The ruling Democratic Party of Korea has decided to extend its stock buyback obligation law to small and venture companies without any exceptions. This is a significant move, as there were speculations that the government might allow exceptions for growth companies in response to concerns from the business sector. Despite these concerns, the move is intended to safeguard the interests of general shareholders by prohibiting practices where controlling shareholders could leverage buybacks to enhance their control over the company.

The amendments, shared on the 19th by the party’s special committee on capital markets, are set to go to the National Assembly’s Legislative and Judiciary Committee. The aim is to pass the final version of the law by the end of this month, with a view to passing it during the February temporary National Assembly session. The central tenet of the proposed amendments mandates that corporations must burn their newly acquired treasury shares within one year of acquisition and existing shares within one and a half years after the law takes effect. This is designed to protect the company's general shareholders from the manipulative tactics of major shareholders.

While there was a possibility that exceptions for small to mid-sized companies could be prevalent, the ruling party committee has opted against this approach in order to maintain the original intentions of the law. They argue that any exceptions could undermine the law's purpose of protecting general shareholder rights. Notably, the Korea Corporate Governance Forum has emphasized that granting exceptions to smaller firms would contradict the government's goals for normalizing the KOSDAQ market. This stance has raised questions regarding future governance reforms in corporate management practices within South Korea.