Will NH Investment Announce Optimus Pre-Compensation Plan This Week?

Uncertainty Over Temporary Board Meeting
Victims Plan Protests for 3 Consecutive Days

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] NH Investment & Securities, the largest distributor of the Optimus Fund, which is facing concerns over a 500 billion KRW redemption suspension crisis, is expected to hold an extraordinary board meeting as early as this week to reconsider advance payment plans for investors. Although the board discussed an advance payment plan once at the meeting on the 23rd, the decision was postponed due to emerging issues of breach of trust. NH Investment & Securities initially aimed to finalize its stance within this month, but it remains uncertain whether they can provide an answer within the scheduled timeframe.

According to the financial investment industry on the 27th, victims of the Optimus Fund plan to increase pressure on NH Investment & Securities through a series of protests this week. They will hold rallies for three consecutive days on the 28th (NH Investment & Securities), the 29th (Blue House), and the 30th (NH Investment & Securities). One victim of the Optimus Fund incident said, "We expect NH Investment & Securities to hold an extraordinary board meeting this week, which will be the first turning point in this crisis," adding, "We plan to trust NH Investment & Securities one last time, but if the desired response is not received, we are prepared to take desperate measures such as lawsuits or simultaneous protests at branches nationwide."

The possibility of holding an extraordinary board meeting this week remains unclear. A representative from NH Investment & Securities stated, "An extraordinary board meeting must be convened at least three days in advance, but given the gravity of this matter, it can be convened earlier," and explained, "It is not yet confirmed whether the extraordinary board meeting will be held this week, but the original goal was to finalize the advance payment plan within this month."

NH Investment & Securities discussed the advance payment plan for investors at the board meeting on the 23rd but did not reach a final decision. Unlike Korea Investment & Securities, which decided on a 70% pre-compensation, NH Investment & Securities has hesitated to make a prompt decision due to the scale of sales. NH Investment & Securities sold 432.7 billion KRW worth, accounting for 84% of the 515.1 billion KRW Optimus Fund. Korea Investment & Securities has a remaining sales balance of 28.7 billion KRW, so even with 70% compensation, the payout is about 20.1 billion KRW. In contrast, if NH Investment & Securities supports at the same rate, the payout exceeds 300 billion KRW. The large scale of advance payments poses a burden on board members, who would face the risk of breach of trust charges if they make premature decisions.

Korea Investment & Securities is an unlisted company wholly owned by its holding company, so it can decide on advance payments with their consent alone. However, NH Investment & Securities is a listed company, and all final decisions must go through a board vote. NongHyup Financial Group is the largest shareholder with 49.11%, but the remaining shares are dispersed among the National Pension Service (9.92%), employee stock ownership (1.51%), and minority shareholders (39.20%). It is a significant burden for the board, composed of outside directors appointed by shareholders, to accept an advance payment plan amounting to several hundred billion KRW due to potential impacts on future performance and stock price decline.

An NH Investment & Securities representative said, "The eight board members are reviewing various measures to minimize the damage to investors and customers, and we are striving to make a decision on the advance payment plan according to the originally planned schedule."

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