Lee Bok-hyun "Pension Funds and Asset Managers Must Actively Exercise Voting Rights... Creating an Environment Considering Shareholder Interests"

Revealing the Will to Timely Exit Zombie Companies
"Reducing Delisting Procedures and Strengthening Listing Maintenance Conditions"

An open discussion for the advancement of the capital market, jointly hosted by the Financial Supervisory Service, the National Pension Service, and the Korea Exchange, was held at the Hankyung Association Hall in Seoul. Before the event, Lee Bok-hyun, Governor of the Financial Supervisory Service, Kim Tae-hyun, Chairman of the National Pension Service, and other attendees are taking a commemorative photo. Photo by Heo Young-han younghan@

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), said on the 12th, "Pension funds and asset managers, as key investment players in the capital market, must actively exercise their voting rights and serve as catalysts to continuously drive corporate innovation."

Governor Lee attended the "Open Discussion for the Advancement of the Capital Market" held at the Korea Economic Association (KEA) in Yeouido on the morning of the same day and stated, "It is now time to take a further step so that investments can be substantially expanded and the fundamental structure of companies can be improved."

This event was jointly hosted by the FSS, the National Pension Service, and the Korea Exchange to evaluate the efforts and achievements made so far for the advancement of the capital market and to discuss detailed implementation plans.

Governor Lee first urged pension funds and asset managers to actively implement the Stewardship Code. As of the first half of this year, the National Pension Service's domestic equity investment amounted to 158.7 trillion won, and asset managers held 67 trillion won (in domestic equity funds). This implies that as key investment players, pension funds and asset managers should actively exercise their voting rights to induce corporate innovation.

Governor Lee said, "The government and financial authorities have continuously formed a social consensus to create an environment that actively considers shareholder interests," adding, "We will actively support the independent exercise of voting rights by funds and closely monitor the appropriateness of voting rights exercised by pension fund entrusted asset managers and their compliance with the Stewardship Code."

He also emphasized the need to promptly delist marginal companies from the domestic stock market. He stated, "The current listing maintenance standards make it difficult to swiftly delist zombie companies, which may cause side effects that limit value appreciation within the capital market," and added, "The FSS is closely discussing improvement measures for related systems, including shortening delisting procedures and strengthening listing maintenance requirements, with relevant ministries."

When the Financial Services Commission disclosed the details of the corporate value-up program in February, Governor Lee said at the "FSS Governor-Research Institute Heads Meeting," "Listed companies that fall below certain standards should be actively delisted from the exchange."

The Financial Services Commission and the Korea Exchange are preparing a "Market Structure Reform" plan to rationally improve listing eligibility standards. They have commissioned related research to the Korea Capital Market Institute.

Additionally, Governor Lee mentioned the responsible roles of pension funds and asset managers, emphasizing the responsibility of long-term investors to expand the investment base of the capital market. The equity investment ratio of Japan's Government Pension Investment Fund (GPIF) increased significantly from 11.5% in 2010 to 24.7% in 2023.

Governor Lee said, "It is necessary to pay attention to market participants' evaluations that the continuous expansion of Japan's public pension investment in the domestic market has helped resolve market undervaluation and positively contributed to Japan's value-up policies."

He continued, "For the domestic capital market to become a 'market where anyone wants to invest,' efforts are needed not only from the government and institutional investors but also from companies themselves," emphasizing again, "In this process, while alleviating corporate concerns, discussions on harmonious and predictable norms to effectively protect shareholder value are necessary."