Why do private KOSDAQ venture funds have a 1 year and 6 month redemption ban?

When the funds were first launched in 2018, concerns were raised that without redemption limits, wealthy investors and others with little interest in the tax benefit could enjoy the IPO allocation benefit and then redeem right away.

The Financial Services Commission therefore proposed granting eligibility for priority allocation only to private funds that prohibit redemption for a certain period (for example, 1 year and 6 months) to encourage long-term investment. Current Korea Financial Investment Association regulations likewise recognize a private venture company investment trust for the separate allocation only if redemption is prohibited for at least 1 year and 6 months from its initial establishment.