SEOUL, April 21 (AJP) - Mandatory treasury share retirements are rapidly reshaping ownership structures across South Korea’s conglomerates, with cancellations surging past $30 billion in the first quarter alone under a tougher Commercial Act of South Korea.
According to a study of 73 conglomerates and 339 affiliates by corporate tracker CEO Score, listed firms canceled shares worth 42.52 trillion won ($30 billion) in the January–March period—more than triple the 13.29 trillion won recorded for all of last year.
“Share cancellations are no longer a matter of choice but are required by law, particularly for large conglomerates,” said Shin Hyun-han.
Under the revised rules, newly acquired treasury shares must be canceled within one year, while previously held shares must be retired within 18 months. Exceptions are tightly limited—such as for employee stock compensation—and require shareholder approval.
The bulk of cancellations was concentrated among market heavyweights. Samsung Electronics led with 14.9 trillion won, followed by SK hynix at 12.24 trillion won. Together, the two accounted for 63.8 percent of total cancellations in the first quarter.
In terms of treasury share holdings prior to retirement, SK Group topped the list at 24.8 percent of common shares, followed by Taekwang Industrial at 24.41 percent, Lotte Corp. at 23.69 percent and Mirae Asset Life Insurance at 21.83 percent.
As cancellations accelerate, founding families are seeing their controlling stakes diluted—a structural shift long debated in Korea’s corporate governance landscape.
Taekwang Industrial recorded the steepest decline, with controlling ownership falling from 78.94 percent to 54.53 percent. At SK Group, the stake dropped from 50.21 percent to 31.87 percent.
At Samsung Electronics, Chairman Lee Jae-yong and related parties saw their combined stake slip below the symbolic 20 percent threshold to 19.95 percent following the cancellations.
Still, experts caution against equating lower ownership with weaker control.
“Corporate leadership should not be interpreted in a limited way,” Shin said, noting that governance in large conglomerates often rests on a broader mix of cross-shareholding structures, board influence and managerial control rather than simple equity percentages alone.
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