South Korea passes law allowing multiple voting stocks for startup founders
2023년 05월 04일

National Assembly of South KoreaThe South Korean National Assembly passed the “Act on Special Measures for the Promotion of Venture Businesses,” allowing unlisted venture companies to issue multiple voting stocks. The legislation, under discussion for over two years, was approved in a plenary session and will be promulgated after a Cabinet meeting’s resolution.

When the revised Venture Business Act is implemented, unlisted venture companies will be able to issue multiple voting stocks with up to 10 voting rights per share to the founder, in the event that the founder’s share of voting rights drops below 30% due to investment attraction.

The amendment to the Venture Business Act requires a special resolution requiring the consent of 3/4 of the total number of issued stocks at the general shareholders’ meeting before the company can amend its articles of incorporation and issue multiple voting stocks. The duration of issued multiple voting stocks is up to 10 years, which is reduced to 3 years upon listing. The stocks with multiple voting rights are converted into common stock upon expiration.

The new legislation includes a voting rights restriction device to prevent abuse of multiple voting stocks and establishes a plan for transparent operation.Companies issuing multiple voting stocks must report important matters to the Ministry of SMEs and Startups, as well as keep and disclose issuance details at their head offices and branches.

Minister Young Lee of the Ministry of SMEs and Startups  stated that multiple voting shares are a system actively employed in the United States, a venture powerhouse, as well as in China and India. He added that the new legislation fosters an environment where high-growth venture companies can leverage the power of South Korea’s capital market.

The passing of the legislation is expected to encourage more entrepreneurs to start their own companies in South Korea, leading to more innovation and economic growth in the country. The Korea Startup Forum has welcomed the passing of the bill, emphasizing the necessity of introducing multiple voting rights for startup founders.

The Korean Startup Forum highlighted that as the domestic startup industry strives to overcome crises by pursuing continuous innovation despite global investment contraction, this bill offers hope for revitalizing diminished investments, enabling startups to achieve steady growth and development.

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전진주는 스타트업 분석 전문 기자로 비석세스 미디어 그룹 창업 초기에 합류하였다. 현재는 비석세스 편집장이자 한국과 미국에서 열리는 비글로벌 컨퍼런스 총괄을 맡고 있다. 전 세계 스타트업 미디어 관계자들과 아름다운 네트워크를 바탕으로 한국 스타트업의 투자 유치 및 글로벌 진출을 적극 지원한다. 인티제이, 안경잡이, 뉴스정키, 베이비 코더, 자유주의자, 작가, 창업장려자, 한국위탁용역협회 회원, 릿라운지 인턴, 스타트업의 셰르파, 스타트업의 컨시어지, 엔젤투자자로 활동 중이다. Remember 'Ash, Wednesday!' Jinju Jeon is a journalist specializing in startup analysis and joined beSUCCESS Media Group in its early days. She is the editor-in-chief of beSUCCESS and the head of beGLOBAL Startup Global Conference in Korea and the United States. With a strong network of startup media contacts worldwide, she actively supports Korean startups in attracting investment and going global. She is an INTJ, four-eyes, News Junkie, Baby Coder, Libertarian, Writer, Entrepreneurship Booster, Member of the Korea Outsourcing Association, Intern at Lit Lounge, Sherpa for Startups, Concierge for Startups, and Angel Investor. Always remember, "Ash, Wednesday!"

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