[비즈한국] The company received investment. Not a single penny of that money has been spent; it remains untouched in the company's bank account. Yet, a lawsuit demanding repayment was filed not against the company, but against the founder personally. The court ruled that the founder must pay.
This is the story of Shin Chul-ho, founder of OGQ, the nation's largest creator content platform. In a statement released on SNS on the 15th, CEO Shin revealed the process by which he came to owe 12 billion won in personal debt and appealed for justice, feeling wronged. Claiming that the interest alone grows by 100 million won each month, he argued, "This is not just a problem for me, but a question posed to the entire venture investment system in Korea."
Established in 2011, OGQ is a creator content platform that operates services such as the 'Naver OGQ Market,' where users buy and sell emojis, images, and fonts. It is the largest IP market in the country, with 17 million users and 1.3 million creators.
The company has 40 billion won, but the founder is facing bankruptcy. Why?
The incident dates back to 2021. OGQ received a 9 billion won investment from investment firm A, contingent upon the acquisition of Getty Images Korea. It was a conditional investment with no specific deadline or completion date set. Nowhere in the contract was the term "joint surety" used in relation to CEO Shin personally. However, the parties to the contract included the investor, OGQ, and Shin Chul-ho as an "interested party."
In 2023, investment firm A claimed repayment of the investment, citing the de facto collapse of the Getty Images Korea acquisition, and filed the lawsuit against CEO Shin personally rather than the company. Following the lower courts, the Supreme Court dismissed the appeal in April 2026, making the 9 billion won principal plus 12% annual interest—totaling approximately 12 billion won—CEO Shin's confirmed personal debt.
Why was the lawsuit filed against the individual rather than the company that received the massive investment? According to CEO Shin, the 9 billion won investment remains in the company account "without a single won difference," and the company holds approximately 40 billion won in cashable assets. The interest accrued on the 9 billion won is also piled up within the company. In effect, the individual—who cannot easily come up with 12 billion won in cash—has become the debtor, while the company, which is fully capable of paying, is left untouched.
CEO Shin laments that not only is he burdened with the debt, but he also has no viable way to pay it. According to Shin, his OGQ shares are subject to transfer restrictions and shareholder consent procedures under the investment agreement, making it difficult for him to sell them alone. Other shareholders also oppose the sale, fearing changes in management control and setbacks to an IPO. Even though his shares hold significant value on paper, he cannot monetize them in time to secure the liquidity needed to repay the confirmed debt.
Consequently, following the court ruling, compulsory sale proceedings for his shares are underway, following the seizure of his salary and real estate. Depending on the scope of the sale, there is a possibility that management shares exceeding the debt amount could be transferred. He now faces the risk of losing control of the company he spent 15 years building.
While acknowledging the court's decision, CEO Shin stated he would file complaints with the Financial Services Commission, the Financial Supervisory Service, and the Ministry of SMEs and Startups, declaring, "Regulatory agencies need to look into whether this structure is normal."
The government has long abolished joint surety for founders to prevent business failure from leading to personal bankruptcy. The Venture Investment Promotion Act also prohibits venture capital firms from demanding joint surety from founders during the investment process.
Nevertheless, how did the investment received by the company become the personal debt of the founder? The answer lies in the five letters written in the contract: "interested party."
The "interested party" practice: Results similar to joint surety
There is a long-standing practice in the venture investment industry. Investment contracts often list not only the company but also the founder personally as a party under the name "interested party." While the name sounds neutral, the reality is different. As an "interested party," the founder is personally responsible for the company's representations and warranties, their share disposal is restricted, and their departure from the company is constrained. Crucially, they share the financial burden if the company fails to keep its promises. It is a way of placing the individual's name alongside the obligations that the company should bear.
A representative mechanism through which this practice exerts its power is the put option, or "stock purchase option." It is a clause stating that if promised conditions are not met, the founder, as an interested party, must buy back the investor's shares at the principal price plus interest, usually around 10% per year.
The OGQ contract differs slightly from a typical put option. It stipulated that if certain conditions were met, the company and the interested party would repay the investment. However, the structure is similar in that it places liability equivalent to the investment amount on the founder personally. The moment conditions diverge, the founder can become personally liable for the entire investment amount and interest received by the company.
The economic outcome for the individual founder can be similar to that of a joint surety. The individual bears the amount equivalent to the investment received by the company plus interest, and if they cannot pay, they risk losing their personal assets and management rights. Jung Yang-hoon, a partner attorney at the law firm Barun, pointed out, "Although there is a trend of prohibiting joint surety for interested parties through recent regulations and guidelines, there are cases where companies attempt to achieve the effect of joint surety through the interested party clause without explicitly using the term 'joint surety'."
For founders desperate for investment, it is not easy to reject such clauses. At the time of the contract, they are often so confident in their business success that they may not fully grasp the weight of the clause.
So, why do investors involve the founder personally in the contract rather than setting recovery mechanisms only for the company? This is because there are various legal restrictions on holding the company directly responsible for recovery.
First, according to Supreme Court precedents, an agreement in which a company guarantees investment principal and profit to specific shareholders can be invalidated for violating the "principle of shareholder equality." If a put option is placed on the company, the contract itself may lose its validity.
