KT&G (Korea Tobacco & Ginseng) announced Wednesday its plan to cancel nearly 2 trillion won ($1.3 billion) worth of treasury shares, making it the first South Korean company to act in accordance with the country’s newly amended Commercial Act aimed at empowering shareholder rights.
This significant decision follows the National Assembly’s recent passage of the third amendment to the Commercial Act, which mandates that companies retire newly acquired treasury shares within one year and existing treasury holdings within 18 months.
During a board meeting held on the same day, KT&G’s board of directors approved the cancellation of 10,866,189 treasury shares, representing approximately 9.5 percent of the company’s outstanding shares. Based on Wednesday’s closing stock price of 179,700 won per share, the value of the canceled shares is approximately 1.95 trillion won.
Shareholders will vote on the proposal for approval on March 26, coinciding with proposed amendments to the company’s bylaws to align with the revised Commercial Act. These proposed changes include the introduction of electronic shareholder meetings, renaming outside directors to independent directors, and increasing the number of separately elected audit committee members to two.
Furthermore, KT&G stated that future shares allocated for employee stock compensation will be purchased on the open market, instead of being sourced from existing treasury stock, demonstrating its commitment to reducing the number of inactive shares it holds.
“We proposed canceling all treasury shares at the upcoming shareholder meeting to reflect the intent of the revised Commercial Act,” said a KT&G official. “We will continue to enhance corporate and shareholder value through strong governance practices.”
This strategic move builds upon KT&G’s existing four-year, 3.7 trillion won shareholder return program, which was launched in 2024.
Between 2024 and 2025, the company has returned approximately 1.2 trillion won to shareholders through dividends and has executed roughly 1.1 trillion won in share buybacks and cancellations. In total, KT&G has retired 19.15 million shares, which is equal to 14.3 percent of the company’s shares outstanding as of the end of 2023.
Since its initial listing in 1999, KT&G has consistently paid dividends every year, maintaining or increasing its payout annually. The company set its annual dividend at 6,000 won per share last year, an 11.1 percent increase year-over-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,” said a capital markets source. “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.”
