[2025 National Audit] Lee Chanjin Says "Effective Measures Will Be Prepared" as Companies Find New Ways to Exploit Treasury Shares

Recently, regarding the trend of listed companies issuing exchangeable bonds (EB) and entering into price return swap (PRS) contracts to avoid canceling their treasury shares, Lee Chanjin, Governor of the Financial Supervisory Service, stated, "We will prepare effective measures, including institutional improvements if necessary."

Yonhap News Agency

On the afternoon of the 27th, during the National Policy Committee audit at the National Assembly, Lee Chanjin responded to a question from Assemblyman Shin Jangshik of the Innovation Party for the Fatherland, who asked whether there were any countermeasures after PRS contracts emerged immediately following the strengthening of EB issuance disclosure requirements.

Recently, as the ruling party has been leading discussions in the National Assembly on the third amendment to the Commercial Act to make treasury share cancellations mandatory, companies have begun issuing EBs and taking other actions to avoid the burden of canceling treasury shares. In response, the Financial Supervisory Service raised the bar by strengthening disclosure requirements for EB issuance. However, as soon as these measures were introduced, companies began seeking alternative routes such as PRS contracts.

Governor Lee explained, "Securities firms must not distort their role as fair market makers, but currently, expedient practices are proliferating," and added, "We will have the relevant department prepare and devise effective regulatory measures."