Heungkuk Asset Management sent a shareholder letter to SK Hynix's board on the afternoon of the 8th, directly criticizing governance violations, but withdrew the letter on the afternoon of the 9th, less than 24 hours later. The company claimed the letter represented the individual opinion of the equity management division head, not an official company position, and stated internal approval procedures had not been completed. The incident highlights ongoing challenges in implementing stewardship code practices in Korea's asset management industry, where institutional investors face structural pressures from major corporate stakeholders.
Heungkuk Asset Management Questions SK Hynix Board Process
The shareholder letter pointed out that Chey Tae-won, SK Group chairman who is not a board member, announced a 1,100 trillion won investment plan with the president without board review, constituting "board bypassing." Lee Nam-woo, chairman of the Korea Corporate Governance Forum, raised the same issue on the same day. The letter addressed a topic that could reasonably be raised in shareholder correspondence.
Company Claims Letter Was Individual Opinion
The company dismissed the letter as "an individual deviation," stating it was "only the personal opinion of the division head, not the company's position" and that "formal internal approval procedures had not been completed." Industry observers question whether an official letter to a major corporation under an institutional investor's name could be sent without compliance department review and solely by a division head's independent action.
Industry Questions Taekwang Group Governance Connection
Taekwang Group is the major shareholder of Heungkuk Asset Management. Taekwang Group's governance is rated among the lowest in Korea. Industry sources question whether group-level governance weaknesses silenced the asset manager's voice, given that a Taekwang-affiliated asset manager retracted its criticism of another company's governance within 24 hours.
Asset Managers Face Structural Pressure from Corporate Stakeholders
Korea's chaebols and large corporations serve as major investors (LPs) in asset management companies and hold superior positions in financial transactions. Earlier this year, a major property insurer reportedly pressured asset managers handling its funds regarding voting rights during the regular shareholder meeting. In the past, when a major financial holding company's affiliated asset manager launched an activist campaign, the target company complained to the holding company, forcing the campaign to end. "Invisible hands" making phone calls to securities firms to pressure them to cut ties with specific asset managers represent an open secret in the industry.
Financial Services Commission Announces Stewardship Code Revision
The Financial Services Commission recently announced a major revision of the stewardship code 10 years after its introduction. The revision would expand fiduciary responsibility to include ESG (environmental, social, governance) factors and establish an "implementation monitoring system" to check and disclose compliance. Among KOSPI and KOSDAQ listed companies, 53.5% still have PBR (price-to-book ratio) below 1.
FAQ
What did Heungkuk Asset Management do on the 8th and 9th?
Heungkuk Asset Management sent a shareholder letter to SK Hynix's board on the afternoon of the 8th criticizing governance violations, then withdrew the letter on the afternoon of the 9th, less than 24 hours later. The company stated the letter was an individual opinion and internal approval procedures had not been completed.
Why did the shareholder letter criticize SK Hynix?
The letter pointed out that SK Group chairman Chey Tae-won, who is not a board member, announced a 1,100 trillion won investment plan with the president without board review, constituting "board bypassing" according to the asset manager's equity management division.
What changes did the Financial Services Commission announce for the stewardship code?
The Financial Services Commission announced a major revision of the stewardship code 10 years after introduction, expanding fiduciary responsibility to include ESG factors and establishing an implementation monitoring system to check and disclose compliance.
