NPS to revise voting guidelines for external managers

The National Pension Service (NPS) is expected to drastically revise the way it delegates voting rights for external equity managers at general meetings of investment company stockholders, InvestChosun reported on Tuesday.

This year the NPS had required external managers to directly exercise part of their voting rights for companies it invested in to guarantee their independence. Companies which NPS does not directly hold a stake in were entrusted with voting rights. But for key management companies like Hanjin Kal, NPS will exercise its voting rights. External managers will exercise limited voting rights only for small and medium-sized companies that do not have major management concerns.

However, most of the management companies do not have a division dedicated to exercising voting rights. Passive fund managers have to decide to exercise voting rights for each of the firms on the portfolio after analysis, which is a heavy burden. Reporting the details and reasons for exercising voting rights to NPS Investment Management on a quarterly basis was also a burden.

As the controversy over its effectiveness has grown, NPS Investment Management recently asked external equity managers to submit suggestions on voting rights guidelines. Although no specific schedule has been set, it is reported that working-level officials of the asset managers will soon be prepared to gather opinions and discuss them. (Reporting by Hye-won Chang)