“Composition and subject of discussion, similar to the committee… Matters that can be discussed in the fund
(yunhap news)
The National Pension Fund Management Headquarters establishes an expert committee to discuss the exercise of voting rights within the headquarters. There are voices of concern about whether the role is in conflict with the Trustee Responsibility Committee (hereinafter referred to as the Trustee Responsibility Committee), which has the right to decide on the direction of voting rights for the existing national pension.
According to the National Pension Fund Management Headquarters on the 28th, the National Pension Fund Management Regulations and Enforcement Rules will be amended to establish a ‘Healthy Governance Improvement Committee (hereinafter referred to as the Improvement Committee)’ within the Fund Management Headquarters.
The improvement committee is composed of private experts. If you look at the qualifications, △more than 5 years of experience in a position in charge of asset management in a collective investment scheme △more than 5 years of experience in a position in charge of finance or asset management in a stock-listed corporation, government company, or public institution △Economics, Majored in business administration or a field related to investment subjects and served as a full-time lecturer or higher at a university △Holding a Ph.D. Other experts may also participate if deemed necessary by the chairperson.
The chairperson of the improvement committee may appoint a chairperson for each department in charge of the operation subcommittee. If necessary, the chairperson may make recommendations. There are three subcommittees to be prepared within the expert committee: △a subcommittee related to governance improvement △a subcommittee related to exercising voting rights and △a subcommittee related to stewardship events. The chairperson of each subcommittee discusses and reviews the matters under the jurisdiction of the subcommittee and submits the results to the chairperson. The chairperson discusses the review opinion of the subcommittee in the committee and notifies the head of the headquarters of the result.
The improvement committee is similar to the operation method of the Trustee Responsibility Committee (hereinafter referred to as the Trustee Committee) from composition to review. It is an organizational reorganization that seems to have created a ‘second committee in charge’ within the fund management headquarters.
The responsible committee is under the National Pension Fund Management Committee (hereinafter referred to as the Fund Committee). Since the Minister of Health and Welfare serves as the chairman of the fund, the committee in charge is effectively under the Ministry of Health and Welfare. On the other hand, within the Fund Management Headquarters, the Trustee Responsibility Office is in charge of fiduciary responsibility activities. The investment committee within the headquarters discusses the direction of voting rights in a large framework.
The matters to be dealt with by the Improvement Committee are already in charge of the Investment Committee within the headquarters or the Receipt Committee under the Fund Committee. Moreover, the National Pension Service exercises voting rights in the Investment Committee and the Accounting Committee within the headquarters. Ordinary agendas are decided by the investment committee, but agendas where it is difficult to determine the direction of voting rights due to conflicting opinions are taken up by the committee. In this situation, it is pointed out that it is ambiguous what role the improvement committee can play.
An official who worked on the Fund Committee said, “The requirements for the composition of the Improvement Committee are almost similar to those of the Committee on Remedy,” and “If the role is similar to that of the Committee on Remedy, there seems to be a need for discussion on the Fund Committee.”
Regarding this, an official from the Fund Management Headquarters said, “It is not intended to decide whether to exercise voting rights, but it seems to play a role in examining whether there are improvements in standards related to exercising voting rights.”
However, there is an opinion that there will be no problem if the improvement committee only serves as an advisory body for the investment committee within the fund management headquarters. It is only necessary to pay attention to conflicts over decisions made by the Investment Committee, the Compensation Committee, and the Fund Committee. An official from the financial investment industry said, “It seems that the investment committee has created a new committee to advise on that part because it is burdensome to independently develop voting guidelines.”