[Korean Government Support Agreement ①] Before Receiving the Grant, Review Your Business Plan Again — Agreements, Amendments, and Repayment Risks — 법률 칼럼 | ETHOS

Hello, this is Jean, a Korean Certified Administrative Agent.

During the 31st Cabinet Meeting broadcast on July 21, 2026, President Lee Jae-myung addressed the issue of government support programs and raised concerns about consulting firms performing work that falls within the professional scope of certified administrative agents or attorneys.

The fact that government support programs were discussed at a Cabinet meeting also reflects the growing attention being paid to how these programs are administered.

A company may spend months revising its business plan and preparing for a presentation evaluation.

After finally passing the evaluation, it receives an agreement for signature.

At that point, the first number most companies will probably check is the amount of funding.

But there have been actual administrative appeal cases in which a violation of an agreement condition resulted in a KRW 947.2 million subsidy repayment order being upheld.

Gyeonggi-do Administrative Appeals Commission, Case No. 2015-01349, January 13, 2016 — Dismissed

On the other hand, the Korean Supreme Court has also held that even where a subsidy condition was violated, cancelling the entire subsidy without sufficiently considering the circumstances could be excessive.

Supreme Court Decision 2003Du1288, May 16, 2003

Together, these cases show an important point.

A government support program does not simply become “money that can be freely spent” once a company is selected.

At the same time, a change from the original plan does not automatically mean that the entire grant must be repaid.

What matters is:

what type of program the company was selected for;
which laws, agreements, and operating rules apply;
what changed during actual implementation; and
what procedure was required for that change.

So before signing a government support agreement, there is something that may be more important to review than the grant amount.

The final version of the business plan submitted for selection.

Korea Has 508 Startup Support Programs in 2026 — But They Do Not All Follow the Same Rules

The 2026 Integrated Announcement of Startup Support Programs by Korean central government ministries and local governments covers 508 programs operated by 111 institutions, with a combined budget of KRW 3.4645 trillion.

The programs cover a wide range of areas, including commercialization, technology development, facilities and incubation, human resources, and global expansion.

The total budget also increased by KRW 170.5 billion, or 5.2%, from the previous year.

Source: Ministry of SMEs and Startups, “2026 Integrated Announcement of Startup Support Programs by Central and Local Governments,” December 19, 2025.

The existence of so many different programs also means that companies should not assume that every program described as a “government support program” operates under the same legal framework.

The applicable rules may differ depending on whether the project is:

a national R&D project;
a subsidy program;
a local government support program; or
a program governed by specific statutes, regulations, or administrative guidelines.

Accordingly, the first question after receiving a selection notice should not simply be:

“How much funding will we receive?”

A more important question is:

“What rules govern this program, and what exactly are we agreeing to do?”

Is It Enough to Read Only the Funding Agreement?

Not necessarily.

In many Korean government support programs, several documents operate together.

For example:

Program Announcement → Final Business Plan → Funding Agreement → Applicable Laws → Operating Guidelines and Management Rules → Expenditure Standards

This is why a funding agreement itself may only be a few pages long, while the actual obligations imposed on the participant can be much broader.

National R&D projects provide a clear example.

Article 11 of Korea's current National Research and Development Innovation Act requires the competent central administrative agency and the research and development institution to enter into an agreement after an R&D project is selected.

The agreement is not limited to the amount of government funding.

Article 11(1)(1) specifically requires the agreement to include the R&D project implementation plan.

This also includes an outline of how the R&D funds will be used.

Depending on the project, the agreement may therefore be connected to matters such as:

the R&D project implementation plan;
the plan for using R&D funds;
the rights and obligations of the government authority;
the rights and obligations of the R&D institution and researchers; and
other matters necessary for implementing the project.

Subsidy programs may follow a different structure.

Under Korea's Subsidy Management Act, conditions may be attached to a subsidy decision in order to achieve the purpose of the grant.

In other words, two programs may both involve money provided by the government, while the legal structure governing them may be different.

