SOUTH KOREA Trends and Developments Contributed by: Yun Seok Jang, Yong Hee Kim, Gajin Choi, Dae Kun Jang and Seung Hyun Dennis Cho, Shin & Kim
• Administrative payments – fund facilities pro- vide a reliable source of liquidity for routine administrative payments, ensuring smooth fund operations. Fund facilities, while beneficial, require careful consideration of various legal issues, especially in Korea. In Korea, fund facilities must com- ply with the FSCMA. This Act imposes various requirements and limitations on the creation and perfection of security interests over uncalled capital commitments, making it challenging for funds effectively to use these commitments as collateral. Addressing these regulatory issues is crucial for the successful implementation of fund facilities. In addition, obtaining investor consent for fund facilities (if any) can be a challenging process. In Korea, cultural business practices may further complicate this, as securing investor commitment faces practical challenges.
Despite such challenges, the demand for fund facilities in Korea is expected to grow. Funds are increasingly looking to establish fund facili- ties to secure urgent and confidential investment funding or to prepare for unforeseen liquidity needs. Although there are difficulties in creating collateral over uncalled commitments, financial institutions may sometimes prefer the reliabil- ity of investor commitments over other forms of collateral, such as portfolio company shares. By addressing the regulatory, legal and cultural issues, funds can effectively utilise fund facili- ties to enhance their investment strategies and achieve their financial objectives in Korea.
435 CHAMBERS.COM
Powered by FlippingBook