The National Pension Service (NPS), Korea’s largest institutional investor, is adopting a stewardship code that will allow it to engage in management decisions of the companies it invests in.

The decision is getting strong opposition from the business community.

After holding two meetings since last week, the National Pension Fund Management Committee decided to exercise limited rights when companies it invests in are hurting the interest of its clients, which is the Korean public with pensions, according to the Ministry of Health and Welfare on Monday.

“While we will in principle not get involved in management, we will exercise our rights in a limited fashion when special conditions are met,” said Health and Welfare Minister Park Neung-hoo. “In order to enhance long-term profit as well as independence and transparency from political and economic powers, we have decided to adopt the stewardship code.

“This will create a new opportunity for companies that are managed soundly and transparently to raise corporate value and to grow and develop. But for companies that not only damage their corporate values and inflict harm on the precious assets of the public, the national pension fund as trustee [of the public] will exercise its rights actively as a shareholder in enhancing the share value and the people’s profit.”

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