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Reassessing Korea’s Stewardship Code: Implementation Status and Policy Challenges for Enhancing its Effectiveness
Publication date May. 13, 2025
Summary
Amid growing interest in capital market advancement and corporate value enhancement, the role of the stewardship code has gained renewed attention. In its 2025 policy agenda, Korea’s Financial Services Commission announced plans to improve the administration of the stewardship code to support more active shareholder engagement. This article assesses the progress and limitations of Korea’s stewardship code, introduced in 2016, and proposes policy recommendations to enhance its effectiveness.
Nearly a decade after the stewardship code adoption, the number of signatory institutions has steadily increased, with 242 institutional investors and advisory firms registered as of April 2025. The stewardship code appears to have positively influenced the proxy voting behavior of institutional investors. In addition, empirical studies suggest that stewardship activities have contributed to improved performance among signatories and increased shareholder returns among listed companies. Nonetheless, concerns persist regarding limited voting participation and insufficient disclosure of fiduciary activities by some institutions. Enhancing the effectiveness of the stewardship code will require reform in three key areas, including establishing a monitoring mechanism to assess implementation, addressing regulatory barriers to institutional investors’ stewardship activities, and raising broader awareness of the stewardship code’s role in advancing corporate value and market development.
Nearly a decade after the stewardship code adoption, the number of signatory institutions has steadily increased, with 242 institutional investors and advisory firms registered as of April 2025. The stewardship code appears to have positively influenced the proxy voting behavior of institutional investors. In addition, empirical studies suggest that stewardship activities have contributed to improved performance among signatories and increased shareholder returns among listed companies. Nonetheless, concerns persist regarding limited voting participation and insufficient disclosure of fiduciary activities by some institutions. Enhancing the effectiveness of the stewardship code will require reform in three key areas, including establishing a monitoring mechanism to assess implementation, addressing regulatory barriers to institutional investors’ stewardship activities, and raising broader awareness of the stewardship code’s role in advancing corporate value and market development.
Amid growing interest in advancing capital markets and enhancing corporate value, the role of stewardship codes1) has come to the fore. Founded on the principle that institutional investors, entrusted with managing assets on behalf of clients and beneficiaries, have a fiduciary responsibility to actively engage with investee companies, stewardship codes encourage a shift from a passive equity holding approach toward the mid- to long-term enhancement of corporate value. The first stewardship code was introduced in the UK in 2010, motivated by the recognition that the 2008 global financial crisis was partly attributable to shareholder apathy, particularly among institutional investors.2) Since then, similar codes have been adopted across a range of countries, including Canada (2010), Switzerland (2013), Japan (2014), Korea (2016), Singapore (2016), Taiwan (2016), Hong Kong (2016), the US (2017), and Australia (2018). Although specific provisions of stewardship codes vary by country, they share a common objective: to establish a virtuous cycle where proactive shareholder engagement by institutional investors enhances corporate governance, increases shareholder value, and ultimately, contributes to the development of robust capital markets.3) The importance of stewardship codes is also emphasized in the G20/OECD Principles of Corporate Governance.4) In Japan, the stewardship code has been frequently cited as a cornerstone of its capital market reform, playing a central role in fostering market development.5) Korea has similarly recognized the significance of stewardship practices. In its 2025 policy agenda, announced on January 8, the Financial Services Commission (FSC) outlines plans to support the implementation of Korea’s stewardship code to facilitate more active shareholder engagement.6) This article examines the achievements and limitations of Korea’s stewardship code, introduced in 2016, and proposes policy recommendations to enhance its effectiveness.
Participation and performance of the stewardship code in Korea
Following the FSC’s 2014 announcement of plans to introduce a stewardship code, a private-sector entity, the Korea Stewardship Code Council, formally launched the code in December 2016. While only 16 institutions initially adopted the code in 2017, participation has steadily expanded over the years, reaching 242 institutional investors, advisory firms, and other related entities as of April 2025.
