Unified Authority for National Pension Representative Lawsuit Committee Falls Through

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kim Hyewon] The revision of guidelines to unify and expand the subject and authority of the National Pension Service (NPS) shareholder derivative lawsuit from the Fund Management Headquarters to the Stewardship Responsibility Committee (SRC) has ultimately been postponed. This is due to strong opposition from the business community and divided opinions within the government.

According to related ministries on the 26th, the NPS Fund Management Committee held a heated debate until late afternoon the previous day over the "Guideline Revision on Stewardship Responsibility Activities" and decided to postpone the resolution again. ▶See the front page of our February 9 issue

Failing to reach a conclusion even in the second meeting following December last year, the delegation of the NPS derivative lawsuit authority to the SRC is effectively off the table for this administration. The Ministry of Health and Welfare plans to form a separate subcommittee under the Fund Management Committee to hold confidential discussions on the matter, but it is expected that after the major political event of the presidential election, whoever wins will have to reconsider the issue from scratch.

Initially, some vice ministers from government ministries who are ex officio members of the Fund Management Committee were expected to attend the meeting to express opposition, but due to prior coordination of opinions and overlapping overseas business trips, a first-level director was sent instead. Typically, unless there is a special agenda, vice ministers from related ministries other than the Ministry of Health and Welfare minimize their attendance at the Fund Management Committee meetings. Park Hwajin, Vice Minister of Employment and Labor, and Kim Jonghun, Vice Minister of Agriculture, Food and Rural Affairs, who did not attend any of the ten Fund Management Committee meetings held last year, also did not attend this meeting.

The revision discussed by the NPS Fund Management Committee this time involved transferring the authority for derivative lawsuits against corporate management and the authority for shareholder proposals on major management issues to the SRC. However, since the plan to revise the guidelines became known, it has faced fierce opposition both inside and outside.

In particular, the business community argued that the NPS derivative lawsuit itself is an unprecedented excessive infringement on corporate management rights worldwide, expressing concerns about the possibility of the SRC, which lacks expertise, excessively filing lawsuits and the unclear accountability. They pointed out that if the SRC decides to file a lawsuit, there is no internal mechanism within the NPS to check this, nor is there an institutional device to hold accountable for damages caused to companies in case of a loss.

As opposition from the business community intensified, the related ministries and even the Blue House began to closely examine the matter, and the atmosphere started to shift. Some voices within the government agreed with the business community’s repeated assertion that "authority and responsibility must coincide." It was also pointed out in inter-ministerial discussions that the SRC is skewed toward members recommended by labor and civic groups, raising concerns about potential political exploitation. A central government official said, "From the beginning, there were many doubts about the SRC’s expertise, and especially strong opposition to granting authority without responsibility," adding, "Even within the NPS Fund Management Headquarters, there was a similar atmosphere."

Immediately after the meeting, the Korea Listed Companies Association issued a statement saying, "The guideline revision included delegating the NPS derivative lawsuit decision authority to the SRC and expanding the authority to restrict non-management participation shareholders," and criticized, "This is a trick by the Fund Management Committee to evade responsibility and burden for decision-making by putting the SRC forward." They added, "We are relieved that the revision was not passed, but we cannot let our guard down as similar attempts may be repeated through further discussions."

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