Since December 31 of last year, the mandatory disclosure of "Treasury Share Reports" has been implemented. Under this regulation, if a listed company holds treasury shares amounting to 5% or more of its total issued shares, it must disclose, as an appendix to its business report, the status and purpose of its treasury share holdings, as well as any plans for additional acquisition or disposal. In particular, when disposing of treasury shares, the company is required to clearly specify the purpose of the disposal, the reason for selecting the recipient, and the expected dilutive effect on share value. The intention behind these measures is to ensure more transparent management of treasury shares held by companies and to prevent their opaque use for specific purposes such as defending management control.
Recently, as requirements for treasury share disclosure have been strengthened and the possibility of mandatory cancellation of treasury shares has been raised, some companies have decided to voluntarily delist. For example, Telcoware, a telecommunications solutions company, holds a high proportion of treasury shares at 44.1%, while the controlling shareholder and related parties own only 22.4%. Lee Kyungyeon, an analyst at Daishin Securities, stated, "If all treasury shares were to be canceled, the controlling shareholder's ownership ratio would be somewhat burdensome for maintaining stable management control. As shareholder coalitions gain strength and activist activities become more active, the market assesses that the company chose voluntary delisting through a tender offer to preemptively avoid becoming a target for activists as a listed company."
The phenomenon of choosing delisting through a tender offer to preemptively avoid becoming a target for activist funds has also been observed in Japan. The Japanese government is demanding that companies with a price-to-book ratio (PBR) below 1 improve capital efficiency through measures such as increased dividends and treasury share cancellation. In response, Japanese companies are accelerating strategic decisions such as restructuring, mergers and acquisitions (M&A), and management buyouts (MBO). A representative case is Benesse Holdings, an education and publishing company, which determined that its long-term structural reforms for digital transformation (DX) were being constrained by short-term performance pressures. As a result, major shareholders and management agreed to gradually buy back shares in preparation for delisting.
Analyst Lee Kyungyeon stated, "Korea, which has announced a value-up program benchmarking Japanese policies, is also likely to follow a similar path under the policy goal of protecting the rights and interests of general shareholders. Investors should not simply consider the proportion of treasury shares held, but should also comprehensively analyze the ownership ratios of controlling shareholders and related parties." For example, companies with a high controlling shareholder ownership ratio are likely to maintain management stability even if all treasury shares are canceled. However, companies with a low controlling shareholder ownership ratio and a high proportion of treasury shares may become targets for activist funds.
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