South Korea, a market with a reputation for not welcoming foreign activist investors with open arms, is poised to get a push — however gentle — from its home team.
The Korea Corporate Governance Forum will launch Dec. 12 with roughly 40 founding members, composed of asset management firms, lawyers and professors of finance, said Youngjae Ryu, CEO of Seoul-based ESG research and proxy adviser Sustinvest Co. Ltd.
That debut, more than a year in the making, reflects a growing recognition that accelerating grudgingly slow progress in improving South Korea's corporate governance standards is an urgent priority, Mr. Ryu said.
In line with South Korea's cultural backdrop, Mr. Ryu said the new organization won't embrace the "activist" moniker, with its connotations of hostile, "name and shame" tactics to win concessions from entrenched controlling shareholders, he said.
The forum would better be termed "stewardship investors," as opposed to activists, Mr. Ryu said, adding the approach would be closer to that of Japan than what's seen in the U.S. and U.K.
Among other things, the forum will pursue amicable engagement with the management of South Korean companies to pursue the rights and interests of shareholders, engage with economic and monetary policymakers, and promote the role/training of independent directors.
Mr. Ryu, who said he's poised to become chairman of the forum when it launches, said while asset managers will dominate the ranks of participants at first, eventually the forum will reach out to asset owners, including heavyweights such as South Korea's 714.3 trillion won ($604.7 billion) National Pension Service, Seoul, and foreign firms as well.
The new forum could be "quite significant if investment firms start to get together and collectively raise their voices," said James Lim, a senior research analyst with Los Angeles-based Asian equity boutique Dalton Investments LLC. Mr. Lim said foreign firms should be able to join in the future but for now he'll join in a personal capacity.