Ventures with over $7.45 mn investment eligible to issue multiple voting shares

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A venture firm that attracts an investment of 10 billion won ($7.45 million) or more since its establishment will be able to issue multiple voting shares with multiple voting rights per share in Korea under new regulations, effective on November 7, as announced by the Korean government on Monday.

The multiple voting shares will be immediately converted into common shares if the company is notified of exclusion from the disclosure requirement.

The Ministry of SMEs and Startups announced on Monday that a legislative notice will be in place for the amendment to the enforcement decree of the law governing venture firms for 42 days, starting from October 2.

The multiple voting share refers to a system that recognizes multiple voting rights of management at shareholders’ meetings. Under the new legislation, unlisted venture companies, whose founders’ voting rights are weakened by large-scale investment, can issue multiple voting shares with shareholders’ consent, beginning November 7.

The amended enforcement decree mandates that a venture company seeking to issue multiple voting shares must receive more than 10 billion won in investment after its founding, with the latest investment being at least 5 billion won. Investments from related parties, such as relatives, will not be counted toward meeting this requirement.

Additionally, multiple voting shares at a company that is excluded from the disclosure requirement will be converted into common shares upon exclusion.

Companies that have issued multiple voting shares are obligated to inform their shareholders and report the issuance status to the Ministry of SMEs and Startups within one month.

In cases of violations related to multiple voting shares, the ministry may initiate investigations and impose fines in accordance with the administrative procedure law.

“We will carefully manage the multiple voting shares system to ensure that it fulfills its role in supporting the growth of innovative ventures,” stated an official from the startup ministry.