South Korean Conglomerates Announce Trillion-Won Treasury Stock Cancellations Under New Commercial Act
South Korea's major corporations, including Samsung, SK, Hyundai Motor, and LG, are canceling trillions of won in treasury stock due to a new law mandating the retirement of newly acquired shares within one year and existing shares within 18 months. Samsung plans to cancel 87 million shares valued at approximately 16 trillion won, while SK will retire 14.69 million shares worth around 4.8 trillion won. This reform aims to improve corporate governance and boost stock market valuations, but may expose firms to increased risks from activist investors.
Major South Korean corporations are swiftly retiring treasury stock following the revised Commercial Act effective March 6, which mandates cancellation of newly acquired shares within one year and existing shares within 18 months. Samsung Electronics will cancel 87 million treasury shares valued at about 16 trillion won, representing 82% of its total holdings.
AI-curated by TheiaSK Inc. plans to retire 14.69 million shares, approximately 20% of its total stocks, valued at 4.8 trillion won. Hyundai Motor and LG Corp will also cancel shares worth 400 billion won and 250 billion won, respectively. This initiative aligns with President Lee Jae Myung's reforms aimed at enhancing corporate governance and shareholder returns, though it limits companies' financial flexibility and defenses against hostile takeovers, raising concerns among business groups.
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