(1) Reasons for Proposal

This Act seeks a partial amendment to newly insert the legal basis to allow non-listed venture businesses, which can attract investment without eroding corporate control, to issue multiple voting shares so that they can receive a large amount of investment and grow into a unicorn, and to prepare strict issuance requirements, common share conversion conditions, and reporting procedures to minimize any abuse by the founder including pursuing personal gains. 

(2) Major Provisions

A. Prepare the basis to issue multiple voting shares in non-listed venture businesses (Article 16-8 newly inserted)

Allow the issuance of multiple voting shares within the period of 10 years by resolution in a shareholder meeting (at least 3 out of 4 issued shares) if corporate control for the founder of a non-listed venture business is under threat due to a certain size of investment.

B. Prepare requirements to convert multiple voting shares into common shares and limit the exercise of multiple voting rights (Article 16-9 newly inserted)

1) Convert into common shares when the founder assumes or transfer multiple voting shares or resigns as a director from a venture business.

2) Convert into common shares for "listing on the securities market (grace period of 3 years)" and "incorporating into a group of business subject to public disclosure."

3) Convert even multiple voting shares issued falsely or unfairly into common shares.

4) Specify 1 multiple voting share has 1 vote for changing the articles of incorporation to change the effective period of multiple voting shares, setting directors’ compensation, reducing liability for the business, appointing or dismissing an audit, and determining dividends from profits.

C. Specify obligations to report the issuance of multiple voting shares (Article 16-10)

Require venture businesses issuing multiple voting shares to report to the Ministry of SMEs and Startups and make their articles of incorporation available and public, and the Ministry of SMEs and Startups to notify a list of such business names on the official gazette.

D. Special cases on the share issuance of businesses which used to be venture businesses (Article 24 paragraph 1 subparagraph 7 newly inserted)

State that multiple voting shares already issued are still valid even when a business which used to be a venture business is no longer a venture business.

E. Impose and collect administrative fines (Article 33 newly inserted)

Allow for imposing administrative fines for failing to report or falsely reporting the issuance of multiple voting shares and failing to make articles of incorporation available to the public.