43 Trillion Won in Treasury Stocks Cancelled by Major Conglomerates in 3 Months... Samsung Electronics’ Controlling Power Falls Below 20%

With the third amendment to the Commercial Act, major listed companies have accelerated the cancellation of their treasury shares, with large conglomerates deciding to cancel as much as 43 trillion won worth of treasury shares in the first quarter of this year alone. This figure is three times the total amount of treasury shares canceled last year.

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On April 21, CEO Score, a corporate data research institute, announced the results of a survey examining the volume of treasury share cancellations and the resulting changes in control at 73 business groups (with 339 affiliated listed companies) designated as public disclosure targets for 2025, which have both controlling shareholders and listed affiliates. The results showed that, out of 339 listed companies, 60 decided to cancel treasury shares in the first quarter of this year, totaling 42.5207 trillion won. This represents a 220.1% surge compared to the annual cancellation amount of 13.285 trillion won last year. However, it should be noted that the cancellation amount was calculated based on the closing price on the day before the board resolution, so the effect of this year’s stock price increase was largely reflected.

The company with the largest volume of treasury share cancellation this year is Samsung Electronics, at 14.8994 trillion won. This is followed by SK hynix (12.24 trillion won), SK Inc. (4.8343 trillion won), and Samsung C&T (2.3269 trillion won). In particular, the combined amount of treasury shares canceled by Samsung Electronics and SK hynix reached 27.1394 trillion won, accounting for 63.8% of all treasury share cancellations this year.

If treasury shares are canceled as planned, the company expected to experience the largest decrease in control is Taekwang Industrial. Taekwang Industrial’s control would decrease by 24.41 percentage points, from 78.94% before the cancellation to 54.53% after. SK Inc. would also see its control drop by 18.34 percentage points, from 50.21% to 31.87%, following the cancellation of treasury shares. SK Inc. plans to cancel 20.3% out of its 24.8% treasury shares by January 2027, with the remaining 4.5% to be used for employee compensation. As of the end of last month, SK Inc. held the highest treasury share ratio (in terms of common stock) among listed companies in large business groups.

In particular, after the cancellation of treasury shares, the control (largest shareholder stake) of the controlling shareholder at Samsung Electronics will fall below 20%. As of the end of March this year, Samsung Electronics' control amounted to 21.91% (treasury shares 2.21%, largest shareholder 19.71%), but after canceling 1.24% of treasury shares earlier this month, it dropped to 19.95%, effectively breaching the 20% mark. Samsung Electronics plans to dispose of the remaining treasury shares for employee compensation purposes by the date of the regular general shareholders’ meeting in 2027.

This survey was conducted to examine future trends in control changes, based on the status of treasury share holdings and the shareholding ratios of the largest shareholders of major conglomerates as of the end of March. The control of a listed company was calculated by dividing the sum of shares held by the largest shareholder, related parties, and treasury shares by the total number of shares issued. After the cancellation of treasury shares, control was calculated by dividing shares held by the largest shareholder and related parties by the total number of shares issued following the treasury share cancellation.

With the implementation of the third amendment to the Commercial Act last month, listed companies are now required to cancel treasury shares they currently hold within 18 months. However, if treasury shares are needed for purposes such as employee compensation or management objectives, companies may retain or dispose of them exceptionally if they receive approval for a treasury share retention or disposal plan at the general shareholders’ meeting.

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