[Attorney Ahn’s Startup Legal Notes] Why the 9 Billion Won Investment Received by the Company Became the Founder’s 12 Billion Won Debt

The investment funds received by the company went into the company's account. However, when the planned M&A fell through, the investor demanded the return of the full investment amount from the founder personally, rather than the company. The court ruled that the founder must repay the amount directly, and the liability was confirmed when the Supreme Court dismissed the appeal.

This is a case surrounding the creator content platform OGQ and its founder, CEO Shin Cheol-ho. The amount CEO Shin is liable for amounts to approximately 12 billion won, which includes the principal investment of about 9 billion won plus late payment penalties at an annual rate of 12%.

Understanding this case simply as a "founder joint guarantee case" misses the core issue. There was no general joint guarantee clause in the investment agreement, nor was it a case where an investor exercised a standard put option. Its structure is also different from the Urbanbase case, where an investor exercised a put option against an interested party.

What the court recognized was not CEO Shin's liability for guaranteeing the company's debt, but rather the contractual obligations he directly bore as an 'interested party' in the investment agreement. Although the legal structure differed, the economic outcome was not significantly different. Ultimately, this is because the founder ended up personally bearing the investment funds received by the company and the associated late payment penalties.

This ruling demonstrates that the term "interested party," which frequently appears in investment agreements, is not merely a contractual status or title, but a clause capable of determining the scope of a founder's liability. At the same time, it serves as a reaffirmation that the recently amended Venture Investment Promotion Act has not fully resolved the issue of founders' personal liability.

The incident dates back to 2021.

OGQ was operating a content platform that connected copyright holders and users of various digital content, including images, videos, and music. At the time, OGQ pursued the acquisition of a stake in Getty Images Korea to expand its business, and CEO Shin Cheol-ho, who was the largest shareholder, explained to investors that the content platform business could grow significantly if the acquisition were successful.

Based on this, investors formed a new technology business investment partnership and acquired 112,500 preferred shares issued by OGQ for approximately 9 billion won.

The investors clarified that the investment funds must be used for the acquisition of Getty Images Korea and its shareholder, Imagines, while also demanding mechanisms to recover the investment should the acquisition fall through. Accordingly, Article 18 of the new share subscription agreement included the following provisions.

“The investee company and/or interested parties shall use the proceeds for the acquisition of the shares received from the investor for the purpose of acquiring Getty Images Korea Co., Ltd. and Imagines Co., Ltd., and if such acquisition is not completed, they shall repay the proceeds for the acquisition of the shares to the investor without delay.”

However, the acquisition ultimately did not materialize.

In June 2022, OGQ conveyed its intention to terminate acquisition negotiations to Getty Images Korea and also informed investors of this. Subsequently, investors filed a lawsuit against CEO Shin personally, demanding payment of their principal investment of approximately 9 billion won and damages for delay.

The Seoul Central District Court accepted all of the investors' claims in July 2024. Subsequently, the Seoul High Court also dismissed CEO Shin's appeal, and the judgment was finally confirmed as the Supreme Court dismissed the appeal on April 2, 2026.

The investors argued that, based on the wording of Article 18 of the new share subscription agreement, the party obligated to repay the investment includes not only OGQ but also CEO Shin. They asserted that since the phrase "investment target company and/or interested parties" serves as the subject of the entire clause, the obligation to repay, as well as the obligation to use the investment funds, applies to both the company and the interested parties.

The investors also cited the contract signing process as grounds. They argued that in exchange for paying approximately 9 billion won earlier than initially expected, they demanded safeguards to recover their investment if the acquisition of Getty Images Korea fell through, and that CEO Shin agreed to the revised contract clauses with a full understanding of this intent.

On the other hand, CEO Shin argued that since OGQ was the entity that actually received and used the investment funds, the obligation to return them should also be borne by the company. His position was that while the obligation to uphold the intended purpose of the investment funds can be shared by both the company and the CEO, the obligation to return the funds cannot be attributed to the CEO personally.

