Financial Supervisory Service Promotes Establishment of Voting Rights Disclosure Information DB for Asset Management Companies

On the 2nd, the Financial Supervisory Service (FSS) announced that it will establish a database (DB) for disclosure information on the exercise of voting rights by asset management companies.

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

Since April, the FSS has formed a task force (TF) with the Korea Financial Investment Association, the Capital Market Research Institute, asset management companies, and others to seek improvement measures for the overall related system, including revising the "Guidelines for the Exercise of Voting Rights by Asset Management Companies."

As a result, it was identified that there are practical difficulties in closely analyzing agenda items by company and by proposal within a short period due to the short-term concentration of domestic shareholder meetings, lack of infrastructure such as past voting rights exercise information DBs, and limited human resources.

The current disclosure management system is bifurcated between the Korea Financial Investment Association and the Korea Exchange, and the disclosure targets, scope, and periods differ between the two, making it difficult to analyze the details of voting rights exercises. Additionally, the classification of proposal types and the standards for recording the number of shares are unclear, reducing comparability between asset management companies and making it difficult to search for voting rights exercise details on specific stocks, resulting in lower information utilization.

Accordingly, the FSS plans to systematize disclosure information so that asset management companies can use it as an important reference when exercising voting rights and investors can compare exercise details by company.

First, disclosure forms will be standardized. The classification of proposal types will be newly established, and the standards for disclosure entries will be supplemented. Based on this, the FSS plans to standardize the disclosure forms of the Korea Financial Investment Association and the Korea Exchange.

Furthermore, the functionality will be enhanced to allow searching of voting rights exercise information by asset management companies under various conditions such as proposal type and stock, not only the current batch disclosure details by company. The disclosure information of the Korea Financial Investment Association and the Korea Exchange will also be interlinked to facilitate multifaceted analysis.

The FSS explained, "By improving the comparability and information utilization of disclosure information by asset management companies, it will be possible to support the faithful exercise of voting rights by asset management companies," adding, "Asset management companies will be able to easily refer to past similar cases by proposal and the exercise history of other companies, making efficient decision-making on voting rights exercise directions easier."

It also emphasized, "Currently, not only investors but also potential investors will be able to clearly compare the voting rights exercise details of multiple asset management companies, making it easier to identify diligent fiduciaries," and added, "We expect this improvement plan to induce responsible management by asset management companies and contribute to establishing a virtuous cycle system that promotes investors' interests through enhancing shareholder value."

An FSS official stated, "We will revise the disclosure forms related to voting rights and standardize the disclosure forms of the Korea Financial Investment Association and the Korea Exchange accordingly so that they can be applied from the 2024 shareholder meetings," and added, "We will prepare detailed improvement plans and implementation schedules with the Exchange and the Korea Financial Investment Association to promote the establishment of the disclosure information database."

He continued, "Other institutional improvement measures, including the revision of the voting rights guidelines, are still under discussion, and the final plan will be confirmed after sufficient discussions within the TF."

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