The business world “interfering with management rights” “controlling the listed companies”
National Pension Service, “Illegal management held accountable” “It is rather late”
FKI Hall in Yeouido, Seoul.
The business community continues to fight against the National Pension Service’s policy of filing a lawsuit against shareholders. The National Federation of Businesses, an interest group in the business world, is conducting an intentional opinion poll, and holding debates one after another, arguing that the representative lawsuit is a ‘dangerous idea’. Some say it is a means to ‘chastise and punish’ entrepreneurs. The Korea Employers’ Federation held a discussion last month on the topic of ‘Is it okay to pursue a national pension representative lawsuit?’, and on the 7th, the FKI held a discussion on the same topic. Previously, the FKI conducted a poll with a question that defined the National Pension’s ‘exercise of shareholder rights’ as ‘interference with management’. At a conference hosted by the FKI, FKI Vice Chairman Kwon Tae-shin said, “The government has been steadily removing obstacles to corporate monitoring and regulation of the National Pension Service, and filing a representative lawsuit is the final stage of corporate governance. If this is achieved, the National Pension Service will become an undisputed institution that controls most of the listed companies in Korea.” In Vice Chairman Kwon’s remarks, the committee refers to the ‘specialized trustee responsibility committee’, which is one of the three specialized committees under the National Pension Fund Steering Committee. The committee is responsible for reviewing and deciding matters related to the responsible investment and exercise of shareholder rights by the National Pension Service. The Ministry of Health and Welfare made the Responsibility Committee the subject of the decision to file a representative litigation in the revision of guidelines related to representative litigation that was submitted to the Fund Management Committee in December of last year. This is the point where the opposition from the business community is concentrated. Choi Kwang, an emeritus professor at Hankuk University of Foreign Studies, who served as the chairman of the National Pension Service, said in a meeting that day, “The Ministry of Health and Welfare is in charge of the appointment of three full-time experts from the Investment Policy and Trustee Responsibility Committee under the Fund Management Committee. They are directly participating in the program or have a significant influence on their appointments.” Hee-young Heo, president of Korea Aviation University, said, “We should not use the retirement funds entrusted to us by the people as a means of scolding and punishing businessmen.” In a discussion held earlier held by the Federation of Korean Industries, full-time vice president Lee Dong-geun criticized the revision of the guidelines of the Ministry of Health and Welfare as “change to a committee focused on labor and civil society groups”. Kim Woo-chan, director of the Solidarity for Economic Reform, refuted this by saying, “It is said without knowing the composition of the committee or is misleading.” There are no government members in the committee, and there are three recommended members each from employers’ groups, workers’ groups, and local subscriber groups, indicating that a specific group cannot lead decision-making. It is also added that there is no civic group among the recommendation members of the local subscriber group. Director Kim said, “Even if the Commission becomes the final subject of litigation, the Fund Management Headquarters is not excluded from decision-making. It makes sense,” he said. It is argued that the current structure in which an unrepresentative fund management headquarters can file a lawsuit without the approval of the enforcement committee is rather a problem. In the shareholder representative litigation, if the management (director) inflicts damage to the company due to violation of the laws and articles of incorporation, a shareholder such as the National Pension Service will take the initiative and file a claim for damages against the director, and the profits resulting from the victory belong to the company. Although the basis for representative litigation was introduced in the Commercial Act in 1962, the number of actual lawsuits was rare, with only two listed companies per year. It shows that it is not easy to meet the requirements for filing a lawsuit (holding a 0.01% stake in a listed company for more than 6 months). Moreover, there has been no case of filing a representative lawsuit led by the National Pension Service. In the early 2000s, arguments began to emerge that the National Pension Service should take a representative lawsuit, and it was only in 2018, when the National Pension Fund Management Committee adopted the principle on fiduciary responsibility, the ground for filing a lawsuit was prepared. In January of the following year, specific guidelines were issued, and last year, the National Pension Service even announced that it would file a lawsuit within the year, but it did not come true. Lawyer Lee Sang-hoon, who is a member of the National Pension Service Committee, said, “If the original schedule went on, the lawsuit should have been filed last year.” Lawyer Lee said, “The representative litigation is not to scold business people, but to hold the management responsible for illegal acts ex-post (as a shareholder) and to obtain a practical preventive effect.” . This means that the series of accidents that occurred in the Gwangju area could be subject to a shareholder representative lawsuit in that they caused extensive damage to shareholders, the company and employees beyond industrial accidents. There is an interpretation that the strong opposition from the business community is related to the time when the government is entering the final stage of the government and is facing the presidential election schedule. An official from the National Pension Service said, “When the Ministry of Health and Welfare proposed the revised guidelines in December of last year, there was no particular objection from the business community (a member of the recommendation committee for employers’ groups). said. The official said, “We cannot file many representative lawsuits, and it will be about one to three cases a year.” It is explained that this is because the idea is to show the possibility of a lawsuit, considering the fact that the National Pension Service has a lot of work to do. By Kim Young-bae, senior staff reporter [email protected]