As the National Pension Service plans to reflect the level of implementation of the stewardship code (fiduciary duty activities) by institutional investors in the allocation of delegated funds, a view emerged that criteria are needed to evaluate improvements in corporations' value while ensuring the independence of asset managers.
The Democratic Party K-capital market special committee held a "forum on evaluation and reflection for introducing the stewardship code" at the National Assembly on the morning of the 11th. At the forum, the necessity of the stewardship code and future tasks were presented.
Kim Nam-geun of the Democratic Party said, "In our stock market, stock-price suppression is rampant, with 60% of corporations posting a PBR (price-to-book ratio) below 1," and added, "Even if our corporations are enjoying a boom thanks to the semiconductor upcycle, we need to resolve stock-price suppression through measures such as the stewardship code to achieve sustainable development."
Park Hong-bae also said, "For reform bills to amend the Commercial Act to be implemented in reality, the stewardship code is important," and added, "Accordingly, institutional investors should take the lead in protecting shareholders' rights."
The stewardship code is a principle under which institutional investors, based on shares they hold in corporations, engage in shareholder activities such as exercising voting rights to induce higher corporate value. After the National Pension Service fund management committee approved a plan in July to introduce a system to check the implementation of fiduciary duty activities, the system has been linked, starting in the second half, to the allocation of funds to the National Pension Service's external asset managers.
However, concerns were raised over evaluation criteria and methods in the process of introducing the stewardship code. Hwang Hyun-young, a senior research fellow at the Korea Capital Market Institute, said, "We should be cautious about using the direction of voting itself as an evaluation criterion," and added, "We need a system that makes institutions transparently disclose their independent decision-making process, conflict-of-interest management, and dialogues with corporations, and retrospectively evaluates whether these actually led to improvements in corporations' value."
Hwang also noted, "The United Kingdom does not use separate checkbox-style standard forms but requires asset managers to explain what they did, how, and why."
Moon Sang-nyeong, an attorney at Truston Asset Management, also said, "It is difficult to evaluate these (institutions') activities by simply tallying the rate of votes against or the number of shareholder letters sent."