Recent Developments
With the resolution of the Capital Markets Board (the “CMB“) numbered i-SPK.22.9 (dated 19 March 2025 and numbered 16/531) (the “Resolution“), the CMB facilitated share buybacks of listed companies and their affiliates significantly. The CMB had previously adopted resolution numbered i-SPK.22.7 (dated 14 February 2023 and numbered 9/177) (the “Former Resolution“) to facilitate share buybacks of listed companies and their affiliates following the earthquakes on 6 February 2023, but the Former Resolution was revoked by the CMB’s resolution numbered i-SPK.22.8 (dated 1 August 2024 and numbered 41/1198). With the Resolution, the CMB reinstated many of the facilities provided for share buybacks in the Former Resolution.
What Does the Resolution Bring?
Pursuant to the CMB’s Communiqué on Share Buybacks numbered II-22.1 (the “Communiqué“), listed companies could initiate a buyback program with the resolution of the board of directors without needing a general assembly resolution only for the purpose of avoiding an imminent and serious loss or after having the CMB’s approval. Likewise, affiliates of listed companies could not purchase shares of their parent without the approval of the general assembly.
With the Resolution, listed companies and their affiliates can initiate a buyback program to be submitted to the shareholders’ information at the following general assembly meeting, without needing any general assembly resolution. The purpose of the buyback, the maximum duration of the program, the maximum number of shares to be purchased and the maximum amount of funds to be used must be included in the board of directors’ resolution to be adopted which must be disclosed to the public pursuant to the CMB’s regulations on public disclosures.
The Resolution also eliminates the application of the rule of the Communiqué that the nominal value of the shares subject to buyback cannot exceed 10% of the paid-in or issued capital, including previous purchases.
Further, the Resolution suspended the rule that the total amount of shares that may be subject to buyback in one day cannot exceed 25% of the average trading volume of the shares for the 20 days prior to the trading day.
Further, the Resolution suspended the rule that the total amount of shares that may be subject to buyback in one day cannot exceed 25% of the average trading volume of the shares for the 20 days prior to the trading day.
With the Resolution, certain public disclosure obligations under the Communiqué, such as the announcement of the buyback program prior to the general assembly meeting, will no longer be applicable.
Moreover, the obligation to dispose of the shares purchased in violation of the provisions of the Communiqué within one year at the latest from the date of the buyback will no longer be applicable.
The regulation stipulating that no buyback or sale can be carried the date of the board of directors’ resolution or general assembly resolution, as the case may be, regarding capital increase until the date of the completion of the capital increase will be applicable only for cash (rights issue) capital increases. Therefore, there will be no restriction on any buyback or resale transaction during the periods in which a capital increase with bonus issue will be carried out.
Shares purchased pursuant to the Resolution cannot be sold for a period of 30 days from the date of the purchase. The 30-day period will be calculated using the “first-in, first-out” method. After the expiry of the 30-day period, the shares may be disposed of within a maximum period of three years or may be retained, provided that the restrictions in the Communiqué are complied with.
Listed companies and their affiliates that have an existing buyback program will be able to continue their buyback programs in accordance with the conditions set out in the Resolution without the need for a new board resolution.
Conclusion
The CMB facilitated the buybacks of listed companies to ensure the proper functioning of the markets.
