South Korea to Require All Listed Firms to Disclose and Cancel Treasury Stock Holdings

South Korea's financial regulator announced Tuesday that all listed firms must disclose details on their treasury stock holdings and plans for cancellation. The Financial Services Commission said the Cabinet approved revisions to the Commercial Act enforcement rules the same day. The National Assembly had approved the changes in late February.

Under the revisions, listed firms must cancel treasury stocks within one year of purchase and retire existing holdings within 18 months. All companies will also be required to report how many shares they hold and how they intend to cancel them. Previously only firms holding treasury stocks above 1 percent of shares in circulation faced disclosure requirements.

Firms planning to use treasury stocks for employee compensation must now secure shareholder approval before disclosure. The rules also ban listed firms from selling bonds exchangeable into their treasury stocks. The revisions take effect June 30.

In the first five months of the year, 43 trillion won (US$28 billion) worth of treasury stocks were canceled, more than double the 21.4 trillion won canceled in all of last year, Yonhap reported. Yonhap reported that the Lee Jae Myung government has advanced multiple measures to improve corporate governance and extend fiduciary duties to all shareholders.