Stewardship code being revised to raise value-up program participation

Finance

Published: 14 Mar. 2024, 18:16

Stewardship code being revised to raise value-up program participation

Financial Services Commission Vice Chairman Kim So-young speaks in a conference with institutional investors in western Seoul on Thursday. [YONHAP]

Korea's financial regulator is considering revising a stewardship code for institutional investors to encourage their participation in the government’s ambitious corporate value-up program, which aims to boost the stock market.

The Financial Services Commission (FSC) said on Thursday that the revision to the stewardship code guideline would serve as the specific grounds for institutional investors, such as pension funds, to encourage companies to join the corporate value-up initiative. The initiative was introduced in February to resolve the country’s chronic undervaluation of stock prices.

The stewardship code is a set of stewardship standards for institutional investors to protect their investments on behalf of their clients. A total of 222 institutions, including four state-run institutions managing pensions and other government funds, signed the pledge.

It will be the first time the stewardship code guideline has been revised after its publication in 2017.

“A virtuous cycle can be created when listed companies strengthen efforts to improve corporate value, and investors make investment decisions and exercise shareholder rights based on the proper evaluation” of their effort, said FSC Vice Chairman Kim So-young in a meeting with officials from institutional investors.

The FSC added that it would create a new corporate value-up index for institutions to use as an investment indicator. The development of the index will be finalized in the third quarter, and exchange-traded funds that follow it are planned to go public in the fourth quarter.

“Along with the development of the Korea value-up index that reflects the stewardship code discussed today, continuously discovering and providing realistic incentives that can encourage companies to actively participate in the value-up program is important,” said Kim Du-nam, an executive at Samsung Asset Management who is in the value-up program advisory group.

BY JIN MIN-JI [jin.minji@joongang.co.kr]