On 16 July 2025, the Seoul Central District Court rendered a notable decision concerning the enforceability of contractual share repurchase rights against company founders in the context of insolvency proceedings (Seoul Central District Court, 2024GaHap59259).  The case involved a venture capital investment in redeemable convertible preferred shares (“RCPS”) and a clause allowing the investor to require either the company or its CEO to repurchase the shares upon commencement of rehabilitation proceedings.  

The Court upheld the enforceability of this clause and ordered the CEO to pay more than KRW 1.25 billion to the investor.  In doing so, the Court rejected arguments that the clause violated fundamental principles of Korean civil and corporate laws, including public policy (Korea’s Civil Code Arts. 103 and 104), the shareholder equality principle, and the capital maintenance principle.  

The ruling engages with the boundaries of contractual freedom in venture investment agreements and provides important guidance for structuring investments in Korea.  

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