That is where agreement review begins to matter.

Does the Business Plan Stop Mattering Once the Company Is Selected?

Not always.

Before selection, the business plan functions primarily as an evaluation document.

After selection, however, what was written in that plan may become connected to the actual implementation of the project.

As noted above, Article 11 of the National Research and Development Innovation Act requires an R&D agreement to include the project implementation plan.

This means the following stages should not necessarily be viewed as separate from one another:

Business Plan → Selection → Agreement → Actual Project Implementation

Consider the following example.

Startup A is selected for a Korean government support program.

In its final business plan, the company stated that a core function would be developed internally by its own employees.

After the project begins, development takes longer than expected.

The CEO concludes that outsourcing part of the development work would be more efficient.

From a business perspective, that could be a perfectly reasonable decision.

But a government support project requires another question:

Is the change beneficial to the business?

and separately:

Can the company make that change without completing a formal administrative procedure?

A “yes” to the first question does not automatically produce a “yes” to the second.

Understanding this distinction before making the change is very different from discovering it after a problem has already arisen.

Does Every Change Require Prior Approval?

No.

The more important issue is determining what type of change is being made.

Article 11 of the National Research and Development Innovation Act provides for amendments to an agreement through consultation when important matters need to be changed, including matters concerning:

the R&D institution;
the principal researcher;
the R&D objectives;
the R&D budget; and
the R&D period.

Certain minor changes prescribed by Presidential Decree may instead be treated as amended through notification between the parties.

Article 14 of the Enforcement Decree of the Act also provides procedures for agreement amendments, including advance written notification of the reasons and details of certain proposed changes and consultation between the parties.

Businesses naturally change while projects are being implemented.

Personnel change.

Markets change.

Costs change.

The issue is not that every change is prohibited.

The key question is whether the required procedure was checked before the change was made.

Apply This to Your Own Project

Has any of the following changed since your company was selected?

development method;
outsourced service provider or scope of outsourcing;
key personnel;
business location or project site;
project period;
major project objectives;
budget or expenditure categories; or
originally planned purchases or production activities.

A change in one of these items does not automatically mean that a violation has occurred.

Many projects inevitably evolve during implementation.

However, once something has changed, the next questions should be:

Is this change freely permitted?
Does it require prior approval?
Is consultation required?
Is notification sufficient?
Does the funding or expenditure plan also need to be amended?

If these questions cannot be answered clearly, it may be time to review not only the agreement but also the applicable operating guidelines and management rules.

There can be a significant administrative difference between checking the procedure before making a change and reviewing it only after the money has already been spent.

“I Told the Program Officer by Phone.” Is That Enough?

Contacting the program officer is a normal part of participating in a government support program.

The issue is that explaining something by telephone and completing the formal amendment procedure are not always the same thing.

If the applicable rules require a company to notify the authority of a change in writing before the change is implemented and to complete a consultation procedure, a telephone conversation alone may not necessarily satisfy that requirement.

For example, Article 14 of the Enforcement Decree of the National Research and Development Innovation Act provides written procedures for certain agreement amendments.

Accordingly, when a project changes, it is useful to maintain records showing:

what changed and when;
why the change became necessary;
which institution was contacted;
whether approval, consultation, or notification was completed; and
where the related documents are stored.

If a problem arises later,

“That is what we understood at the time.”

and

“Here is the document we submitted at the time.”

are very different forms of evidence.

Is It Enough That the Money Was Used “For the Business”?

This is another important question.

A company representative may reasonably think:

“We did not spend it personally. Every won was spent on the company.”

But government support programs generally require one additional question:

Was the money used for the purpose and in the manner permitted by the program?

Article 30(1) of Korea's Subsidy Management Act allows the head of the relevant central government authority to cancel all or part of a subsidy decision in certain circumstances, including where the subsidy recipient:

uses the subsidy for another purpose;
violates applicable laws or the terms of the subsidy decision; or
obtains the subsidy through a false application or other fraudulent means.

