[One Year After Commercial Act Revision]② "Institutional Investors Must Exercise Voting Rights Properly... Role of National Pension Service Is Also Crucial"

Interview with Former APG CEO Park Yukyung

Reliance on Proxy Advisors, Passive Shareholder Engagement

"An Assertive and Independent Voice Towards Corporations Is Needed"

National Pension Service Should Speak in Unison with Pension and Public Funds

Although the regulatory framework for Korea's capital market is changing rapidly, there are concerns that institutional investors' practices regarding the exercise of voting rights are not keeping pace. Some investors continue to rely on proxy advisor recommendations or remain reluctant to take an active role as shareholders during major corporate decisions, rather than making independent judgments.

Park Yukyung, former Head of Emerging Markets Equities at APG (APG Asset Management), recently met with The Asia Business Daily near Yeouido, Seoul, and stated, "For capital market reform to be sustained, institutional investors must first exercise their voting rights responsibly," adding, "In particular, the National Pension Service should set the standard for the market." APG serves as the asset management arm of the major Dutch public pension fund. As of the end of last year, APG managed assets totaling 641 billion US dollars (approximately 948 trillion won).

Park assessed that amendments to the Commercial Act have marked a turning point for the Korean capital market. He said, "In the past, the stock market merely served as an ATM for companies and their largest shareholders," but "in the past year or two, a 'sweet spot' has emerged, where individual investors' voting intentions coincide with the interests of politicians and financial regulators, leading to unprecedented rapid changes."

However, he noted that legal revisions alone do not transform the market. For a sustainable capital market, he explained, companies, shareholders, laws and regulations, and market practices all need to evolve together. Park said, "Even if laws change, it takes at least ten years for natural codes of conduct and standards for judgment—namely, practices—to firmly take root in the corporate sphere and the market."

To achieve this, he emphasized that not only individual investors but also institutional investors should speak up more actively. He specifically criticized the tendency to rely on proxy advisory firms and highlighted the structural limitations that place investors in subordinate positions. Park stated, "Except for some independent advisory firms, most domestic advisors or asset managers inevitably have to be mindful of companies since they manage company funds or simultaneously provide ESG consulting and advisory services," and "in particular, asset management subsidiaries of financial holding companies often see their assertive voting rights immediately suppressed, as in the recent case with Heungkuk Asset Management."

Previously, on July 8, Heungkuk Asset Management sent an open letter to SK hynix, criticizing the announcement by Chairman Chey Tae-won—who is not a board member—of an investment plan worth 1,100 trillion won, without prior review or resolution by the board. Heungkuk Asset Management withdrew the statement after just one day, attributing it to the personal opinion of the head of its equity investment division.

He also pointed out concerns about overseas institutional investors' reliance on global proxy advisory firms. "Even at leading proxy advisory firms, only three to four full-time employees are assigned to Korea," he said. "Although reports spanning 20 to 30 pages are produced, more than half of the content is essentially rebuttal material provided by the company, while the proxy advisor's own independent evaluation or conclusions tend to be appended briefly and lack thoroughness."

Park stresses that the National Pension Service should lead by example in exercising voting rights. He also cautioned against the recent push to further delegate voting rights to external fund managers. "The National Pension Service already has the country's largest stewardship responsibility organization," he said, "so it is too soon to delegate voting rights to domestic fund managers who are often not independent from corporate influence." He emphasized that, as a realistic measure, voting rights may be exceptionally delegated only to asset managers whose independence is guaranteed and whose explicit goal is to enhance value through governance reform, such as Align Partners or VIP Asset Management.

He further proposed that the National Pension Service, together with other domestic pension funds and public funds, form an alliance such as an "Asset Owner Forum." Park said, "For market practices to change, large asset owners should jointly study stewardship codes and principles for shareholder engagement, and raise a consistent voice."

Former APG Asset Management CEO Yukyung Park is being interviewed by The Asia Business Daily on the 16th at the Korea Exchange in Yeouido, Yeongdeungpo-gu, Seoul.

This content was produced with the assistance of AI translation services.