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NPS Excludes Management Participation from Stewardship Code
A Steward with Limited Roles
NPS Excludes Management Participation from Stewardship Code
  • By Yoon Young-sil
  • July 18, 2018, 14:29
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A guideline on the voting rights of the National Pension Service (NPS) has excluded the exercise of the NPS’ shareholder rights.
Under the proposed stewardship code, the National Pension Service (NPS) will not exercise its shareholder rights for participation in management.

The National Pension Service has disclosed a plan to introduce a stewardship code, a guideline on how to exercise its voting rights on companies where it has invested.

According to the plan, the NPS will not exercise its shareholder rights on issues such as that can be categorized as management intervention.

While lowering the level of management participation, the NPS will gradually expand from the second half of this year the list of companies that are required to set up dividend policies.

The Ministry of Health and Welfare and the NPS held a public hearing on the plan for the introduction of the stewardship code at the Korea Financial Investment Association building in Yeouido on July 17.

The disclosed plan does not allow the NPS to recommend candidates of non-executive directors or auditors through shareholder proposals, consign the operation of funds for management participation, and call for convocation of a general meeting of stockholders. These activities have been excluded from the plan due to concerns over management intervention.

However, asset management companies that manage NPS assets will be allowed to exercise its voting rights. When the NPS selects or evaluates asset management companies, it will give additional points to companies that introduce a stewardship code and exercise their voting rights.

However, asset management companies will be allowed to write a stewardship code and set the standard for exercising voting rights independent of the NPS stewardship code. The NPS will entrust its voting rights to medium and large sized management companies only for the time being as small and medium-sized asset management firms lack the required expertise. The NPS will start entrusting its voting rights to asset management companies from next year. The NPS will expand its Voting Rights Committee and set up a special committee for consignee obligations.


The stewardship code will be phased in. The number of companies required to establish dividend policies will be doubled from the second half of the year. Asset management companies will be required to announce their policy on the exercise voting rights before the general meeting of stockholders.