The Financial Services Commission (FSC) of South Korea held a meeting presided over by its chairman Yim Jong-yong on February 13 to discuss the introduction of the Stewardship Code for transparent corporate management. According to experts, the South Korean government is thinking that now is the right time for the discussion with an increasing number of people advocating more transparent corporate management in the wake of the Choi Soon-sil scandal.
The Stewardship Code can be defined as a set of guidelines in which institutional investors can actively participate in the voting rights of listed companies to better fulfill their role as shareholders while providing their customers with related matters. The financial authorities of the country tried to bring in the code in 2014 but failed to do so due to opposition from the business community.
At that time, those in the business community such as the Federation of Korean Industries claimed that the Stewardship Code can affect their business autonomy by allowing institutional investors’ excessive intervention. This is the reason why a private voluntary agreement was adopted in December last year instead of the code.
At present, the agreement has no member organization at all with asset management firms reluctant to join it and the National Pension Service (NPS), the largest institutional investor in South Korea, having yet to clarify its intention. At the meeting on February 13, eight organizations – Samsung Asset Management, Mirae Asset, Korea Investment Management, NH-Amundi, Truston, Meritz, Lime Asset Management and Zebra Investment Management – said that they are willing to adopt the Stewardship Code.
When it comes to the NPS, separate rules are to be prepared because related issues are governed by the Ministry of Health & Welfare. It is said that the NPS has no more reason to hesitate about joining the code although it has been rather lukewarm so far. On the part of the FSC, the other major institutional investors including the Government Employees Pension Service and the Military Mutual Aid Association can be stimulated once the NPS, which runs a fund of no less than 550 trillion won, is attracted.