KT&G CEO Bang Kyung-man (KT&G)
KT&G CEO Bang Kyung-man (KT&G)

KT&G said Wednesday it will cancel treasury shares worth nearly 2 trillion won ($1.3 billion), becoming the first company to comply with South Korea’s newly revised Commercial Act aimed at strengthening shareholder rights.

The decision came hours after the National Assembly passed a third amendment to the Commercial Act, requiring companies to retire newly acquired treasury shares within one year and existing holdings within 18 months.

At a board meeting the same day, KT&G resolved to cancel 10,866,189 treasury shares — about 9.5 percent of shares outstanding. Based on Wednesday’s closing price of 179,700 won, the cancellation is valued at roughly 1.95 trillion won.

The proposal will be put to shareholders for approval on March 26, alongside amendments to the company’s bylaws to reflect the revised law. Planned changes include allowing electronic shareholder meetings, renaming outside directors as independent directors and increasing the number of separately elected audit committee members to two.

KT&G also said future employee stock compensation shares will be purchased on the open market rather than drawn from existing treasury stock, reinforcing its commitment to reducing idle share holdings.

“We proposed canceling all treasury shares at the upcoming shareholder meeting to reflect the intent of the revised Commercial Act,” a KT&G official said. “We will continue to enhance corporate and shareholder value through strong governance.”

The move builds on KT&G’s four-year, 3.7 trillion won shareholder return program launched in 2024.

Between 2024 and 2025, the company returned about 1.2 trillion won in dividends and executed roughly 1.1 trillion won in share buybacks and cancellations. In total, KT&G has retired 19.15 million shares — equivalent to 14.3 percent of shares outstanding as of end-2023.

Since listing in 1999, KT&G has paid dividends every year, maintaining or increasing payouts annually. It set its annual dividend at 6,000 won per share last year, up 11.1 percent on-year, with total shareholder returns exceeding 100 percent of net income.

“KT&G is a leading value-up company in Korea that has actively implemented shareholder return policies based on solid business performance,” a capital markets source said. “By proactively reflecting the intent of the third amendment to the Commercial Act, the company has established a best-practice model for enhancing shareholder value.”


minmin@heraldcorp.com