Sangjang Association: "Urgent Need to Introduce Dual-Class Voting Rights to Attract Korean Unicorns for Domestic Listing"

"Obstacles Blocking Unicorn Attraction... Misconceptions That Need to Be Cleared"

[Asia Economy Reporter Minwoo Lee] It has been pointed out that the introduction of dual-class voting rights is urgently needed to enable domestic unicorns (unlisted startups valued at over 1 trillion won) to be listed on the domestic stock market.

The Korea Listed Companies Association announced on the 31st the "Problems and Improvement Plans Regarding the Introduction of the Dual-Class Voting Rights System*." This comes against the backdrop of Coupang listing on the U.S. stock market with dual-class voting rights on the 11th of last month, and domestic unicorns such as Market Kurly turning their eyes to overseas stock markets. The dual-class voting rights system allows multiple voting rights to be exercised per share.

The association pointed out that misunderstandings about countries that have introduced the dual-class voting rights system, such as the U.S., Japan, Hong Kong, and Singapore, are widespread. The most representative misunderstanding is that founders can issue shares at their discretion. It explained that the issuance of dual-class voting rights shares can only occur if the necessity is recognized through consultations between founders and investors before the IPO, resolutions at the general shareholders' meeting, and the listing examination process.

They also addressed the misconception that existing listed companies can issue dual-class voting rights shares. Only unlisted companies can issue dual-class voting rights shares to newly list, and after listing, only additional issuance within a certain scope is permitted. The scope of recognition for dual-class voting rights and the non-recognition of inheritance were also explained.

The association stated, "The U.S. capital market, which is the most advanced in terms of the dual-class voting rights system, grants discretion so that founders and financial investors can freely negotiate and decide according to their needs," adding, "Countries that have recently introduced this system refer to the operational cases of U.S. companies and impose restrictions through listing regulations requiring certain conditions to be met for listing."

Ultimately, it was pointed out that discussions on the introduction of dual-class voting rights are necessary from the perspective of competition among global exchanges to attract listings. The association emphasized, "The listing of unicorn companies is an indicator to evaluate the level and scale of a country's capital market and a factor determining tax revenue," and added, "In terms of establishing management rights protection systems for listed companies, not only the introduction of the dual-class voting rights system but also urgent discussions on the introduction of management rights protection measures for all existing listed companies are needed, considering the world's only 3% rule, the separate election system for audit committee members, and the resolution requirements of the general shareholders' meeting."

This content was produced with the assistance of AI translation services.