The stewardship code appears to have positively influenced institutional investors’ exercise of voting rights.7) According to 2024 shareholder meeting data, institutional investors that are signatories to the code recorded a proxy voting participation rate of 95%, significantly higher than the 62% rate observed among non-signatory institutions.8) Moreover, signatories have shown a growing tendency to scrutinize proposals put forth by investee companies and to exercise dissenting votes. The share of dissenting votes cast by institutional investors rose from 1.84% in 2016 to 3.34% in 2018 and 4.26% in 2020, indicating a sustained upward trend. Shareholder engagement activities, such as sending letters to companies or initiating direct dialogues, have also increased every year among stewardship code participants. Reported activities stood at 123 cases in 2018, rising to 286 in 2019 and 331 in 2020.9)
The National Pension Service (NPS), in particular, has demonstrated consistent adherence to its fiduciary responsibilities under the stewardship code. The NPS voted against 16.3% of investee company proposals in 2021, 23.3% in 2022, and 21.8% in 2023. In 2023, the most frequently opposed items included proposals related to director and auditor remuneration (44.7%), director and auditor appointments (31.9%), amendments to the articles of incorporation (11.7%), and other miscellaneous agenda items (11.7%). Additionally, the NPS has actively engaged in shareholder activities in response to key monitoring issues or unexpected governance concerns. It sent letters or held meetings concerning 313 issues across 158 companies in 2021, 272 issues across 139 companies in 2022, and 297 issues across 172 companies in 2023.10)
Empirical studies on these behavioral shifts suggest that the stewardship code is exerting a positive influence on Korea’s capital market. A comparative analysis of signatory and non-signatory institutions during 2017-2018 found that code-adopting asset managers recorded higher returns on equity (ROE) and returns on assets (ROA) than their non-adopting peers.11) Listed companies have also reportedly benefited from increased shareholder engagement. One study found that following shareholder engagement, dividend payout ratios increased by an average of 22.94%, and dividend yields rose by 0.27% on average.12)
Limitations in the implementation of the stewardship code and the need for improvement
Although participation in the stewardship code is voluntary, becoming a signatory signals to clients and beneficiaries a commitment to upholding fiduciary duties. In this regard, stewardship code participation should reflect genuine stewardship practices, rather than merely serving as a public relations strategy. Currently, however, the only formal requirement is the registration of institutions seeking to join the code. There is no mechanism or supervisory body to ensure that signatories are genuinely implementing the code’s principles. The registration process itself is limited to verifying formal documentation, without any substantive evaluation of stewardship practices. Consequently, some institutions that registered as “prospective participants” as early as 2017 continue to retain that provisional status, well beyond the one-year implementation timeline initially announced. At present, 51 institutions remain classified as prospective participants without having transitioned to full implementation.
When an institution publicly commits to adopting the stewardship code but fails to engage in substantive stewardship activities, it is effectively neglecting its fiduciary duty as a steward of client and beneficiary assets. This underscores the need for monitoring and evaluation mechanisms to assess compliance. Such concerns have been raised repeatedly in recent years. Notably, the Financial Supervisory Service (FSS)’s review of proxy voting and disclosure practices by institutional investors in 2024 revealed deficiencies in stewardship code implementation.13)
Against this backdrop, during a February 2025 seminar on the future direction of Korea’s stewardship code, the FSC raised concerns about whether the current stewardship code—unchanged since its introduction in 2016—aligns with today’s evolving capital market environment. The FSC also emphasized the need to develop mechanisms for evaluating and disclosing compliance with the code’s principles and reiterated that proactive stewardship by institutional investors is vital to driving structural improvements in Korea’s capital market.14) Given that the FSC has identified stewardship code reform as a key initiative in its 2025 policy agenda, it is crucial to devise concrete measures to enhance the code’s effectiveness. In this context, Korea could benefit from examining international models, such as the UK’s stewardship code15)—the first of its kind and still actively revised and enforced—and Japan’s stewardship code,16) which has served as a cornerstone of the country’s broader capital market reform. Drawing on insights from these models may help Korea develop a more effective stewardship framework tailored to its domestic context.
