SEOUL, December 23 (AJP) -South Korean listed companies will be required to disclose their treasury stock holdings once they exceed 1 percent of shares outstanding — down from the current 5 percent — under sweeping revisions to capital markets rules, as regulators move to strengthen shareholder protection and curb opaque share buybacks.
The amendments to the enforcement decree of the Capital Markets Act were approved at a Cabinet meeting, the Financial Services Commission said Tuesday. The new rules will take effect on Dec. 30 and must be reflected in companies’ 2025 annual reports.
Under the revised rules, listed firms holding treasury shares equal to at least 1 percent of total shares outstanding must disclose the size of their holdings, the purpose of holding them and future disposal plans. The disclosure frequency will double from once a year to twice a year, with companies required to attach a treasury stock report to both annual and semiannual filings.
Companies will also be required to disclose a comparison between their most recently announced treasury stock plans and actual execution over the past six months. If the gap between the plan and implementation exceeds 30 percent, firms must explain the reasons in detail.
Reporting requirements will also be tightened when companies decide to buy or sell treasury shares. Listed firms must file a major event report outlining the purpose, planned amount, number of shares, method and period of the transaction, and regularly disclose the status of treasury share holdings, purchases and sales in periodic filings. Companies holding treasury shares above a certain threshold must additionally disclose disposal plans in their annual reports.
The FSC said it will actively apply sanctions for disclosure violations, including recommendations to dismiss executives, limits on securities issuance, administrative fines and criminal penalties. Repeated violations will face heavier punishment, it added.
Beyond treasury stock, the amendments expand mandatory disclosures related to major industrial accidents.
Companies will be required to include details such as the occurrence of incidents, damage, response measures and outlook in both annual and semiannual reports. Disclosure requirements for mergers and similar transactions will also be strengthened, with firms required to provide more detailed board opinion statements, including explanations given by management and specific issues discussed by directors at each board resolution.
Financial authorities said the reforms are intended to foster a shareholder-value-focused corporate culture and reduce information asymmetry between controlling and minority shareholders by ensuring that material corporate actions are disclosed in a timely and transparent manner.
Regulators also expect the changes to accelerate the use of treasury shares as a shareholder-return tool benefiting all investors rather than select shareholders.
Treasury share buybacks and cancellations have already been on a sharp uptrend, with the value of canceled shares reaching 20.7 trillion won ($14 billion) through November 2025 — surpassing the full-year total of 13.9 trillion won recorded in 2024.
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