Samsung Electronics Faces Shareholder Return Dilemma
As Samsung Electronics announced a shareholder return plan of up to 110 trillion won (about $81.44 billion), interest in the method of return is increasing.In particular, attention is focusing on the situation as demands for the ‘cancellation of preferred shares’ are emerging, while Samsung Electron
Samsung Electronics has unveiled a shareholder return plan of up to 110 trillion won (around $81.44 billion), sparking interest in the return method. The focus is on the potential cancellation of preferred shares, as the financial affiliates of Samsung Electronics face limitations in buying and canceling treasury shares due to shareholding structure issues.
Samsung Electronics plans to distribute around 70 trillion won to shareholders, with 30 trillion won in cash dividends in Q3 and Q4, and the remaining 40 trillion won allocated towards purchasing and canceling treasury shares. However, the initial plan did not include a large-scale treasury share cancellation, raising concerns about the impact on the shareholding ratio, which could exceed the 10% limit set by the Act on the Structural Improvement of the Financial Industry for financial companies.
Activist fund Life Asset Management suggested prioritizing the remaining shareholder return resources for the purchase and cancellation of preferred shares, as they are cheaper and have no voting rights, thus not affecting the shareholding limit calculation. Analyst Kim Soo-hyun from DS Investment & Securities noted that considering the Act on the Structural Improvement of the Financial Industry's constraints during common share cancellations, there is a possibility that the purchase and cancellation volume of preferred treasury shares will increase from Samsung Electronics' available resources.
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