1. Reason for revision

The purpose of the revision is to follow up on the “Plans to Improve the Treasury Stock System for Stock-listed Corporations” announced on January 30, 2024 and to improve some deficient provisions related to the operation of the current system.

2. Main contents

a. Imposition of the obligation of disclosure when treasury stock is held over a certain amount (Article 176-2 (6) of the Enforcement Decree and Article 4-3 (1) 3, Item (o) of the Regulations)

- If the proportion of treasury shares held is more than 5/100 of the total issued shares, the relevant corporation is required to report its treasury stock holding by submitting the report as an attachment to its business report.

b. Restriction of the allocation of new shares to treasury shares in a corporate spin-off (Articles 176-5 and 176-6 of the Enforcement Decree)

* The same restriction on the allocation of new shares in a corporate merger.

- For exchange-listed corporations, the revision restricts the allocation of new shares to treasury shares in a corporate spin-off or merger.

c. Expansion of the scope of disclosure of the key issues to report upon the disposal of treasury shares (Subparagraph 2 of Article 5-1 and subparagraph 3 of Article 5-2 of the Regulations)

- When disposing of treasury shares, the relevant corporation is now required to additionally disclose the counterparty (buyer) and the expected dilution effect of share value, etc.

d. Resolution of regulatory arbitrage in the acquisition of treasury shares via trust (Articles 5-2, 5-4 and 5-10 of the Regulations)

- Resolution of regulatory arbitrage even when treasury shares are acquired in trust as well as in direct acquisition by requiring the relevant corporation to submit a statement of the reasons for the acquisition of treasury shares in short of the planned acquisition amount.