The Korea Stewardship Code, “Principles on the Stewardship Responsibilities of Institutional Investors,” sets forth detailed principles and guidelines for institutional investors to abide by to fulfill their fiduciary duties while investing in listed companies in Korea as a steward managing assets entrusted by others.
Institutional investors should discharge their fiduciary responsibilities faithfully by closely monitoring investee companies and engaging in shareholder activities including having a dialogue with them in a proactive manner when a concern is identified.
By doing so, institutional investors will not only help promote the investee companies’ mid- to long-term growth and enhance investor returns for the clients and beneficiaries, but also support the growth and development of the capital markets and the overall economy.
Principle 1Institutional investors, as a steward of assets entrusted by their clients, beneficiaries, etc., to take care of and manage, should formulate and publicly disclose a clear policy to faithfully implement their responsibilities
Principle 2Institutional investors should formulate and publicly disclose an effective and clear policy as to how to resolve actual or potential problems arising from conflicts of interest in the course of their stewardship activities.
Principle 3Institutional investors should regularly monitor investee companies in order to enhance investee companies’ mid- to long-term value and thereby protect and raise their investment value.
Principle 4While institutional investors should aim to form a consensus with investee companies, where necessary, they should formulate internal guidelines on the timeline, procedures, and methods for stewardship activities.
Principle 5Institutional investors should formulate and publicly disclose a voting policy that includes guidelines, procedures, and detailed standards for exercising votes in a faithful manner, and publicly disclose voting records and the reasons for each vote so as to allow the verification of the appropriateness of their voting activities.
Principle 6Institutional investors should regularly report their voting and stewardship activities to their clients or beneficiaries.
Principle 7Institutional investors should have the capabilities and expertise required to implement stewardship responsibilities in an active and effective manner.
The Code only applies to the institutions who have declared participation in the Principles, including institutional investors such as asset management companies, insurers, and pension funds, and proxy advisors and investment advisory firms helping their shareholder engagement.
Comply or Explain
It is desirable that institutional investors who are participating in the “Principles” implement all the 7 detailed principles and guidelines. If any principle is not implemented in an exceptional case, the reason and an alternative should be sufficiently explained and disclosed.
It takes 1-2 business days until being listed as a participant or preliminary participant.
Contact : Stewardship Code Center at +82-2-6951-3851
COPYRIGHT © 2018 KOREA CORPORATE GOVERNANCE SERVICE
ALL RIGHTS RESERVED