The strong balance sheet and the increase in cash holdings of the Company have reduced the need to hold treasury shares, which the Company had retained to use as a financial resource, including for M&A transactions and securing talented professionals.

More importantly, today’s decision reflects Samsung’s ongoing commitment to enhancing sustainable long-term value for shareholders.

As the current market value of the treasury shares exceeds 40 trillion won, the Company plans to cancel the shares in two stages to limit the impact on the financial market. The first stage will cancel 50 percent of the holding, or about 9 million common shares and about 1.6 million preferred shares, and the remainder will be canceled after the Board’s approval in 2018.

The Company currently holds 17,981,686 of common shares (12.9 percent of outstanding common stock) and 3,229,693 of preferred shares (15.9 percent of outstanding preferred stock) in treasury shareholding.

The review found that a holding company structure would not strengthen the competitiveness of the Company’s businesses and could potentially weigh on the Company’s operations longer term.

The review also found a number of issues that may result from the process of converting into a holding company.

First, creating a holding company would require divestments of equity stakes held by the Company and its affiliates. This would need the approval of the board of directors and the shareholders of each of the relevant companies and therefore cannot be implemented by the Company alone.

In addition, current laws could force the Company’s financial affiliates which own shares in the Company to divest part or all of that stake, which could potentially cause volatility in the Company’s share price.

The uncertainty of the legal and regulatory environment is also increasing as several revisions to relevant laws are pending for review which may negatively impact the creation of a holding company structure.

As such, Samsung concluded the risks and the challenging environment surrounding a change in the corporate structure would not be beneficial for enhancing shareholder value and sustaining long-term business growth. The Company believes a holding company does not have clear benefits compared to the advantages of the Company’s current business structure.

Samsung maintains a well-balanced business portfolio between consumer electronics, including smartphones and TVs, and components business, comprising of semiconductors and displays.

This structure has enabled Samsung to minimize earnings volatility during periods of economic downturn and maintain stable growth through bold and preemptive investment in new technologies and facilities.

Moreover, this structure also serves as a platform for sustainable growth by allowing the Company to invest in new growth engines with earnings generated by profitable businesses. This is a unique strength of Samsung that cannot be matched by its global peers.

With the Company already maintaining strong competitiveness in its businesses, the Company has held a negative view that converting into a holding company structure would not contribute to further enhancing the competitiveness of the Company.

Since announcing the review plan in November as requested by investors, the Company and its advisors have evaluated important strategic, operational, financial, legal, tax and accounting considerations in determining the optimal structure with the Board and management maintaining a neutral position.

On April 27, 2017, Samsung Electronics Board of Directors (BOD) approved the second phase of the share buyback and cancellation.

It will start on April 28, 2017 and take approximately three months to complete, in which the company will repurchase and cancel 900,000 (nine hundred thousand) common shares and 225,000 (two hundred and twenty-five thousand) preferred shares.

Samsung announced in January’s Q4 2016 earnings release that it would implement a share buyback of KRW 9.3 trillion won in 2017.

The first phase was completed on April 12, 2017. Samsung invested approximately KRW 2.45 trillion and it repurchased and cancelled 1.02 million common shares and 255,000 preferred shares.

Quarterly Dividends

The BOD also approved the first quarter dividend of 7,000 won per share for both common and preferred. The quarterly dividend payment will enable Samsung to provide more evenly distributed dividends to our shareholders throughout the year.