The Stewardship Code as the Criteria for Institutional Investors’ Exercise of Voting Rights

In the United Kingdom, where the stewardship code was first developed, the proportion of individual investors decreased and the proportion of institutional investors increased overwhelmingly. However, it was introduced to solve the problem of corporate governance caused by the failure of institutional investors to monitor corporations properly. Korea on the other hand, the share of individual investors is still relatively high, while the governance problem caused by large shareholders holding a small number of shares by the company’s circular shareholding due to a handful of major shareholders that have caused corporate governance problems is more serious. Therefore, in introducing the stewardship code developed in the UK into Korea, we should recognize the different business environment between the two countries and carefully review the introduction and implementation. Even if the stewardship code was introduced, Japan’s stewardship code model, which promotes the continued growth of investee companies and promotes mid-to-long-term ROI of clients and beneficiaries of institutional investors, is more desirable. Participating in the stewardship code is simply a commitment to its customers. It is enough to give trust to customers or beneficiaries like pension funds and to use them for businesses. We do not have to worry or be burdened, but we should expect institutional investors to make strategic and wise judgments on code subscription.