The Financial Supervisory Service (FSS) said Wednesday that it will request a movie production company to halt plans to collect funding for its new movie through the Internet as the plan violated the new asset management laws.
The FSS said that KangJeGyu & Myung Films' plan to fund the entire production cost of 1.95 billion won for its new movie "Annyong, Hyonga (Working English title: Hey, Bro)" from Internet users was a violation of the new law as the company was not registered with the regulator for such funding activities.
"The new laws, which were passed this year, prohibit any collection of funds over the Internet that invest in the production of movies or music albums", an official from the FSS said. "If they also have the intention of giving back part of the profits to the investors without proper authorization, it clearly breaches the current regulations".
The FSS is likely to hand down a warning to the company since it did not actually collect the funds, which the company was planning to do on Sept. 14 and 16.
The movie funding by Internet users first came to light in 1999 when movie producers and entertainment firms established a so-called "netizen fund" to raise money for movies from Internet users and give back part of the profit to those who participated in the fund. Some of the biggest hit movies such as "Chingu (Friend)" posted returns of as high as almost 300 percent. Prior to recently merging with KangJeGyu Films, Myung Film used the Internet to raise money for two of its films.
But the new asset management laws are expected to make it tougher for film companies to seek funding over the Internet as they must register with and be authorized by regulators each time they plan to collect money for movie production.
"Annyong, Hyonga" will tell the story of a young boy dying of cancer from the perspective of his 9-year-old younger brother and is set to be released next spring.
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