Mandatory cancellations under new law forced treasury stock cancellation to jump from 4 Trillion to 30 Trillion Won in 3 Years,
The total amount of treasury stock cancellation disclosed by all listed companies at this year’s general shareholders’ meetings is estimated to be close to 30 trillion won. (Businesskorea DB)
Major domestic companies have embarked on an unprecedented ‘investment diet.’ This is because, in line with amendments to the Commercial Act, such as the government and ruling party’s mandatory treasury stock cancellation, companies have carried out treasury stock cancellations in the trillions of won, thereby reducing the investment capital that can be utilized directly or indirectly. Each company is narrowing its business scope and engaging in ‘selection and concentration,’ pouring capital only into core businesses directly linked to survival.
According to business circles on April 3, the total amount of treasury stock cancellation disclosed by all listed companies at this year’s general shareholders’ meetings, where mandatory treasury stock cancellation under the amended Commercial Act was implemented, is estimated to be close to 30 trillion won. Even before the mandatory treasury stock cancellation, the scale of cancellations increased every year. According to the Korea Exchange, the amount of treasury stock cancelled by domestic listed companies was only 4.8 trillion won (approximately $3.2 billion) in 2023, but it increased to 13.9 trillion won in 2024, the first year of the government’s ‘Value-up’ policy, and 21.4 trillion won in 2025.
While this is welcome from the perspective of enhancing shareholder value, from the companies’ standpoint, it means a reduction in the very means for future investment. This could lead to cuts in new investment budgets and the streamlining of existing businesses.
The actions of Samsung Electronics and SK Group, which are at the heart of the global artificial intelligence (AI) semiconductor hegemony competition, are representative examples. Samsung Electronics, which decided to cancel all 16 trillion won worth of treasury stock in the first half of this year, is focusing investment on core future technologies such as semiconductor infrastructure and High Bandwidth Memory (HBM). Simultaneously, it is reportedly embarking on efficiency measures such as postponing the expansion of non-core durable consumer electronics lines, whose replacement cycles have lengthened, and increasing the automation rate of existing factories.
SK Group, which is undergoing a large-scale rebalancing (business restructuring), has significantly cut budgets for redundant or low-profit non-core businesses, centered around its holding company, which carried out approximately 5 trillion won worth of treasury stock cancellation. Funds secured by delaying the expansion of some overseas battery factories and selling non-core assets are being intensively invested in building ‘AI data centers’ that combine ‘HBM’ with communication capabilities.
LG Group, too, instead of reducing physical facility investments in durable consumer electronics such as TVs and white goods, has reallocated resources to the ‘ABC (AI, Bio, Clean Tech)’ sectors, which Chairman Koo Kwang-mo has designated as future growth engines. In particular, it is concentrating its budget on business-to-business (B2B) models such as the vehicle component solutions (VS) business and commercial heating, ventilation, and air conditioning (HVAC), thereby improving its constitution to one with high capital efficiency.
An official from the business community expressed concern, stating, “It is a concern that if resources are ‘all-in’ on specific promising sectors through selection and concentration, and then the bubble in that industry bursts, the entire company could falter.” The official added, “Furthermore, investment in industrial sectors that may not be profitable now but will be responsible for the future 10 to 20 years from now could become difficult, potentially causing the ‘seeds of innovation to wither’.”
Yoon Young-sil
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