If subsidy funds have already been paid and the grant decision is later cancelled, a repayment obligation may also arise under Article 31.

For that reason,

“The money was genuinely spent on the business”

and

“The money was spent in compliance with the program's expenditure rules”

are not necessarily the same statement.

Before spending project funds, it is useful to check at least:

whether the expense is an eligible expenditure;
what supporting evidence is required;
whether the expenditure differs from the original plan;
whether the budget category may be changed; and
whether separate approval or notification is required.

An Actual KRW 947.2 Million Repayment Order Was Upheld Because of an Agreement Condition

An administrative appeal decision illustrates why agreement conditions should not be treated as mere formal wording.

The case is:

Gyeonggi-do Administrative Appeals Commission, Case No. 2015-01349, January 13, 2016

The claimant entered into an agreement with a local government for the construction of a training facility and received a subsidy.

The facility was later transferred to another foundation.

The agreement contained a condition prohibiting the transfer of contractual rights and obligations without authorization.

The administrative authority cancelled the subsidy decision and ordered the recipient to repay KRW 947.2 million.

The Administrative Appeals Commission held that the relevant agreement condition could be treated as a condition of the subsidy grant and dismissed the claimant's request to cancel the repayment decision.

The important point is not simply the size of the repayment.

It is that a condition written into the agreement actually became part of the legal basis used in determining the repayment obligation.

Therefore, rather than treating agreement provisions as standard-form language that can simply be signed, companies should first understand whether they can realistically comply with them.

Does a Violation Automatically Mean Full Repayment?

No.

There is also no need to assume that every violation automatically leads to full repayment.

In Supreme Court Decision 2003Du1288, May 16, 2003, the Court considered a case involving an employer-supported childcare facility that had been established with government subsidies and was later sold to a third party during a restricted disposal period.

The disposal restriction had been violated.

However, the Supreme Court did not automatically accept the cancellation of the entire subsidy.

The Court considered factors including the period during which the facility had actually been used for the intended subsidized purpose and the circumstances that led to the sale.

It held that cancelling the entire subsidy without sufficiently considering such circumstances exceeded the proper limits of administrative discretion.

Taken together, these cases show that when a problem arises, the inquiry should not end with:

“Was there a violation?”

Depending on the applicable law and the individual facts, it may also be necessary to examine:

which condition was violated;
how serious the violation was;
how much of the project had been completed;
to what extent the purpose of the funding had been achieved;
which sanction standards applied; and
whether the scope of the administrative measure was proportionate.

Supreme Court Case Law Also Shows Why the Agreement Alone May Not Be Enough

Supreme Court Decision 2022Du31822, July 28, 2022 involved restrictions on participation and recovery of government contributions under a technology development support program for small and medium-sized enterprises.

The Supreme Court considered detailed standards contained in the relevant Operating Guidelines for SME Technology Development Support Programs.

The Court treated those standards as administrative discretionary guidelines established under the relevant statutory framework.

It also indicated that such standards should generally be respected as the administrative authority's stated criteria unless they conflict with superior laws or are objectively unreasonable.

The practical lesson for companies entering a support agreement is important.

The agreement itself may not reveal the entire compliance risk.

If a dispute later arises, the relevant standards may include not only statutes but also:

operating guidelines;
management rules;
expenditure standards; and
sanction criteria.

Before Signing, Put These Five Documents Side by Side

The process may appear complicated, but the first review can be relatively straightforward.

1. Program Announcement

Check which institution operates the program and what type of program it is.

Pay particular attention to any laws, operating guidelines, or management rules that the announcement says will apply.

2. Final Business Plan

Review what the company actually promised to do when it was selected.

Use the final submitted version, not an earlier draft.

3. Funding Agreement

Review the project period, major obligations, amendment procedures, reporting requirements, termination provisions, and repayment provisions.