He argued that even if certain liability were acknowledged, it amounted to nothing more than a guarantee liability securing the company's debt. His logic was that if the company's repayment agreement guaranteed the recovery of the principal to a specific investor, it would be invalid as it violated the principle of shareholder equality, and thus his own guarantee liability subordinate to it would also be invalid.

Furthermore, CEO Shin argued that the repayment conditions have not yet been met. He stated that the contract did not specify an explicit deadline for the acquisition of Getty Images Korea, and since the acquisition was pursued even after that, the schedule was merely delayed, not that the acquisition had ultimately fallen through. In addition, he asserted that interpreting the approximately 9 billion won received by the company as a burden on the CEO personally is inconsistent with business practices and equity, and that an investor cannot receive a refund of their investment funds without having transferred their shares.

The court considered not only the wording of the contract but also the circumstances under which the contract was concluded and the economic objectives that the parties intended to achieve.

First, we determined that the phrase "investment target company and/or interested parties" constitutes the subject of the entire Article 18. Nowhere in the contract was there any provision distinguishing that while the obligation to use the investment funds is shared by the Company and CEO Shin, the obligation to repay is borne solely by the Company.

The process of concluding the contract also served as an important basis for judgment. The investors requested a repayment clause to reduce the risk associated with early investment, and CEO Shin signed the contract without objection after reviewing the revised contract. The court determined that CEO Shin was in a position to fully recognize the meaning and effect of the clause.

Furthermore, it was determined that it is difficult to regard CEO Shin's liability as a mere guarantee obligation. This is because nowhere in the contract was there any provision stating that the company assumed the debt and CEO Shin guaranteed it, and the company and interested parties were stipulated in parallel as the subjects of the repayment obligation. Accordingly, CEO Shin's liability was viewed as an independent contractual obligation, rather than a guarantee liability subordinate to the company's debt.

The court determined that the repayment conditions had also already been satisfied. While the obligation to repay does not arise merely because the acquisition schedule was delayed, the court ruled that the acquisition could be considered effectively canceled at the time OGQ conveyed its intention to terminate acquisition negotiations to Getty Images Korea in June 2022 and notified investors of this. The court also made it clear that the conditions already met do not expire simply because there was an attempt to resume negotiations thereafter.

In addition, the investors expressed their intention to transfer their shares if CEO Shin repaid the investment funds. Accordingly, the court ruled that the return of the investment funds and the transfer of shares are in a relationship of simultaneous performance.

The most important point of this ruling is that it clearly distinguished between the company's obligations and the founder's personal obligations.

The court did not view CEO Shin as bearing liability due to his status as CEO or the largest shareholder. Instead, it recognized his personal liability because he participated as an 'interested party' in the investment contract and became a contracting party bearing the direct obligation to repay.

Ultimately, this ruling confirms that while the company received the investment funds, the founder personally may also be held directly liable depending on the structure of the contract. It also reaffirms that the term "interested party," commonly used in investment agreements, is not merely a designation but can serve as a key clause determining the scope of a founder's liability.

Then, why are founders included as 'interested parties' in investment agreements? Furthermore, to what extent should the founder's liability be recognized, and to what extent should the company bear the business risks?

In the next installment, we will examine the legal meaning of 'interested parties,' the Key Holder system in U.S. VC investment agreements, and the reasons why the issue of founders' personal liability still remains even after the recent amendment to the Venture Investment Act.

Managing Partner Ahn Hee-chul graduated from the Department of Physics at Pohang University of Science and Technology and Seoul National University School of Law, and obtained qualifications as a lawyer and certified tax accountant. Currently serving as the Managing Partner and Head of the Policy Center at DLG Law Firm, he advises clients primarily in the fields of startup investment, corporate finance, M&A, and AI and data. He also serves as an adjunct professor at POSTECH and a director of the Korea Angel Investment Association. His publications include *Startup Legal Guide 3.0* and *Investment Agreement Guidebook*.