"Exercising National Pension Voting Rights Made Easier"…KSD Launches Electronic Voting Support Service

[Asia Economy Reporter Lee Seon-ae The National Pension Fund can now easily exercise voting rights through the Korea Securities Depository's electronic voting system (K-VOTE).

On the 22nd, the Korea Securities Depository announced that it signed a business agreement with the National Pension Service and started a support service for exercising voting rights via electronic voting. The Depository linked its system with Woori Bank, the custodian bank for the National Pension Fund's domestic stocks, and developed a system that allows the National Pension Fund's voting rights holders to conveniently exercise electronic voting on listed stocks held by the fund through K-VOTE.

Until now, the National Pension Fund exercised voting rights through direct exercise or delegated exercise via entrusted asset managers. Due to difficulties in procedures such as sending written proxies through the custodian bank, sending written proxies directly, and receiving confirmation of exercise results, the National Pension Fund was unable to smoothly exercise its voting rights.

Based on the regular general shareholders' meetings from January to March, the total number of shares on which the National Pension Fund can exercise voting rights amounts to 2.143 billion shares, including 1.125 billion shares under direct management and 1.018 billion shares under entrusted management.

If the National Pension Fund exercises electronic voting on all shares under its direct management that are eligible for electronic voting, the electronic voting participation rate is expected to exceed 7%. The electronic voting participation rate for the regular general shareholders' meetings in the first half of this year was 4.67%.

Also, if the National Pension Fund's entrusted asset managers switch entirely from written proxies to electronic voting for entrusted management exercises, the participation rate is expected to rise above 9%. As a major investor in domestic listed companies, active electronic voting by the National Pension Fund is expected to increase the number of issuing companies adopting electronic voting systems to secure institutional investors' voting rights.

The Korea Securities Depository plans to expand the service to other institutional investors, including other pension funds, using the National Pension Fund as a starting point.

It has been 11 years since the introduction of electronic voting systems at shareholders' meetings of domestic companies. Although the impact was somewhat minimal until now, the abolition of the shadow voting system, a proxy voting system, has led to an active trend over the past two years. The Depository stated, "We expect to support the strengthening of institutional investors' fiduciary responsibilities, contribute to improving corporate governance and transparency through increased exercise of voting rights by institutional investors."

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