Challenges in enhancing the effectiveness of the stewardship code
The first major challenge in enhancing the effectiveness of the stewardship code lies in assessing whether signatory institutions are substantively implementing the code’s principles. Korea’s stewardship code outlines seven core principles, which include: the establishment and disclosure of policies to fulfill fiduciary duties and prevent conflicts of interest in managing assets on behalf of clients and beneficiaries (Principles 1 and 2); the development of internal guidelines and periodic monitoring to enhance the long-term corporate value of investee companies (Principles 3 and 4); the adoption and disclosure of proxy voting policies, along with the publication of voting records and the rationale behind such decisions (Principle 5); regular reporting to clients and beneficiaries on voting and stewardship activities (Principle 6); and the development of the capabilities and expertise necessary to effectively carry out these responsibilities (Principle 7). Central to these principles is the expectation that institutional investors will not only establish responsible asset management policies, but also act in good faith in their execution and report the outcomes regularly. However, under the current framework in Korea, institutional investors are only required to disclose and register whether they have formulated such policies. There is no process in place to evaluate actual implementation or periodic stewardship reporting. By contrast, in the UK, the Financial Reporting Council (FRC), a public regulatory body, conducts annual evaluations of stewardship code compliance. Signatories to the code must submit annual stewardship reports detailing their practices, which the FRC reviews to determine whether they meet the standards necessary to retain signatory status.17) Japan follows a voluntary stewardship model, similar to Korea’s. However, under its 2024 Action Program for Corporate Governance Reform,18) Japan’s Financial Services Agency has begun discussing the introduction of oversight mechanisms to assess stewardship code adherence. Notably, Japan’s Government Pension Investment Fund (GPIF) plays a pivotal role in promoting effective oversight over stewardship code implementation. As of September 2024, the GPIF manages approximately USD 1.6 trillion (KRW 2,264 trillion), making it the world’s largest public pension fund.19) The GPIF has publicly announced that it places significant weight on stewardship efforts when evaluating asset managers entrusted with managing pension assets.20) Moreover, it requires annual stewardship reports from its asset managers and discloses the evaluation results, thereby contributing to more effective stewardship activities among institutional investors.21) In this context, Korea should consider establishing a formal entity and oversight process to monitor stewardship code implementation. The lack of binding authority under the current system, where a private entity administers the code, has long been cited as a structural limitation.22) While public oversight, as in the UK and Japan, would be ideal, Korea should seek to define standards that strike a balance between autonomy and regulatory structure within its existing private-sector-driven framework. In addition, follow-up measures should be adopted, depending on the results of implementation reviews, and corrective actions should apply to institutions with persistently weak stewardship engagement. As demonstrated by Japan’s GPIF, public pension funds can play a central role in facilitating stewardship activities. Korea’s policymakers should consider introducing requirements for asset managers to report stewardship activities, disclose evaluation outcomes, and assign greater weight to stewardship performance in the evaluation of entrusted institutions.
Second, it is essential to establish a supportive regulatory environment for effective stewardship code implementation. Korea lacks an institutional framework conducive to diligent proxy voting by institutional investors. As of 2024, approximately 97.2% of listed companies in Korea hold their annual general meetings (AGMs) within a limited timeframe between March 20 and 29, resulting in a heavy concentration of meeting dates. On top of that, roughly 90% of listed companies disclose key documents, such as business reports and audit reports, just one week prior to their AMGs.23) These constraints force institutional investors to review shareholder proposals from hundreds of companies within a compressed timeframe,24) making it difficult to cast proxy votes in a diligent and well-informed manner. In comparison, the concentration of AGM scheduling is lower in countries such as the UK and Japan, but they still provide shareholders with more time to prepare. In the UK, companies are required to disclose detailed AGM materials at least three weeks in advance, and in Japan, the disclosure period is two weeks.25) These international practices highlight the need to improve Korea’s proxy voting regime through regulatory reforms. In addition to the concentration of AGM dates, legal uncertainties that institutional investors may face when conducting stewardship activities pose an additional challenge. In particular, Korea maintains relatively broad and strict regulations regarding large-shareholding disclosure and proxy voting solicitation compared to major countries such as the US, the UK, and Japan. These regulatory constraints have long been cited as impediments to the effective exercise of fiduciary responsibilities by institutional investors.26) In the UK, the Financial Services Authority regulates only formal agreements among institutional investors that exert sustained influence over a company’s management. Casual or occasional exchanges among those investors on specific issues are not subject to such scrutiny.27) Japan amended its Financial Instruments and Exchange Act in 2024 to clarify that joint holder status applies only to agreements that materially affect corporate control, such as the appointment or dismissal of a CEO (Article 27-23). As of 2025, Japan is also in the process of revising its stewardship code to further facilitate collaborative engagement among institutional investors.28) Korea should adopt similar revisions to reduce ambiguity. Specifically, the criteria for designating joint holders under large-shareholding reporting rules, the scope of “investment purposes” that may be construed as attempts to influence corporate control, and the interpretation of “solicitation” under proxy voting rules should all be clarified to better support stewardship activities.
