Some in the Democratic Party "Firmly oppose the introduction of multiple voting rights... Judiciary Committee must carefully review"

[Asia Economy Reporter Naju-seok] Some members of the Democratic Party's Political Affairs Committee have requested the Legislation and Judiciary Committee to approach cautiously the amendment to the Venture Business Act, which mainly introduces the multiple voting rights system.

On the 9th, Democratic Party lawmakers Park Yong-jin, Oh Ki-hyung, and Lee Yong-woo stated in a "joint statement" that they "strongly oppose the introduction of the multiple voting rights system and urge careful review by the National Assembly's Legislation and Judiciary Committee."

They explained, "The purpose of introducing the multiple voting rights system is to allow venture business founders to easily attract large-scale funds without concerns about equity dilution, thereby enabling venture companies to grow into unicorn companies," but added, "Since the multiple voting rights system poses greater problems in Korea, where corporate governance and minority shareholder protection are weak, it should be promoted through sufficient discussion and social consensus."

[Image source=Yonhap News]

They argued, "Venture investment is based on the founder's technology and management capabilities with a goal of long-term returns, so there is no reason to threaten management rights," and "Since the founder's management rights over venture companies can be guaranteed through private contracts among shareholders without issuing multiple voting rights shares, the claim that management rights should be protected by issuing multiple voting rights shares lacks grounds."

They continued, "There are already sufficient mechanisms in Korea's Commercial Act to defend founders' management rights," explaining, "With the recent amendment to the Commercial Act, various types of shares can be issued, allowing the creation of management defense structures through limited voting rights shares such as limited liability companies, redeemable convertible preferred shares, and no-par value shares."

Furthermore, they pointed out, "Although the multiple voting rights system is to be introduced only for unlisted venture companies, once introduced, there will be strong calls for its adoption by other companies as well." They emphasized, "The proposal to grant multiple voting rights to founders so that they can manage companies at will will be difficult for tens of millions of stock investors to accept," and added, "Korea must undergo a paradigm shift to consider the interests of all shareholders, not just those of founders or controlling shareholders."

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