The ESOP system was first adopted in Korea by Yuhan Corporation in October 1958 to improve labor welfare and promote cooperation between labor and management. Yuhan distributed treasury stocks in the form of ESOP shares to its workers. It gave bonus shares to executives while giving bonus money for buying treasury stocks to employees that wished to buy treasury stocks.

• The Capital Market Development Act was enacted on Nov. 22, 1968
• When a listed company issues new shares, 10% of the new issues must be allotted to its employees first

• After the then Korean President gave special orders to create a sound business environment emphasizing openness on May 29, 1974, the ESOP Implementation Expansion Plan was announced on Jul. 13 of the same year.

• As a result of the boom in the securities market and the continued economic growth in the late 1980s, the needs of employees changed in quality and became more diverse, and on September 15, 1987, the ESOP System Promotion Plan was created to facilitate wealth creation and strengthen a sense of ownership of workers. This led to the increase in the ESOP share allotment ratio and the tax exemption rate to 20% and 15%, respectively, since January 1, 1988.
• Afterwards, the mandatory depositing period and tax benefits have been frequently adjusted to alleviate the problems that accompanied the growth or recession of the national economy and the capital market.

Despite such efforts to promote the ESOP system, the system could not achieve its intended purpose due to its limitations such as the method of acquisition through preferential allotment only, the need for ESOA members to raise funds on their own to acquire ESOP shares, and the lack of tax benefits and financial support to encourage long-term holding of treasury stocks. This spurred active discussions on how to overcome the fundamental problems of the ESOP system in many parts of society after the 1998 Asian foreign exchange crisis.

In response to the need to establish a new legal framework to better promote the ESOP, the Framework Act on Labor Welfare was enacted and announced on August 14, 2001 for the Korean ESOP system, followed by the establishment of the Enforcement Decree and Enforcement Regulations of the Act. No amendments have been made to the Securities and Exchange Act(predecessor of the Financial Investment Services and Capital Markets Act) which serves as a special act related to the preferential allotment system in listed companies, ever since it was enforced on January 1, 2002.