Anil Moon Partner Attorney, wrote an article on “Right of Multiple Appeals System” which was in front of the eye, in the IT specialized media Outstanding.
Article posted in 2023-09-20 16:24:50 | VEAT
Law firm Veat’s An Il-Woon Partner Attorney contributed content that was featured in the outstanding magazine, discussing ‘Dual Voting Rights,’ a crucial issue for venture-backed startups and established companies.
Venture-backed companies grow through multiple investments, and during this process, the founder’s voting rights gradually diminish. In such cases, it is necessary to explain why the ‘Dual Voting Rights’ system is needed, what actual cases led to its implementation, and what the advantages of the ‘Dual Voting Rights’ system are.
However, when starting with seed rounds and progressing to Series C or D rounds, and issuing new shares to investors, the total amount of shares issued by the company increases. Relatively, the founder’s equity ratio decreases.
Typically, the new shares issued to investors are around 10-20% of the previously issued shares, depending on the stage.
Depending on the capital-raising situation, this ratio can be higher, and as the number of investment rounds increases, the number of shares issued tends to increase.
As the founder’s equity ratio decreases, it becomes difficult to enforce their business philosophy.
Especially given that startups are characterized by the need for quick decision-making and the individual capabilities of founders, if the founder does not fully exercise their voting rights and becomes involved in management disputes, it can lead to a result that hinders growth.
Source: Outstanding (https://outstanding.kr/)
An Il-Woon Partner Attorney, who is also the ‘ICT Startup Legal Mentor Attorney’ of the Ministry of Science and ICT and a ‘Lawyer Instructor’ for the ‘Venture Startup Investment Academy’ of the Korea Bar Association in 2020, provides legal advice based on his extensive experience in ‘Startups’ and ‘Companies’.
Law firm Veat provides legal advice throughout a startup’s initial stages and its growth process, understanding the startup’s difficulties, and was also selected as a ‘finalist’ in the ‘Boutique Law Firm’ category at the ‘ALB Korea Law Awards 2022,’ recognizing its expertise and competitiveness.
If you need assistance while operating a startup, please feel free to contact Law firm Veat at any time.
Thank you.
Law firm Veat.