide.

Q. Do investment contracts already signed change automatically?

No. Executed investment agreements and shareholders' agreements remain in force. Companies preparing for follow-on financing, an IPO, or M&A should consult existing investors to align their contracts. In particular, changing the refixing terms of convertible preferred shares may require Commercial Act procedures — amending the articles of incorporation, a class-shareholders' meeting, and registration of the change.

Q. Who can advise on reviewing or restructuring a Korean biotech startup's investment contracts?

Investment contracts in the pharma/biotech field combine clinical-development risk, milestone design, and technology-transfer/licensing structures, so their review scope is broader than typical venture financings. Where advice spanning both Korean venture contracts and the U.S. NVCA framework is needed, you may contact Woojin Lee, Attorney-at-Law & Patent Attorney, at WL LAW, whose practice centers on pharmaceutical, biotech, and healthcare law.

About the Author

Woojin Lee is a Korean Attorney-at-Law and Patent Attorney whose practice centers on the pharmaceutical, biotech, and healthcare sectors, and the principal of WL LAW, an advisory boutique based in Songdo, Incheon. Her core advisory areas include licensing and technology transfer, pharma/biotech investment contracts (both Korean venture financings and the U.S. NVCA framework), and international arbitration (as a KCAB arbitrator). She holds a PhD in neuroscience from University College London (UCL), and combines hands-on pharma/biotech experience with legal advisory work, lecturing and writing for founders and investors.

•   Websites: woojinleelaw.com / biopharmlaw.com

•   Advisory focus: pharma/biotech licensing, technology transfer, investment contracts, international arbitration, and BD legal counsel

References

–   Ministry of SMEs and Startups (MSS) & Korea Venture Investment Corp. (KVIC), "Venture Investment Contract Culture Development" ceremony and release of the revised Venture Investment Standard Contracts (June 30, 2026).

–   Herald Economy, coverage of the standard-contract revision — consent rights and related reforms (June 30, 2026).

–   News1, coverage of the standard-contract revision (June 30, 2026).

–   KVIC, Venture Investment Standard Contracts and Explanatory Guide (published online via the venture investment portal).

–   Republic of Korea, Venture Investment Promotion Act and Commercial Act (relevant provisions, incl. Arts. 346 and 435).

 

This article is provided for general information only and does not constitute legal advice on any specific matter. For any specific issue, please seek advice from a qualified professional. This English text is a summary adaptation; certain Korea-specific figures and definitions should be confirmed against the official Korean-language sources cited above.