"Properly Cancel Treasury Shares"... Government Employees Pension Service Sends Investor Letter

Exceptional Holding of Treasury Shares Criticized

"Insufficient Basis for Calculating Holdings and Future Utilization Plans"

The Government Employees Pension Service has urged its portfolio companies to retire treasury shares in a transparent manner, in accordance with the intent of the Commercial Act.

On June 5, the Government Employees Pension Service announced that it had sent an "Investor Letter Calling for Enhanced Transparency in Capital Policies" to its major portfolio companies. The recipients were companies that had failed to adequately disclose information regarding the handling of treasury shares following this year’s annual general shareholders' meetings.

The Government Employees Pension Service explained that, after analyzing the agendas of this year’s annual general meetings at its major portfolio companies, it found numerous cases where companies held treasury shares as an exception but did not clearly disclose their plans. The agency noted that there was not only a lack of information regarding the basis for calculating the scale of treasury shares held, but also omissions of key details such as future utilization plans and schedules for disposal.

Accordingly, the Government Employees Pension Service sent out the investor letter, urging companies to strictly comply with the intent of the amended Commercial Act. Furthermore, it requested that, even in cases where holding treasury shares is unavoidable, companies must provide a level of transparent and specific disclosure—including the purpose and source of funds—that is sufficient for shareholders to fully understand and accept.

The agency plans to closely monitor whether the companies that received the letters make improvements, and to actively incorporate the results into future voting decisions. In particular, it intends to link this shareholder engagement activity to its stewardship responsibilities and thereby enhance transparency in the capital market, taking the lead in "strengthening its public role" as a public pension fund.

Kim Donggeuk, President of the Government Employees Pension Service, emphasized, "Sending this investor letter goes beyond a simple recommendation—this is an active exercise of stewardship as a public pension fund, aimed at enhancing corporate value and sound development of the capital market. We will continue to foster a virtuous cycle that boosts the sustainability of the fund by encouraging transparent capital policies and shareholder return policies."

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