It is also not easy for a company to voluntarily buy back shares. Under Commercial Law, a company must have "distributable profits" to buy back its own shares or redeem redeemable preferred shares. Even if there are tens of billions of won in the bank, if there is a cumulative deficit on the books, it is difficult for the company to return that money to investors. Most startups, which commonly run deficits during their growth stages, fall into this category.
The problem is that the primary situations where put options are triggered—business stagnation or failure to list—are exactly the times when there are no distributable profits. The mechanism against the company is essentially a safety pin that fails to work exactly when it is needed. This legal constraint is the background behind why an individual became a debtor despite OGQ having 40 billion won.
A former venture capital industry official noted, "Joint surety is prohibited, and there are restrictions on guarantee agreements against the company or the acquisition of treasury shares. Therefore, in practice, there are cases where the founder is included as an interested party to secure personal liability as a double lock," adding, "It is a way to secure the founder as a final means of recovery from the beginning in anticipation of situations where the mechanism against the company is neutralized."
Not the first time… another founder receives a 1.3 billion won final judgment
OGQ is not the first case where this structure has become a reality. Ha Jin-woo, former CEO and founder of proptech startup Urbanbase, signed a contract as an "interested party" when receiving a 500 million won investment from Shinhan Capital in 2017. The contract included a clause stating that if "the company's normal business pursuit becomes impossible," he must repay the investment plus 15% annual interest. When the company entered rehabilitation procedures in early 2024 amid a cold investment climate, Shinhan Capital sent a bill to Ha personally, rather than the company, and placed a provisional seizure on the house where he lives with his family. Among the 18 investors in Urbanbase, Shinhan Capital was the only one to file a lawsuit against the founder personally.
The result was a total defeat for the founder. In April of this year, the Supreme Court finalized the debt as approximately 1.3 billion won, consisting of the 500 million won principal plus 15% compound annual interest, for which Ha is personally liable. The appellate court ruled, "As entrepreneurs have the opportunity to enjoy massive profits when a business succeeds, it is also reasonable to compensate for the investment when it fails." In other words, the current judiciary's view is that even without the founder's wrongdoing, such as embezzlement or breach of trust, the risk of business failure itself is borne by the founder personally.
Both cases share another commonality: the investment entities are not venture investment funds under the Venture Investment Promotion Act, but "new technology business investment funds" (so-called "New Tech Funds") under the Specialized Credit Finance Business Act. Although the "Regulations on Registration and Management of Venture Investment Funds," introduced in 2023, prohibits imposing joint liability on interested parties without culpability like embezzlement or breach of trust, these regulations only apply to venture investment funds. Contracts that hold founders personally liable for company obligations are still possible in New Tech Fund investments. Both contracts were signed before the regulations were introduced, making them non-retroactive, and the types of investors themselves exist in a double blind spot outside of these regulations.
"Risk distribution" vs "Regulatory evasion"... Homework for oversight agencies
Legal experts generally agree that it is difficult for founders to win if these contracts go to trial. Courts generally consider contracts signed voluntarily by adults with business experience to be valid as written. The validity of stock purchase or repayment agreements against the CEO personally has also been recognized in numerous precedents. The requirements for accepting arguments that a contract is excessively unfair are also very strict. It is difficult to negate the validity of a contract simply based on the fact that one was desperate for investment or had weak bargaining power.
There is also the investors' perspective. They argue that the abolition of joint surety regulates the realm of loans and guarantees, but does not prohibit contract conditions for equity investments. They contend that put options are not about demanding accountability for business failure but are devices to guarantee the fulfillment of promised conditions, and that without such safety nets, large-scale conditional investments would be difficult to conclude. They argue these are fair contracts where the founder and investor share risks. In fact, if investors do not exercise recovery clauses in a contract, they could face dilemmas regarding breaches of their fiduciary duty to fund contributors.
However, fundamental counterarguments arise regarding whether such contract structures align with the essence of equity investment. Attorney Jung Yang-hoon stated, "Equity investment is risk capital that enjoys large profits upon success while accepting the risk of principal loss upon failure. Clauses that shift management risks to the founder personally in cases of business failure without intent or gross negligence are a form of evasive contract structure, so it is appropriate to interpret their effect restrictively."
Of course, it is difficult to see Shin as completely free from legal responsibility given that he signed the contract in his personal capacity. However, the crux of this case is not merely whether a founder read the contract properly. The core issue is whether it is acceptable to allow the practice of imposing personal liability of the same scale under the guise of an "interested party" while prohibiting joint surety, and whether it aligns with policy goals to allow personal execution even when the company holds sufficient funds.
To the founder, this is no different from a joint surety under a different name. Almost no founder has personal assets on the scale of the investment. The moment the clause is triggered, the founder's options narrow to personal bankruptcy or loss of management control. If the policy promise to "enable re-challenges even after failure" is rendered powerless by a single contract clause, the meaning of the regulation fades.
Institutional complements to limit the founder's personal liability have already been made, but the blind spot of New Tech Funds and responsibilities arising from past contracts remain. The OGQ case is a prime example of a practice that the current system attempted to block, but which has materialized through these loopholes. This is why there are demands for oversight agencies to carefully examine whether the intent of regulations is effectively operating throughout the actual investment field, regardless of the investment entity.
CEO Shin stated, "It might be easier for me to just give up. But if I back down in the face of this injustice, another founder will eventually stand in the same spot. I want to set the wrong structure straight so that no one else has to experience the same thing. That is the reason I am starting this long fight."