The number of institutional investors in South Korea taking up the stewardship code recently reached the 100 milestone after the government introduced the guideline to enhance the participatory role of shareholders back in December 2016.
According to an announcement by the Korea Corporate Governance Service (KCGS), 100 institutional investors have mandated the code, with an additional 31 planning to adopt it.
The National Pension Service (NPS) is the only pension fund in the country compliant with the code, but the Korea Teachers’ Pension and the Government Employees Pension Service are getting ready to follow suit, said the KCGS.
The stewardship code was first introduced in Britain in 2010 to promote institutional investors’ active involvement in corporate management as stewards of shareholders’ value in companies. South Korea’s Financial Services Commission established its own version of the code in December 2016 to enhance shareholders’ rights and promote transparent management of companies.
Since then, financial authorities have been encouraging local institutional investors to comply with the guidelines as they have come under frequent criticism for acting like nothing more than a rubber stamp at shareholder meetings. Many investors have decided to introduce the code following its adoption by NPS, the nation’s biggest institutional investor, in July last year.
In addition, a total of 23 companies were challenged with shareholder activism by stewardship code-complaint institutional investors from January to March this year, notes the KCGS.