South Korea’s business leaders on Friday expressed concerns over the National Pension Service’s decision to actively exercise its shareholder rights over Hanjin KAL, claiming that it could dampen corporate activities.

“If the NPS decides to actively exercise shareholder rights (on Hanjin KAL), this would be the first such case to be applied on a private firm,” the Federation of Korean Industries said in a statement.
 

“We have concerns that the NPS’ decision to intervene in the firm’s management could work as a precedent that could spread across the entire political and business sector. This could further dampen corporate activities, which in turn could negatively affect corporate investment and job creation,” the business lobbying group added.

Earlier in the day, the fund management committee, which is the top decision-making body of the NPS, decided to apply its stewardship code on Hanjin KAL, the holding firm of the nation’s flag carrier Korean Air. But it decided not to extend its decision to the airline itself.

The FKI’s concerns are in line with worries that were prompted within the nation’s business sector on President Moon Jae-in’s remarks last month that the NPS should be more “aggressive” in practicing stewardship codes to control wrongdoings of major shareholders of large companies. The remark sparked controvesy on the possibility that the Seoul government may be looking to use the stewardship code as a punitive tool.

By Jung Min-kyung (mkjung@heraldcorp.com)