The South Korean National Assembly has approved the third amendment to the Commercial Act that mandates companies to burn treasury shares they hold. This legislation passed on the 25th with a significant majority, with 175 votes in favor out of 176 present, while the opposition party, the People's Power Party, chose to abstain from the vote following a filibuster against the bill. The amendment allows companies to retain treasury shares but requires that they be burnt unless there is a valid reason, such as compensation for employees, approved by shareholders at a general meeting.

This latest amendment is part of a series of legislative efforts by the ruling Democratic Party aimed at enhancing shareholder value. Previous amendments focused on broadening the responsibilities of corporate directors to include shareholders and introducing mandatory cumulative voting systems and separate elections for audit committee members. These changes reflect a significant shift in South Korea's corporate governance landscape, emphasizing accountability and transparency to shareholders.

The enforcement of this law indicates a growing trend in South Korea towards stricter regulations on corporate behavior, particularly regarding the management of treasury shares, which are often seen as a tool for mistreatment of shareholders. Companies that do not comply with the new rules, particularly the stipulated time frame to burn shares, face fines up to 50 million won for individual directors, which underscores the seriousness of this legislative push and the government's commitment to strengthening corporate governance practices.