Stewardship Code
On May 3, the Federation of Korean Industries, the Korea Federation of SMEs, the Korea and KOSDAQ Listed Companies Associations and the Association of High Potential Enterprises of Korea submitted a join proposal to the Financial Services Commission (FSC). In the proposal, they advised that listed companies’ concerns over the stewardship code scheduled to be brought in by the FSC within the first half of this year would have to be alleviated via a public opinion gathering process.
The stewardship code can be defined as a set of guidelines for encouraging institutional investors in possession of the stocks of listed South Korean companies, such as the National Pension Service, asset management firms and insurance companies, to exercise their voting rights in an active way. According to the stewardship code, the institutional investors have to make public their voting right exercise guidelines and histories with regard to the shares they own.
Some of the listed companies are concerned about the possibility that the introduction of the stewardship code could result in the South Korean government’s influence on their management based on the utilization of the institutional investors. This is because the institutional investors can exercise their voting rights in tandem with one another in accordance with the stewardship code, calling for shareholders' meetings and filing lawsuits against shareholders.
The economic organizations pointed out that the stewardship code of the FSC is problematic in that it contains a series of specific rules, as well as principles, unlike those currently in effect in other countries such as Britain and Japan.