70% of Venture Companies Plan to Utilize Multiple Voting Rights Shares

Venture Business Association to Announce Survey Results on 16th
Policy Briefing with Ministry of SMEs on December 6th

Seven out of ten venture companies plan to utilize the multiple voting rights stock system.

On June 8th, a 'Field Meeting of the Venture Business Community, Government, and Political Parties for the Establishment of Multiple Voting Rights' was held at Front1, a startup support center in Mapo-gu, Seoul.
[Photo by Yonhap News]

The Korea Venture Business Association announced on the 16th that a survey conducted on 291 venture companies showed that 70.8% responded that they plan to issue multiple voting rights stocks in the future.

Multiple voting rights stocks is a system where, if the voting rights ratio of the founder of an unlisted venture company falls below 30% due to investment attraction, the founder is granted up to 10 voting rights per share.

The timing of introduction was as follows: ‘No specific plan’ (52.4%), ‘Within the next 3 years’ (30.1%), and ‘Within 1 year’ (13.1%). Nine companies (4.4%) said they would introduce it immediately upon implementation.

The reasons for not planning to issue multiple voting rights stocks were ‘No plan to attract investment’ (44.7%), ‘Sufficient friendly shares held by relatives’ (20.0%), and ‘Opposition from shareholders and burden of obtaining consent from three-quarters of issued shares’ (11.8%), in that order.

Regarding the anticipated difficulties in issuing multiple voting rights stocks (multiple responses allowed), answers included ‘Meeting issuance requirements’ (31.1%), ‘Consent of all shareholders’ (29.4%), ‘Payment for shares’ (18.9%), and ‘Conversion to common stock’ (10.3%). For an unlisted venture company to issue multiple voting rights stocks, the founder must have accumulated investment of at least 10 billion KRW since founding, with the last investment being at least 5 billion KRW. Due to the last investment, the founder’s shareholding ratio must fall below 30% or lose majority shareholder status. Additionally, the articles of incorporation must be amended by a weighted special resolution requiring consent from three-quarters of the total issued shares, after which new multiple voting rights stocks are issued.

Sung Sang-yeop, chairman of the Korea Venture Business Association, said, “Since the multiple voting rights stock system, which has been a long-standing wish of the venture industry, has been difficultly introduced, we hope that many venture companies will challenge global ventures by attracting large-scale investments without threats to management rights through the introduction of multiple voting rights.” He added, “The association will continuously propose improvements to ensure the system settles and will steadily support consulting for system introduction.”

The Korea Venture Business Association, together with the Ministry of SMEs and Startups, will hold a policy briefing session on the 6th of next month for those wishing to introduce the multiple voting rights stock system.

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