[비즈한국] Recent corporate disclosure trends among listed companies can be summarized in one sentence. The number of companies burning their treasury shares is increasing, as is the number of companies moving them out of the market. This is because discussions on the third amendment to the Commercial Code have intensified, shaking the conventional wisdom that "treasury shares are a card that can be used whenever needed." In fact, disclosures for treasury stock cancellation have surged to about 50 in the last two weeks, while disclosures for "disposal of treasury shares"—rather than cancellation—have also seen a concurrent rise, recording 53 cases in the same period.
Cancellation or Disposal... Legislative Risk Has Split 'Treasury Stock Strategies'
Behind this trend lies the Commercial Code amendment bill currently being discussed in the National Assembly, which aims to make treasury stock cancellation mandatory. According to reports, the Democratic Party of Korea has signaled its intent to process the third amendment to the Commercial Code at a plenary session as early as February 24, leading to speculation that the time for implementation is near. Multiple bills regarding the mandatory cancellation and regulation of treasury stock disposal have been proposed in the National Assembly. Analysis suggests that some of these bills are based on the principle that "treasury shares must be cancelled within a certain period," while limiting exceptions—such as employee compensation, employee stock ownership plans, or business necessity—to requirements like shareholder meeting approval.
The point the market is focusing on is not the simple formula that "increasing cancellations equals stronger shareholder returns." There has been consistent criticism that companies have used the structure where voting rights are revived the moment treasury shares are disposed of as a means for controlling families to increase friendly stakes. The current amendment discussions are seen as a move to institutionally bind those practices. Consequently, corporate reactions are divided. While large conglomerates, holding companies, and financial groups with ample cash flow are strengthening shareholder return signals through "bold cancellations," some mid-sized and smaller firms are being observed moving to utilize treasury shares through methods like EBs (Exchangeable Bonds) or third-party disposals to simultaneously secure funding and defensive logic.
The disclosure on the 20th by TBH Global 005930 can be read in line with this "speed war" trend. TBH Global decided to cancel 398,563 shares of its previously acquired treasury stock, with the expected cancellation amount reported to be around 500 million won. While it is a minor event in terms of value, what the market is watching now is the direction of the "choice the company has made" rather than the scale.
When M&A 'Currency' Disappears... Costs Shift to Cash, New Shares, and EBs
The treasury stock debate is interesting because the issue is not limited solely to "shareholder returns." Treasury shares have effectively been used as "currency" in M&A and corporate governance. It was possible for companies to use treasury shares for in-kind contributions or exchanges with other companies to secure stakes, build friendly alliances, and sometimes erect defensive walls. Recent reports of increasing treasury share swaps among some companies show that discussions on "mandatory cancellation" are being interpreted as a signal that "treasury shares must be used now, quickly."
If legislation acts forcefully and pressures companies to cancel treasury shares within a certain period, corporate options in M&A or equity transactions will become simpler. Deals that were previously settled with treasury shares will require cash; if cash is short, there is an incentive to accept dilution through the issuance of new shares or increase indirect funding through forms like EBs or CBs. The rapid increase in "disposal of treasury stock" disclosures and reports of a sharp rise in treasury stock sales on the KOSDAQ in a short period can be interpreted as a precursor to this.
It is also necessary to examine the "cash flow illusion" of cancellation. While treasury stock cancellation itself does not result in an immediate cash outflow at the time of cancellation, cash was already drained in the past when the shares were bought, and cancellation is an act of closing the option to re-liquefy those assets. If companies expand into additional purchases to join the "cancellation rush," their capacity for dividends and future investments will inevitably decrease from that point on. Conversely, while treasury stock disposal can bring in cash, for shareholders, it brings simultaneous issues of stock value dilution and governance concerns due to the revival of voting rights.
Ultimately, the current situation can be summarized in one line: the "legislative risk" of the Commercial Code amendment has made it impossible to view corporate treasury shares solely as a means of shareholder return, and it is simultaneously pushing for the reorganization of the functions that treasury shares previously held in M&A and corporate governance. The increase in disclosures is not just a trend, but a signal that companies have begun to calculate the "cost after the law changes."