In addition to regulatory reform, raising awareness of the stewardship code is of significant importance. Institutional investors, listed companies, and other capital market stakeholders need to recognize that faithful implementation of the stewardship code can play a positive role in enhancing the corporate value of investee companies. Japan offers valuable insights in this regard. Shareholder engagement activities, such as dialogues with investee companies, are far more active in Japan than in Korea, and listed companies have generally responded favorably to the stewardship code. In 2023 alone, institutional investors managing assets on behalf of the GPIF engaged in approximately 6,000 dialogues across 924 companies. These included 100% of companies listed on the TOPIX 100 and 93% of those on the TOPIX 500. While corporate governance was a consistent focus, a wide range of issues, such as capital efficiency and financial strategies, were covered in those dialogues.29) In a 2024 GPIF survey of 2,154 listed companies, 76.6% of respondents gave a positive evaluation of GPIF’s stewardship activities, and 74.9% supported placing greater weight on stewardship performance in the evaluation of external asset managers.30) These findings suggest that robust stewardship practices not only enhance shareholder value but also contribute to the long-term corporate value of investee companies.
Marking the 10th anniversary of its stewardship code introduction, this is an opportune time for Korea to assess its implementation, identify structural limitations, and adopt measures to enhance its effectiveness. Through these efforts, the stewardship code can more fully serve its original purpose—expanding shareholder interest and promoting the development of Korea’s capital market.
1) Although the Korean translation is “Principles of Fiduciary Responsibility,” this article uses the term “stewardship code,” as it is more commonly recognized.
2) David Walker, 2009, A review of corporate governance in UK banks and other financial industry entities.
3) KCGS, 2018, Understanding Korea’s Stewardship Code.
4) OECD, 2023, G20/OECD Principles of Corporate Governance 2023.
5) Lee, H.S., 2024, Japan’s capital market reform: Drivers and policy implications, KCMI Issue Report 24-16; Koh, I.H., 2024, The process and implications of Japan’s capital market and corporate governance reforms, Journal of Economic Law Studies 23(3); Lee, B.M., 2024, Japan’s capital market reform efforts and implications for Korea’s value-up program, Financial Brief 33(16).
6) Financial Services Commission, January 8, 2025, 2025 Policy Agenda of the Financial Services Commission, press release.
7) Kim, S.M., Park, K.S., & Chung, C.S., 2020, A Study on the impact of the stewardship code on proxy voting by institutional investors, Korean Journal of Financial Studies 49(4).
8) Kim, S.M., 2024, Comparative analysis of disclosure practices for dissenting votes by domestic and foreign institutional investors, SC Research Report no. 2.
9) Kim, S.M., 2021, The stewardship code and shareholder engagement by domestic institutional investors: Focusing on the implementation, appropriateness, and effectiveness of engagement activities, KCGS Report 11(10).
10) National Pension Service, 2023, Annual report on Fiduciary Stewardship Activities of the National Pension Fund.
11) Cho, H.J., 2014, The relationship between the stewardship code, proxy voting, and performance of Korean asset management firms, Journal of East Asia Management 5(1).
12) Kim, S.M., 2021, The stewardship code and shareholder engagement by domestic institutional investors: Focusing on the implementation, appropriateness, and effectiveness of engagement activities, KCGS Report 11(10).
13) In August 2024, the Financial Supervisory Service examined proxy voting and disclosure practices of institutional investors and identified several issues, including inadequate disclosure of reasons for voting or non-voting, boilerplate internal guidelines for proxy voting, failure to follow the prescribed disclosure format, and inadequate proxy voting practices. (Financial Supervisory Service, August 6, 2024, Review Results and Future Plans for Proxy Voting and Disclosure by Investment Funds, press release).
14) Financial Services Commission, February 5, 2025, Seminar on Future Directions for the Stewardship Code, press release.
15) The UK has revised its stewardship code several times in response to changes in the capital market. As of 2025, the third revision is underway. A total of 287 institutions are signatories as of July 2024, including 196 asset managers, 72 asset owners such as pension funds, and 19 service providers including advisory firms.
16) Japan is also in the process of a third revision as of 2025. As of March 2025, 340 institutions are signatories, including 6 trust banks, 212 investment firms and advisors, 24 insurance companies, 87 pension funds, and 11 service providers for institutional investors.
17) FRC, 2024, UK Stewardship Code 2020 Application and Assessment Terms and Conditions.
18) https://www.fsa.go.jp/news/r5/singi/20240607.html
19) A Thinking Ahead Institute and Pensions & Investments, 2022, Global top 300 pension funds
20) GPIF, 2025, Policy to Fulfill Stewardship Responsibilities.
