The news that the government and the ruling party are pushing a bill to mandate the retirement of treasury stocks has caused the stock prices of companies with a high ratio of treasury shares to issued shares to surge. Generally, when treasury stocks are retired, the total number of shares decreases, which has the effect of raising stock prices.
BOOKOOK Securities shares traded at 60,600 won in the KOSPI market at 1:23 p.m. on the 9th. The stock price rose by 29.9% (13,950 won) compared to the previous day, hitting the upper limit (the highest daily price cap). BOOKOOK Securities has a treasury stock ratio exceeding 42.7% relative to the number of issued shares.
The stock price increases of Shinyoung Securities, as well as Chokwang Leather, Daewoong, Shindaeyang Paper, and ILSUNG IS, all showed double-digit growth.
The news that the Democratic Party of Korea's 'KOSPI 5000 Special Committee' plans to push for a revised Commercial Act mandating the retirement of treasury stocks appears to have stimulated investor sentiment. There has been ongoing criticism that some corporations use treasury shares for the purpose of defending the management rights of controlling shareholders.
However, opinions are divided on the scope of the mandate for treasury stock retirement. Considering the principle of non-retroactivity, it is acceptable to impose retirement obligations on newly acquired treasury shares, but enforcing the retirement of existing treasury shares is a matter of a different dimension.
In the business community, there is also a lament about the lack of proper means for defending management rights. Economic organizations have been demanding that defense mechanisms such as dual-class voting shares and poison pills be established.