Dongkuk completes capital rebalancing after shareholders approve reserve transfer

Dongkuk Holdings, the holding company of Dongkuk Steel Mill Group, said Wednesday it held an extraordinary general meeting of shareholders at Ferum Hall in Ferum Tower, its headquarters in Suha-dong, Jung-gu, Seoul, where shareholders approved a resolution to reduce reserves and transfer the proceeds to retained earnings.

With the vote, Dongkuk Holdings completed a roughly five-month capital rebalancing process and secured a sustainable dividend funding base from a medium- to long-term perspective.

Under the approved resolution, Dongkuk Holdings will convert 480.8 billion won ($313 million) in capital surplus reserves and 100.3 billion won in legal reserves — 581.1 billion won in total — into retained earnings, making the funds available for future shareholder returns through dividends.

The amount represents the maximum permitted under the Commercial Act. Citing Article 461-2 of the Commercial Act, which allows reserves exceeding 1.5 times paid-in capital to be reduced by the excess amount through a shareholder resolution, Dongkuk Holdings converted the full excess into distributable funds with shareholder approval. The company also secured tax benefits tied to the capital reduction dividend.

The approval marks the completion of a four-stage capital rebalancing plan Dongkuk Holdings launched in February. The company first retired treasury shares (Stage 1) and reduced par value (Stage 2) to adjust its capital base, then conducted a stock split (Stage 3) to improve share liquidity and shareholder accessibility. In the final stage, it transferred the full amount of reserves exceeding the statutory ceiling relative to the adjusted paid-in capital into retained earnings, preserving total equity while securing a dividend funding pool.

In addition, the higher minimum dividend standard set out in the company's dividend policy disclosed in February will take effect. Dongkuk Holdings said it will continue to review additional shareholder return measures, including dividend expansion, as earnings improve and cash generation grows.

A Dongkuk Holdings official said the company would "focus on its core role of identifying new growth engines for the group."

Meanwhile, Dongkuk Holdings retired all of its treasury shares — 698,940 shares, or 2.2 percent of total issued shares — in April to enhance shareholder value.