South Korea passes commercial act revision to boost share valuations and improve corporate governance

The parliament of South Korea KR passed a revision to the Commercial Act on Wednesday, February 25, 2026, requiring listed companies to cancel newly acquired treasury shares. This legislative change introduces a mandate for firms to eliminate these shares within specified grace periods or face administrative fines. The measure is a significant step in the government's effort to reform corporate equity practices and ensure that shareholder value is prioritized over internal management control.

Lawmakers and government officials stated that the revision is intended to close loopholes that have historically been used to consolidate management control within major conglomerates. By mandating the cancellation of treasury shares, the law seeks to strengthen corporate governance and boost share valuations. These changes have been closely watched by business lobbies, as the new requirements represent a fundamental shift in how corporations must handle their own stock.