21) The number of engagement cases by institutional investors increased from approximately 3,000 in 2017 to about 6,000 in 2023. The share of shareholders’ proposals that institutional investors supported also rose from 2.3% in 2013 to 11.1% in 2023 (GPIF, 2025, Policy to Fulfill Stewardship Responsibilities).
22) Lee, S.Y., 2017, Prerequisites for ensuring the effectiveness of Korea’s stewardship code, Financial Brief 26(22).
23) Hwang, H.Y., 2024, Examining the Status and Challenges of Shareholder Rights Protection Through the Analysis of 2024 Shareholder Meetings, KCMI Opinion 24-09.
24) As of 2024, the National Pension Service exercised voting rights at 602 listed companies during regular shareholder meetings held in February and March. Among private institutional investors, Samsung Asset Management cast votes at 332 companies, and Korea Investment Management at 314 companies.
25) OECD, 2023, Corporate Governance Fact Book 2023.
26) Lee, C.S., 2011, Strict interpretation of the large-shareholding reporting system: Focused on sanctions, The Korean Journal of Securities Law 6(2); Kim, B.T., 2016, A comparative legal study on improving the large-shareholding reporting system, Advanced Commercial Law Review 73; Kim, J.Y., 2018, Legal constraints on proxy voting of institutional investors, SNU Law Review 8; Kim, K.I., 2021, Comparative analysis of proxy voting solicitation regulations and implications, Human Rights and Justice 500; Yoon, S.Y., 2023, A Study on the purpose of influencing corporate control under Article 147 of the Financial Investment Services and Capital Markets Act, Business Law Review 37(4), and other studies.
27) FSA, 2009, Open letter to institutional Shareholders Committee.
28) As of March 21, 2025, the proposed legislation was announced for public consultation, with the public consultation period open until April 20 (https://www.fsa.go.jp/news/r6/singi/20250321-3.html).
29) GPIF, 2025, Policy to Fulfill Stewardship Responsibilities.
30) GPIF, 2024, Report of the 9th Survey of Listed Companies Regarding Institutional Investors’ Stewardship Activities.
Participation and performance of the stewardship code in Korea
Following the FSC’s 2014 announcement of plans to introduce a stewardship code, a private-sector entity, the Korea Stewardship Code Council, formally launched the code in December 2016. While only 16 institutions initially adopted the code in 2017, participation has steadily expanded over the years, reaching 242 institutional investors, advisory firms, and other related entities as of April 2025.
The National Pension Service (NPS), in particular, has demonstrated consistent adherence to its fiduciary responsibilities under the stewardship code. The NPS voted against 16.3% of investee company proposals in 2021, 23.3% in 2022, and 21.8% in 2023. In 2023, the most frequently opposed items included proposals related to director and auditor remuneration (44.7%), director and auditor appointments (31.9%), amendments to the articles of incorporation (11.7%), and other miscellaneous agenda items (11.7%). Additionally, the NPS has actively engaged in shareholder activities in response to key monitoring issues or unexpected governance concerns. It sent letters or held meetings concerning 313 issues across 158 companies in 2021, 272 issues across 139 companies in 2022, and 297 issues across 172 companies in 2023.10)
Empirical studies on these behavioral shifts suggest that the stewardship code is exerting a positive influence on Korea’s capital market. A comparative analysis of signatory and non-signatory institutions during 2017-2018 found that code-adopting asset managers recorded higher returns on equity (ROE) and returns on assets (ROA) than their non-adopting peers.11) Listed companies have also reportedly benefited from increased shareholder engagement. One study found that following shareholder engagement, dividend payout ratios increased by an average of 22.94%, and dividend yields rose by 0.27% on average.12)
Limitations in the implementation of the stewardship code and the need for improvement
Although participation in the stewardship code is voluntary, becoming a signatory signals to clients and beneficiaries a commitment to upholding fiduciary duties. In this regard, stewardship code participation should reflect genuine stewardship practices, rather than merely serving as a public relations strategy. Currently, however, the only formal requirement is the registration of institutions seeking to join the code. There is no mechanism or supervisory body to ensure that signatories are genuinely implementing the code’s principles. The registration process itself is limited to verifying formal documentation, without any substantive evaluation of stewardship practices. Consequently, some institutions that registered as “prospective participants” as early as 2017 continue to retain that provisional status, well beyond the one-year implementation timeline initially announced. At present, 51 institutions remain classified as prospective participants without having transitioned to full implementation.
