Legislative Notice of Enforcement Decree Amendment Including 'Multiple Voting Rights for Venture Companies'

Ministry of SMEs and Startups Can Investigate Ex Officio and Impose Fines
Legislative Notice Conducted Until October 2

The Ministry of SMEs and Startups announced on the 21st that it has publicly notified a partial amendment to the Enforcement Decree of the Special Act on the Promotion of Venture Businesses, which includes detailed provisions on multiple voting rights for venture companies.

On April 27, the National Assembly plenary session is approving the amendment to the Special Measures Act on Fostering Venture Businesses.
[Photo by Yonhap News]

According to the amendment, to issue multiple voting right shares, a company must have received investments totaling at least 10 billion KRW since its founding, and the last investment must exceed 5 billion KRW. When calculating these requirements, investments made by special related parties such as relatives are not included.

If the Fair Trade Commission notifies the company of exclusion from the disclosure target business group, the issued multiple voting right shares will be immediately converted into common shares. Companies that have issued multiple voting right shares must inform their shareholders of this fact and report the issuance status to the Ministry of SMEs and Startups within one month.

The Ministry of SMEs and Startups may investigate violations related to multiple voting right shares ex officio and impose fines in accordance with the Framework Act on Administrative Procedures.

To prepare for this amendment to the enforcement decree, the Ministry held a policy meeting with the Venture Business Association on the 16th to gather opinions from experts and the field. Public comments will also be collected through the public notice period until October 2nd.

Lim Jeong-wook, Director of the Startup Venture Innovation Office, said, “We will carefully manage the multiple voting rights system to ensure it effectively supports the growth of innovative venture companies,” and added, “We hope that stakeholders actively express their opinions on the amendment.”

Multiple voting right shares refer to shares that carry two or more voting rights per share. This system is classified as a kind of defense mechanism that allows venture and startup founders to operate their companies stably by reducing the risk of management control threats caused by equity dilution during investment attraction. The bill introducing multiple voting right shares was passed by the National Assembly plenary session on April 27th.

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