Draft rules demand semiannual disclosure of buyback plans and stricter penalties for inaccurate reporting

South Korea’s Financial Services Commission (FSC) on Thursday proposed amendments to the Capital Markets Act and related regulations that would tighten disclosure requirements for listed companies holding their own shares. The draft lowers the reporting threshold from 5% to 1% of a company’s total issued stock and requires firms to report their holdings and disposal plans twice a year instead of once. Companies would also have to compare previously announced buyback or disposal plans with actual actions and explain any significant differences.

The FSC said the changes aim to improve transparency as buybacks surge, noting that cancellations of treasury shares reached $13.4 billion (18.8 trillion won) through August, already exceeding the $9.9 billion (13.9 trillion won) cancelled in all of 2024. The draft, open for public comment from Sept. 26 to Nov. 5, would allow regulators to impose stronger penalties on repeat violators, including executive dismissal recommendations, fines, restrictions on securities issuance and possible criminal charges. The government plans to finalize the revisions in the fourth quarter of 2025 after regulatory reviews and Cabinet approval.

WHY IT MATTERS

The proposal marks the Lee Jae-myung administration’s latest move to tighten oversight of corporate capital management and strengthen shareholder rights. By forcing disclosure at a 1% threshold and mandating semiannual reporting, the FSC would draw a much larger pool of blue-chip firms into regular scrutiny, reducing opportunities for quiet buybacks that can inflate share prices or shield management from shareholder pressure.

For investors, the requirement to match stated plans with actual execution promises greater visibility into how major companies deploy cash and manage balance sheets. That could narrow the information gap that has long advantaged insiders and help global funds assess whether repurchases are driven by fundamentals or by short-term price support.

This regulatory push complements the bipartisan Commercial Act amendment passed in July, which expanded directors’ fiduciary duties and capped controlling-shareholder influence in audit committee elections. Together, these legislative and regulatory measures signal a coordinated effort to raise governance standards and attract foreign capital, underscoring the Lee administration’s intent to bring South Korea’s corporate-transparency norms in line with other advanced economies.

South Korea’s Financial Services Commission (FSC) on Thursday proposed amendments to the Capital Markets Act and related regulations that would tighten disclosure requirements for listed companies holding their own shares. The draft lowers the reporting threshold from 5% to 1% of a company’s total issued stock and requires firms to report their holdings and disposal plans twice a year instead of once. Companies would also have to compare previously announced buyback or disposal plans with actual actions and explain any significant differences.

The FSC said the changes aim to improve transparency as buybacks surge, noting that cancellations of treasury shares reached $13.4 billion (18.8 trillion won) through August, already exceeding the $9.9 billion (13.9 trillion won) cancelled in all of 2024. The draft, open for public comment from Sept. 26 to Nov. 5, would allow regulators to impose stronger penalties on repeat violators, including executive dismissal recommendations, fines, restrictions on securities issuance and possible criminal charges. The government plans to finalize the revisions in the fourth quarter of 2025 after regulatory reviews and Cabinet approval.

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