When an institution publicly commits to adopting the stewardship code but fails to engage in substantive stewardship activities, it is effectively neglecting its fiduciary duty as a steward of client and beneficiary assets. This underscores the need for monitoring and evaluation mechanisms to assess compliance. Such concerns have been raised repeatedly in recent years. Notably, the Financial Supervisory Service (FSS)’s review of proxy voting and disclosure practices by institutional investors in 2024 revealed deficiencies in stewardship code implementation.13)
Against this backdrop, during a February 2025 seminar on the future direction of Korea’s stewardship code, the FSC raised concerns about whether the current stewardship code—unchanged since its introduction in 2016—aligns with today’s evolving capital market environment. The FSC also emphasized the need to develop mechanisms for evaluating and disclosing compliance with the code’s principles and reiterated that proactive stewardship by institutional investors is vital to driving structural improvements in Korea’s capital market.14) Given that the FSC has identified stewardship code reform as a key initiative in its 2025 policy agenda, it is crucial to devise concrete measures to enhance the code’s effectiveness. In this context, Korea could benefit from examining international models, such as the UK’s stewardship code15)—the first of its kind and still actively revised and enforced—and Japan’s stewardship code,16) which has served as a cornerstone of the country’s broader capital market reform. Drawing on insights from these models may help Korea develop a more effective stewardship framework tailored to its domestic context.
Challenges in enhancing the effectiveness of the stewardship code
The first major challenge in enhancing the effectiveness of the stewardship code lies in assessing whether signatory institutions are substantively implementing the code’s principles. Korea’s stewardship code outlines seven core principles, which include: the establishment and disclosure of policies to fulfill fiduciary duties and prevent conflicts of interest in managing assets on behalf of clients and beneficiaries (Principles 1 and 2); the development of internal guidelines and periodic monitoring to enhance the long-term corporate value of investee companies (Principles 3 and 4); the adoption and disclosure of proxy voting policies, along with the publication of voting records and the rationale behind such decisions (Principle 5); regular reporting to clients and beneficiaries on voting and stewardship activities (Principle 6); and the development of the capabilities and expertise necessary to effectively carry out these responsibilities (Principle 7). Central to these principles is the expectation that institutional investors will not only establish responsible asset management policies, but also act in good faith in their execution and report the outcomes regularly. However, under the current framework in Korea, institutional investors are only required to disclose and register whether they have formulated such policies. There is no process in place to evaluate actual implementation or periodic stewardship reporting. By contrast, in the UK, the Financial Reporting Council (FRC), a public regulatory body, conducts annual evaluations of stewardship code compliance. Signatories to the code must submit annual stewardship reports detailing their practices, which the FRC reviews to determine whether they meet the standards necessary to retain signatory status.17) Japan follows a voluntary stewardship model, similar to Korea’s. However, under its 2024 Action Program for Corporate Governance Reform,18) Japan’s Financial Services Agency has begun discussing the introduction of oversight mechanisms to assess stewardship code adherence. Notably, Japan’s Government Pension Investment Fund (GPIF) plays a pivotal role in promoting effective oversight over stewardship code implementation. As of September 2024, the GPIF manages approximately USD 1.6 trillion (KRW 2,264 trillion), making it the world’s largest public pension fund.19) The GPIF has publicly announced that it places significant weight on stewardship efforts when evaluating asset managers entrusted with managing pension assets.20) Moreover, it requires annual stewardship reports from its asset managers and discloses the evaluation results, thereby contributing to more effective stewardship activities among institutional investors.21) In this context, Korea should consider establishing a formal entity and oversight process to monitor stewardship code implementation. The lack of binding authority under the current system, where a private entity administers the code, has long been cited as a structural limitation.22) While public oversight, as in the UK and Japan, would be ideal, Korea should seek to define standards that strike a balance between autonomy and regulatory structure within its existing private-sector-driven framework. In addition, follow-up measures should be adopted, depending on the results of implementation reviews, and corrective actions should apply to institutions with persistently weak stewardship engagement. As demonstrated by Japan’s GPIF, public pension funds can play a central role in facilitating stewardship activities. Korea’s policymakers should consider introducing requirements for asset managers to report stewardship activities, disclose evaluation outcomes, and assign greater weight to stewardship performance in the evaluation of entrusted institutions.