4. Operating Guidelines and Management Rules

These may contain the detailed rules governing amendments, expenditure, inspections, reporting, and sanctions that are only briefly referenced in the agreement itself.

5. Project Expenditure Standards

Check which expenses are eligible, what supporting documents are required, and how budget changes must be handled.

The key is not merely to read each document separately.

Compare them and identify inconsistencies.

For example:

Does the business plan say A while the company is now implementing B?
Was the budget planned under category A but is now being spent under category B?
Does the proposed change require approval, consultation, or notification?

Spend Five Minutes Checking These Questions

Write down the name of your current support program and answer the following questions.

Do you know which laws and operating guidelines apply?
Do you have the final version of the business plan that was submitted?
Has anything changed since the company was selected?
Do you know whether that change requires approval, consultation, or notification?
Have you checked the eligible expenditure categories and supporting-document requirements?

If all five questions can be answered clearly, much of the ongoing administration may be manageable internally.

However, if the answers sound more like:

“It should probably be fine.”

“We mentioned it to the program officer by phone.”

“All of the money was spent on the business.”

“We heard other companies do the same thing.”

then the relevant issue should be checked again against the actual written rules.

What Can a Company Handle Internally, and When Is an Individual Review More Appropriate?

If the agreement has not yet been signed and the business plan has not changed, there is often a substantial amount that a company can review on its own.

Start by summarizing the following items on a single page:

Program Name / Managing Institution / Applicable Rules / Agreement Period / Project Objectives / Budget / Amendment Procedures / Reporting Deadlines

For any item that may change later, simply marking “Check before amendment” can already help prevent mistakes.

The situation becomes more complex if:

actual implementation already differs from the business plan;
outsourcing, key personnel, business location, or project period has already changed;
funds have been spent under a category different from the original plan;
it is unclear whether approval, consultation, or notification was required;
the managing institution has requested an explanation or supplementary documents; or
the institution has begun mentioning possible repayment or breach of the agreement.

At that stage, reviewing only the agreement may not be enough.

It becomes important to reconstruct the project chronologically:

Program Announcement → Business Plan → Agreement → Operating Rules → Amendment Records → Actual Expenditure and Implementation Records

How Does This Connect to the Work of a Korean Certified Administrative Agent?

Article 2 of the Enforcement Decree of Korea's Certified Administrative Agent Act includes within the scope of certified administrative agent services the preparation of certain documents relating to contracts, agreements, undertakings, claims, and other transactions between individuals or corporations, as well as between the state or local governments and individuals.

The scope also includes, subject to restrictions under other laws, the preparation and submission of documents to administrative agencies, applications for permits and approvals, and explanations of administrative laws and procedures.

Government support programs may therefore involve administrative work that continues beyond the initial signing of an agreement.

Depending on the case, this may include:

documents relating to amendments of the project plan;
preparation of reasons for amendments;
documents submitted to the administering authority;
organization and explanation of relevant facts; and
preparation of explanatory materials.

For this reason, the area is better understood not merely as a one-time “review of a government funding agreement,” but as part of the broader administration of government support agreements and project implementation procedures.

In many government support programs, the least costly time to address an administrative issue is before a change is made, not after a dispute arises.

If there is currently no problem, begin by placing the program announcement, final business plan, agreement, operating guidelines, and expenditure rules side by side.

If the amendment procedures and expenditure rules are clear, there may be many matters the company can manage internally.

However, if actual implementation has already diverged from the original plan or the required administrative procedure is unclear, it is safer to review the applicable rules and contemporaneous records rather than relying on an assumption that the change will “probably be fine.”

A different set of issues arises once a company has already received a notice concerning repayment of government funds or an alleged breach of the agreement.

Even when the same word “repayment” is used, the legal basis and procedure can differ from one program to another, and the appropriate response may also depend on whether the document is only a prior notice or a final administrative disposition.

[Korean Government Support Agreement ①] Before Receiving the Grant, Review Your Business Plan Again — Agreements, Amendments, and Repayment Risks