Burning 6.979 Trillion Won... "Treasury Share Cancellations" Begin in Earnest, Which Sectors to Watch? [Weekend Money]

Following the amendment of the Commercial Act—which now includes mandatory cancellation of treasury shares—several companies have announced plans to cancel their treasury shares, leading to expectations that holding companies will become more attractive investment targets. Analysts believe that treasury share cancellations could help alleviate the so-called "holding company discount."

According to the financial investment industry, since the third amendment to the Commercial Act, which includes mandatory cancellation of treasury shares, was passed at the National Assembly’s plenary session on February 25, companies have quickly begun announcing treasury share cancellations. The revised act was officially promulgated on March 6, 2026, and has since been fully implemented.

Under the revised law, companies are required to cancel newly acquired treasury shares within one year, and existing treasury shares within one year and six months. However, exceptions are permitted only in cases such as employee compensation, provided that approval is obtained at a general meeting of shareholders.

In fact, public disclosures of treasury share cancellations are increasing rapidly. According to SK Securities, between February 25 (when the amendment passed) and March 10, a total of 48 companies announced plans to cancel treasury shares, amounting to approximately 6.979 trillion won.

Choi Kwansoon, a researcher at SK Securities, explained, "Despite the one year and six month grace period for existing treasury shares, companies are responding swiftly to government policy through prompt decision-making, as the revised act was promulgated before most general meetings of shareholders."

Holding companies, in particular, are cited as beneficiaries of this regulatory change. The holding company discount has long been recognized as a structural issue in the domestic stock market, primarily due to the use of treasury shares as a means for controlling shareholders to make key decisions.

Choi added, "The cancellation of treasury shares is the final step in improving corporate value through share buybacks. For holding companies, since the use of treasury shares for controlling shareholder decision-making has been a key factor behind the holding company discount, cancelling treasury shares could serve as a catalyst for the revaluation of holding companies."

Indeed, holding companies are actively participating in treasury share cancellations. SK recently decided to cancel 14.69 million common shares (20.3%) and 1,787 preferred shares from its treasury holdings. The total amount is approximately 4.8 trillion won, with the cancellation scheduled for January 4, 2027.

In addition, several other holding companies—including Humax Holdings, Neowiz Holdings, Amorepacific Group, and Lotte Corporation—have announced treasury share cancellations following the passage of the Commercial Act amendment in the National Assembly.

He concluded, "Despite the recent high volatility in the stock market, the possibility of a revaluation of holding companies through treasury share cancellations is expected to increase their relative investment appeal."

This content was produced with the assistance of AI translation services.