Second, it is essential to establish a supportive regulatory environment for effective stewardship code implementation. Korea lacks an institutional framework conducive to diligent proxy voting by institutional investors. As of 2024, approximately 97.2% of listed companies in Korea hold their annual general meetings (AGMs) within a limited timeframe between March 20 and 29, resulting in a heavy concentration of meeting dates. On top of that, roughly 90% of listed companies disclose key documents, such as business reports and audit reports, just one week prior to their AMGs.23) These constraints force institutional investors to review shareholder proposals from hundreds of companies within a compressed timeframe,24) making it difficult to cast proxy votes in a diligent and well-informed manner. In comparison, the concentration of AGM scheduling is lower in countries such as the UK and Japan, but they still provide shareholders with more time to prepare. In the UK, companies are required to disclose detailed AGM materials at least three weeks in advance, and in Japan, the disclosure period is two weeks.25) These international practices highlight the need to improve Korea’s proxy voting regime through regulatory reforms. In addition to the concentration of AGM dates, legal uncertainties that institutional investors may face when conducting stewardship activities pose an additional challenge. In particular, Korea maintains relatively broad and strict regulations regarding large-shareholding disclosure and proxy voting solicitation compared to major countries such as the US, the UK, and Japan. These regulatory constraints have long been cited as impediments to the effective exercise of fiduciary responsibilities by institutional investors.26) In the UK, the Financial Services Authority regulates only formal agreements among institutional investors that exert sustained influence over a company’s management. Casual or occasional exchanges among those investors on specific issues are not subject to such scrutiny.27) Japan amended its Financial Instruments and Exchange Act in 2024 to clarify that joint holder status applies only to agreements that materially affect corporate control, such as the appointment or dismissal of a CEO (Article 27-23). As of 2025, Japan is also in the process of revising its stewardship code to further facilitate collaborative engagement among institutional investors.28) Korea should adopt similar revisions to reduce ambiguity. Specifically, the criteria for designating joint holders under large-shareholding reporting rules, the scope of “investment purposes” that may be construed as attempts to influence corporate control, and the interpretation of “solicitation” under proxy voting rules should all be clarified to better support stewardship activities.
In addition to regulatory reform, raising awareness of the stewardship code is of significant importance. Institutional investors, listed companies, and other capital market stakeholders need to recognize that faithful implementation of the stewardship code can play a positive role in enhancing the corporate value of investee companies. Japan offers valuable insights in this regard. Shareholder engagement activities, such as dialogues with investee companies, are far more active in Japan than in Korea, and listed companies have generally responded favorably to the stewardship code. In 2023 alone, institutional investors managing assets on behalf of the GPIF engaged in approximately 6,000 dialogues across 924 companies. These included 100% of companies listed on the TOPIX 100 and 93% of those on the TOPIX 500. While corporate governance was a consistent focus, a wide range of issues, such as capital efficiency and financial strategies, were covered in those dialogues.29) In a 2024 GPIF survey of 2,154 listed companies, 76.6% of respondents gave a positive evaluation of GPIF’s stewardship activities, and 74.9% supported placing greater weight on stewardship performance in the evaluation of external asset managers.30) These findings suggest that robust stewardship practices not only enhance shareholder value but also contribute to the long-term corporate value of investee companies.
Marking the 10th anniversary of its stewardship code introduction, this is an opportune time for Korea to assess its implementation, identify structural limitations, and adopt measures to enhance its effectiveness. Through these efforts, the stewardship code can more fully serve its original purpose—expanding shareholder interest and promoting the development of Korea’s capital market.
1) Although the Korean translation is “Principles of Fiduciary Responsibility,” this article uses the term “stewardship code,” as it is more commonly recognized.
2) David Walker, 2009, A review of corporate governance in UK banks and other financial industry entities.
3) KCGS, 2018, Understanding Korea’s Stewardship Code.
4) OECD, 2023, G20/OECD Principles of Corporate Governance 2023.
5) Lee, H.S., 2024, Japan’s capital market reform: Drivers and policy implications, KCMI Issue Report 24-16; Koh, I.H., 2024, The process and implications of Japan’s capital market and corporate governance reforms, Journal of Economic Law Studies 23(3); Lee, B.M., 2024, Japan’s capital market reform efforts and implications for Korea’s value-up program, Financial Brief 33(16).
6) Financial Services Commission, January 8, 2025, 2025 Policy Agenda of the Financial Services Commission, press release.
