This also creates an incentive to control the number of seats - perhaps majority approval is required to open a new one, usually driven by the desire to build a bigger reserve for specific actions (like funding an army for an expansion push), balanced against having to share the power and introduce another player into the power game.
I do agree that incorporating a representative on behalf of smaller players (perhaps all sharing a industry and thus a common goal) is likely to take place. Whenever a seat goes up for auction, after all, the opportunity exists.
You also bring up an interesting concern - musical chairs. I buy my place in the council, pass some beneficial rulings for me and my funders, and then ditch before the next round of bills comes due. There may have to be constraints in place on how you can leave - such that even holding the seat for a short time causes you to forfeit funds or assets to cover a full year of responsibilities.