As the clock ticks down on South Korea’s February parliamentary session, the National Assembly has become the stage for a fierce legislative showdown. At the heart of the conflict is the much-debated 3rd amendment to the Commercial Act, a bill that would require companies to cancel their treasury stocks within a year of acquisition—a move that could reshape the country’s corporate landscape and its capital markets for years to come.
The bill, which was introduced as the first agenda item in the plenary session on February 24, 2026, quickly became the focal point of partisan strife. According to Media Issue, the ruling Democratic Party (DP) has been pushing aggressively to pass the amendment, arguing that it will boost shareholder value by reducing the number of circulating shares and increasing earnings per share (EPS). As Democratic Party lawmaker Kim Yong-min put it, “This amendment aims to correct outdated practices and restore trust in the market.”
Under the proposed law, companies would be mandated to cancel any newly acquired treasury stocks within one year. Existing treasury stocks must be disposed of within one year and six months after a six-month grace period from the law’s enforcement. There are exceptions for employee compensation and employee stock ownership plans, but these require all board members to sign off on a retention or disposal plan, which must then be approved at the shareholders’ meeting. The intention, as explained by the DP, is to prevent controlling shareholders from using treasury stocks as a tool to entrench their power or manipulate stock prices.
Supporters of the bill, including capital market experts, see it as a step toward addressing the so-called “Korea discount”—the persistent undervaluation of Korean stocks compared to global peers. Hwang Hyun-young of the Capital Market Research Institute told MBC News, “Until now, boards could dispose of treasury stocks at their discretion, often to benefit major shareholders or friendly parties. This bill shifts that power to the shareholders, increasing transparency and fairness.”
There’s also a tangible link between treasury stock cancellations and rising stock prices. As Lee Jeong-bin, a researcher at Shinhan Investment & Securities, explained to MBC News, “From a shareholder return perspective, when the number of shares goes down, the value of each remaining share goes up. That’s good news for individual investors.” The anticipation is that, by raising expected net profits relative to invested capital, the amendment will help resolve chronic issues that have kept the Korean market undervalued.
Recent corporate actions suggest the market is already responding. In December 2025 alone, there were 164 treasury stock cancellations—accounting for a staggering 25% of all cancellations for the year. Major players like Samsung Electronics, HMM, and Korea Zinc have proactively canceled treasury stocks worth trillions of won. As Newsis noted, the expectation of the law’s passage has sent investors scrambling to identify potential beneficiaries, fueling volatility in securities, financial holding, and insurance stocks.
But the amendment’s path through the National Assembly has been anything but smooth. The opposition People Power Party (PPP) has mounted a determined resistance, launching a filibuster to delay the vote. PPP lawmaker Yoon Han-hong, the first to take the floor, wore a mourning ribbon inscribed with “judicial independence” and cautioned, “There’s no such thing as a 100% good policy. If you make an enemy of business, the negative effects will be even greater.” He went on to warn against what he described as “excessive government intervention strangling the free market economy.”
The opposition’s objections go beyond economics. PPP floor leader Song Eon-seok denounced the bill as a “dictatorial act” that undermines the independence of the judiciary. The party has vowed to boycott committee schedules in protest, and has threatened further filibusters against upcoming legislation. According to Seoul Wire, the DP, undeterred, plans to forcibly end the filibuster after 24 hours—per parliamentary rules, this requires a three-fifths majority—and proceed with a vote on the afternoon of February 25, 2026. The party’s roadmap is clear: pass the Commercial Act amendment, then move on to other contentious bills, including a criminal law amendment introducing the so-called “law distortion crime.”
The “law distortion crime” amendment, if passed, would criminalize intentional misapplication of laws and the illegal use of evidence in trials and investigations. It’s drawn criticism not just from the opposition but also from within the DP, where some members have called for more deliberation. Still, the DP’s leadership is intent on pushing through a series of judiciary reform and welfare bills before the session ends on March 3, 2026—one bill per day, in what’s been dubbed a “salami strategy.”
Market watchers are keeping a close eye on the fallout. According to Newsis, stocks of companies with high treasury stock ratios—such as ShinYoung Securities (53.1%), SNT Dynamics (32.7%), Daewoong (29.7%), and others—have seen increased volatility. On February 24, 2026, insurance and securities stocks, which had risen in anticipation of the bill’s passage, fell sharply due to profit-taking. NH Investment & Securities analyst Jeong Jun-seop cautioned, “Cancelling existing treasury stocks without new purchases is just a one-off event, not a true return to shareholders. Investors need to consider whether recent price rises are justified by fundamentals.”
The DP frames the amendment as a long-overdue reform to modernize Korea’s financial and capital markets, while the PPP insists it’s an overreach that could expose domestic companies to hostile takeovers and weaken vital defenses. Both sides agree on one thing: the stakes are high, and the outcome could fundamentally alter the rules of corporate governance in South Korea.
As the parliamentary session barrels toward its conclusion, compromise seems elusive. The DP’s majority gives it the upper hand in forcing through its legislative agenda, but the PPP’s filibusters and public warnings ensure that the debate remains front and center. Whether the 3rd amendment to the Commercial Act will deliver the promised boost to shareholder rights and market confidence—or trigger unintended consequences—remains to be seen. For now, the only certainty is that South Korea’s lawmakers are locked in a legislative battle that will be remembered long after the final vote is cast.