7) Kim, S.M., Park, K.S., & Chung, C.S., 2020, A Study on the impact of the stewardship code on proxy voting by institutional investors, Korean Journal of Financial Studies 49(4).
8) Kim, S.M., 2024, Comparative analysis of disclosure practices for dissenting votes by domestic and foreign institutional investors, SC Research Report no. 2.
9) Kim, S.M., 2021, The stewardship code and shareholder engagement by domestic institutional investors: Focusing on the implementation, appropriateness, and effectiveness of engagement activities, KCGS Report 11(10).
10) National Pension Service, 2023, Annual report on Fiduciary Stewardship Activities of the National Pension Fund.
11) Cho, H.J., 2014, The relationship between the stewardship code, proxy voting, and performance of Korean asset management firms, Journal of East Asia Management 5(1).
12) Kim, S.M., 2021, The stewardship code and shareholder engagement by domestic institutional investors: Focusing on the implementation, appropriateness, and effectiveness of engagement activities, KCGS Report 11(10).
13) In August 2024, the Financial Supervisory Service examined proxy voting and disclosure practices of institutional investors and identified several issues, including inadequate disclosure of reasons for voting or non-voting, boilerplate internal guidelines for proxy voting, failure to follow the prescribed disclosure format, and inadequate proxy voting practices. (Financial Supervisory Service, August 6, 2024, Review Results and Future Plans for Proxy Voting and Disclosure by Investment Funds, press release).
14) Financial Services Commission, February 5, 2025, Seminar on Future Directions for the Stewardship Code, press release.
15) The UK has revised its stewardship code several times in response to changes in the capital market. As of 2025, the third revision is underway. A total of 287 institutions are signatories as of July 2024, including 196 asset managers, 72 asset owners such as pension funds, and 19 service providers including advisory firms.
16) Japan is also in the process of a third revision as of 2025. As of March 2025, 340 institutions are signatories, including 6 trust banks, 212 investment firms and advisors, 24 insurance companies, 87 pension funds, and 11 service providers for institutional investors.
17) FRC, 2024, UK Stewardship Code 2020 Application and Assessment Terms and Conditions.
18) https://www.fsa.go.jp/news/r5/singi/20240607.html
19) A Thinking Ahead Institute and Pensions & Investments, 2022, Global top 300 pension funds
20) GPIF, 2025, Policy to Fulfill Stewardship Responsibilities.
21) The number of engagement cases by institutional investors increased from approximately 3,000 in 2017 to about 6,000 in 2023. The share of shareholders’ proposals that institutional investors supported also rose from 2.3% in 2013 to 11.1% in 2023 (GPIF, 2025, Policy to Fulfill Stewardship Responsibilities).
22) Lee, S.Y., 2017, Prerequisites for ensuring the effectiveness of Korea’s stewardship code, Financial Brief 26(22).
23) Hwang, H.Y., 2024, Examining the Status and Challenges of Shareholder Rights Protection Through the Analysis of 2024 Shareholder Meetings, KCMI Opinion 24-09.
24) As of 2024, the National Pension Service exercised voting rights at 602 listed companies during regular shareholder meetings held in February and March. Among private institutional investors, Samsung Asset Management cast votes at 332 companies, and Korea Investment Management at 314 companies.
25) OECD, 2023, Corporate Governance Fact Book 2023.
26) Lee, C.S., 2011, Strict interpretation of the large-shareholding reporting system: Focused on sanctions, The Korean Journal of Securities Law 6(2); Kim, B.T., 2016, A comparative legal study on improving the large-shareholding reporting system, Advanced Commercial Law Review 73; Kim, J.Y., 2018, Legal constraints on proxy voting of institutional investors, SNU Law Review 8; Kim, K.I., 2021, Comparative analysis of proxy voting solicitation regulations and implications, Human Rights and Justice 500; Yoon, S.Y., 2023, A Study on the purpose of influencing corporate control under Article 147 of the Financial Investment Services and Capital Markets Act, Business Law Review 37(4), and other studies.
27) FSA, 2009, Open letter to institutional Shareholders Committee.
28) As of March 21, 2025, the proposed legislation was announced for public consultation, with the public consultation period open until April 20 (https://www.fsa.go.jp/news/r6/singi/20250321-3.html).
29) GPIF, 2025, Policy to Fulfill Stewardship Responsibilities.
30) GPIF, 2024, Report of the 9th Survey of Listed Companies Regarding Institutional Investors’ Stewardship Activities.