NPS Tightens Voting Guidelines on Companies' Treasury Share Holdings and Disposals

The National Pension Service (NPS) is tightening its voting guidelines on companies’ holdings and disposal of treasury shares. When a company submits a plan to hold or dispose of treasury shares to a general meeting of shareholders, the NPS will decide whether to vote for or against it based on whether the plan serves to enhance long-term shareholder value.

Yonhap News Agency

The National Pension Fund Management Committee held its seventh meeting on Tuesday at the Government Complex Seoul and deliberated on and approved amendments to the “Guidelines on the National Pension Service’s Trustee Responsibility Activities.” The measure is intended to reflect changes under the revised Commercial Act in the NPS’s guidelines for exercising voting rights on domestic and overseas stocks.

Under the amendments, when a company seeks shareholder approval for a plan to hold or dispose of treasury shares, the NPS will comprehensively review whether the plan is consistent with the purpose disclosed when the shares were acquired, as well as the plan’s specificity and reasonableness. The NPS plans to vote in favor when it determines that the plan serves to enhance long-term shareholder value.

The same principles will apply when a company seeks to add or amend a provision in its articles of incorporation that allows it to hold or dispose of treasury shares as an exception for management purposes. The NPS will decide whether to vote for or against the proposal after considering whether the reasons for allowing an exception are reasonable and whether the views of ordinary shareholders can be adequately reflected in the approval process.

At the meeting, Minister of Health and Welfare Jeong Eun-kyeong also addressed public concerns over recent volatility in the domestic stock market. “I am well aware that recent volatility in domestic stocks has heightened public concerns about the long-term financial stability of the National Pension,” Jeong said. “To properly assess performance, we need to evaluate returns across all assets over the long term and in a comprehensive manner.”

She added, “The National Pension is a long-term investor that invests in a range of assets, including domestic and overseas stocks and bonds, as well as alternative investments. We will closely monitor financial market conditions and work to improve long-term investment performance so that people can entrust their retirement security to us with confidence.”

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