OPINION
2017 Aug/08
A Thought on Korea Stewardship Code and NPS
Aug. 08, 2017
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- Summary
- There have been calls for the National Pension Service to play a proactive role in expanding the adoption of Korea Stewardship Code (Principles on Stewardship Responsibilities of Institutional Investors) unveiled at the end of 2016. As a public fund’s fiduciary responsibilities could be viewed as maximizing shareholder value via exercising shareholder rights, the NPS’s enactment of the stewardship code is likened to formulating guidelines to bolster shareholder rights. In this regard, the 2015 case of the NPS’s action to bolster shareholder rights with regard to dividends gives a good reference to the NPS’s stewardship code adoption. In formulating the stewardship code of public funds and building an adherence monitoring system, many constraints should be taken into account, e.g., the NPS’s excessive market dominance and complex interests, inefficient governance, etc. On top of policy efforts for addressing many legal and institutional constraints, public discussions must take place before the code’s adoption in order to maximize its positive impacts.