The Korean government has been reinforcing laws and regulations to improve transparency in the investment structures of large business groups as well as their corporate management, in an effort to strengthen shareholders’ rights in individual companies. In this changing landscape of regulatory environment and capital market, the notion of maintaining effective communication and constructive relationships with domestic and foreign shareholders, including institutional and private investors in the capital market, is gaining importance. Shareholder engagement has gained traction in Korea. Institutional investors have become more active, and listed companies have started to proactively adopt shareholder-friendly policies, seeking to improve corporate governance. The Korea Stewardship Code seems to have played an important part. Institutional investors adopting the Code have demonstrated greater willingness to communicate and engage with their investee companies and to bring about changes in corporate governance. This has in turn helped to enhance shareholder value, as some empirical evidence suggests.

The Korean Stewardship Code is remarkably similar to the UK Code in terms of language, although it differs significantly in motivation. A major concern in the UK is institutional investorsʼ dormancy in widely held shareholding. Conversely, a primary purpose of stewardship in Korea is to keep controlling shareholders in check, particularly by curbing tunnelling of controlling family members. This chapter elucidates contents, the enforcement mechanism, the features, impacts and implications of stewardship in Korea and its related shareholder activism. A unique feature in Korea is the National Pension Service (NPS), the largest institutional investor in Korea and the worldʼs third largest public pension fund. As a keen advocate of shareholder activism, the NPS acts as a catalyst in spreading stewardship in Korea. However, since it is a quasi-government agency, the concern is that its investee companiesʼ autonomy may be damaged in the name of stewardship. Another concern is that the government may use stewardship as a powerful policy tool to steer the private sector in line with its own socio-political agenda that has less to do with the financial benefits of the NPS’s beneficiaries.