Multiple Voting Rights Bill Passes Judiciary Committee...Venture Industry Unanimously 'Welcomes'

"Necessary for Protecting Founders' Management Rights"
Attention on Tomorrow's National Assembly Plenary Session Decision

[Image source=Yonhap News]

As the bill introducing multiple voting rights (amendment to the Venture Business Act) passed the National Assembly's Legislation and Judiciary Committee, the venture industry collectively welcomed the move.

The Innovation Venture Organizations Council issued a statement on the 26th, saying, "We sincerely welcome the passage of the amendment to the Venture Business Act, which grants multiple voting rights to unlisted venture companies, through the Legislation and Judiciary Committee." The bill is scheduled to be presented at the National Assembly plenary session tomorrow (27th).

Multiple voting rights are a necessary system for founders of unlisted venture companies to continue management activities without concerns over management rights threats due to dilution of shareholding ratios when raising external capital and hostile mergers and acquisitions (M&A).

The introduction of multiple voting rights has been a long-standing issue for the venture industry, but it faced opposition for over three years due to concerns about misuse as a means of inheritance by conglomerate group heads, conflicts with commercial law principles, and harm to minority investors, preventing it from passing the National Assembly.

This amendment is evaluated to have sufficiently established institutional stability as a special law targeting only unlisted venture companies. It stipulates issuance requirements so that heads of large business groups or related parties cannot be subject to multiple voting rights from the outset.

Additionally, when founders inherit or transfer multiple voting shares, they are converted into common shares to prevent abuse by founders.

The council stated, "In the digital economy era, at a critical point preparing for a new era led by innovative venture companies, if the introduction of the multiple voting rights system is opposed solely due to concerns about system abuse, venture companies will not be able to lead in global competition."

Another startup organization, Korea Startup Forum (Kospo), also emphasized, "The multiple voting rights bill is an essential system to protect the management rights of startup founders and secure stable management rights, allowing them to maintain their original founding values and growth even after an initial public offering (IPO)."

Kospo added, "Despite the global investment contraction, the domestic startup industry is striving to overcome the crisis by pursuing continuous innovation. We hope this bill will revitalize the weakened investment environment and enable startups to achieve steady growth and development."

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