South Korea’s Financial Services Commission (FSC) has proposed amendments to capital market rules to support the revised Commercial Act’s mandatory cancellation of treasury shares, requiring broader disclosure by listed companies and tightening rules around how treasury shares can be held and disposed of. The revised Commercial Act requires listed companies to cancel treasury shares in principle within one year, with a one year and six month period for treasury shares acquired before the revised law takes effect. Where retention is exceptionally needed for employee compensation or other management purposes, a retention and disposal plan must be approved by a general shareholders’ meeting. To enable “seamless implementation”, the FSC proposal would expand the treasury share disclosure obligation from listed companies holding at least one percent in treasury shares to all listed companies, with twice-yearly disclosure of retention status, disposal plans and actual implementation. The package also aligns capital market rules with Commercial Act restrictions by banning trust businesses from disposing of treasury shares during a trust agreement, removing the capital market regulation on issuing exchangeable bonds backed by treasury shares, prohibiting sales of treasury shares to an unspecified group of people while continuing to allow block deals, and updating rules for disposing of treasury shares acquired through exercising stock options. Disparities between disclosed plans and actual disposal would not be treated as a disclosure breach, while false disclosure may trigger administrative sanctions and/or criminal penalties under the Financial Investment Services and Capital Markets Act. The proposal is open for comment from March 31 to May 11, 2026, after which the upgraded rules will proceed through legislative review and approval before taking effect.
South Korea Financial Services Commission 2026-03-30
South Korea Financial Services Commission proposes capital market rule changes to expand treasury share disclosures and align disposal limits with mandatory cancellation
The South Korea Financial Services Commission has proposed amendments to capital market rules to support the revised Commercial Act’s mandatory cancellation of treasury shares, expanding disclosure obligations to all listed companies and requiring twice-yearly reporting on retention status, disposal plans and implementation. The package also tightens rules on the holding and disposal of treasury shares, including banning trust businesses from disposing of treasury shares during trust agreements, prohibiting sales to an unspecified group while allowing block deals, and updating rules for shares acquired via stock options, with false disclosure subject to administrative or criminal sanctions.