Public Hearing on the Introduction of Multiple Voting Rights Shares for Unlisted Venture Companies to Be Held

Gathering Opinions from Experts and Venture/Startup Companies... Plan to Introduce Multiple Voting Rights Shares Next Month
Enables Large-Scale Investment Attraction Without Concerns of Management Dilution Upon Introduction

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[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) announced that it will hold a public hearing on the introduction of multiple voting rights shares for unlisted venture companies on the 15th at the Seoul Creative Economy Innovation Center.

Multiple voting rights shares (hereinafter referred to as multiple voting rights) refer to shares with multiple voting rights. Looking at overseas cases, multiple voting rights are permitted in many OECD member countries such as the United States, the United Kingdom, and France, and have recently been introduced and operated in Asian countries experiencing a venture startup boom such as Hong Kong, Singapore, and China. In the case of Hong Kong, after allowing multiple voting rights in April 2018, Xiaomi was listed with a multiple voting rights structure in July of the same year.

Last year, when announcing the 2nd Venture Boom Expansion Strategy and this year’s K-Unicorn Project, the Ministry stated that it would amend the law to allow the issuance of multiple voting rights so that high-growth venture companies can attract large-scale investments without concerns about dilution of management rights during their growth into unicorn companies. Accordingly, the Ministry is preparing plans to introduce multiple voting rights through reviewing overseas cases and conducting surveys, and plans to gather opinions from experts and industry stakeholders through this public hearing.

Cha Jeong-hoon, Director of the Startup Venture Innovation Office at the Ministry, said, "So far, startup and venture entrepreneurs have inevitably been passive in attracting investment for corporate growth due to concerns about losing management rights. We intend to introduce multiple voting rights shares so that founders of companies with high growth potential can actively attract investment and engage in management activities to grow into unicorn companies." He added, "We will carefully review the matters discussed at this public hearing and fully collect opinions from related industries and experts to prepare a government proposal."