Monthly Archives: June 2021

1. Objective

A further revision of the Law on Financial Investment Services and Capital Markets (“FSCMA“) adopted in early 2020 will enter into force on October 21, 2021. This amendment includes a new provision, Article 165-20, which requires the board of directors of a listed company with total assets of KRW 2,000 billion or plus must not be entirely one-sex, in other words, diversity is required by law.The current law is as follows.

The aim of introducing this new provision is to promote gender equality so that women expand their roles in economic activities, ensure diversity in business decision-making and encourage changes in business. corporate culture.

For reference, in accordance with the G20 / OECD Principles of Corporate Governance (jointly ratified by the OECD and the G20, hereafter “OECD Principles“), corporate governance is a system that guides and supervises a company, designed to protect the interests of stakeholders at all times to the extent that they are compatible with the public interest. According to the principles of the OECD, a good corporate governance becomes the essential means to create a market In this perspective, the aforementioned OECD Principles consist of six chapters: (1) Securing the basis of an effective corporate governance framework; (2) The rights and fair treatment of shareholders and key ownership functions; (3) investors, stock markets and other intermediaries; (4) the role of stakeholders in corporate governance; (5) information and transparency and (6) responsibilities of the board Chapter 6 (“Responsibilities of the Board”) provides that the diversity of the composition and perspective of the board stems from several factors (eg gender, experience, race, age, method problem solving, etc.) and gender diversity is a way to encourage constructive discussions and improve board performance.

Thus, many European countries such as Norway, Finland, Spain, Belgium, France, Germany, Italy, have introduced bills ensuring the representation of women on boards of directors. companies. Likewise, the state of California in the United States enacted a law (California bill SB 826) in late September 2018, requiring listed companies based in California to include at least one female executive on their boards of directors. The enactment of this law is seen as an effort to adapt to global trends aimed at facilitating the participation of women in economic activities.

2. Main aspects of the amendment

The new provision requires listed companies with total assets of KRW 2,000 billion or more not to make up the entire board with directors (registered officers) of the same sex. However, there is no provision imposing civil / criminal penalties or a disclosure obligation for violation of the above provision. However, regardless of any sanction provision, if a board composition violates the new requirement, a board resolution and management’s execution thereof may be denied and unenforceable.

3. Anticipated effects

1. More women directors on the board

As a direct result of the enactment, we have seen a significant increase in the number of appointed directors for publicly traded companies with total assets exceeding KRW 2,000 billion (as of December 31, 2020) in anticipation of the amended FSCMA – on number of companies headed by women grew from 37 companies (36 companies listed on KRX, one company listed on KOSDAQ, as of December 31, 2019) to 62 companies (61 companies listed on KRX, one company listed on KOSDAQ, as of 31 December 2020). The number of such companies is expected to increase further as the amendment goes into effect in October.

2. Higher ESG performance scores

According to an empirical analysis that examined the relationship between board gender diversity and environmental, social governance and (“ESG“) corporate ratings published by ISS Corporate Solutions, analysis shows¹ that companies with diverse boards achieved higher ESG scores. This finding suggests that a board of diverse genders reacted better to risk, provided a more comprehensive overview of client trends and priorities to key stakeholders, and improved board participation and effectiveness.

The ESG rating is significant because it is linked to the plans of the Korean government. From 2021, the Korean National Pension Service plans to apply ESG ratings to investment decisions regarding domestic stocks and bonds, and plans to significantly increase the share of ESG investments to around 50% of total assets since. 2022. Likewise, the Financial Services Commission plans to require all listed companies to disclose their corporate governance reports from 2026. Such external pressures will likely impact the number of companies. directors appointed to the board of directors, even for companies not subject to FSCMA. in order to improve their ESG rating.

4. Limits and implications

One limitation of the amendment is that despite the increase in the number of female directors, this generally remains with outside directors. Of the 211 listed companies with total assets of KRW 2,000 billion or more, only 14 companies have appointed female internal directors (14 KRX listed companies, as of December 31, 2020). Out of the 14 companies, only 4 companies have appointed female internal directors who are not related to the majority shareholders (the other 10 internal administrators are in fact the majority shareholders or their affiliates).

Another limitation is that the appointment of female directors does not automatically improve ESG ratings. Thus, it is necessary to implement some internal measures – for example, establish rules related to ESG and implement related policies, etc.

Footnote

1. Cristina Banahan and Gabriel Hasson. “Across the Board Improvements: Gender Diversity and ESG Performance”, Harvard Law School Forum on Corporate Governance and Financial Regulation, 2018.9.6. https://corpgov.law.harvard.edu/2018/09/06/across-the-board-improvements-gender-diversity-and-esg-performance/

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

Secure experience features^® for the customers

For the first time, a client’s financial investments and protection portfolio can be viewed and viewed seamlessly on the fully consolidated and secure Advisor360 ° platform through the Massachusetts Mutual Life Insurance Company (MassMutual).

The Advisor360 ° platform – built with input from finance professionals over the past decades – now brings together portfolios of financial protection and investment products and, more importantly, enables finance professionals to prepare to customer reviews with one click, rather than manually compiling reports on what used to take hours or sometimes days.

“Over the centuries, financial professionals have had many reasons to choose to affiliate with MassMutual, including our continued commitment and investment to help them help their clients secure their futures and protect those they care for. they love a fast-paced and ever-changing world, ”said John Vaccaro, chief financial advisor at MassMutual. “Our ability to invest in ways that help their businesses thrive and deliver meaningful value to customers is what sets MassMutual apart.”

With a single, unified application powered by tightly integrated back-office systems, data and front-end workflows, finance professionals can now manage their practices more efficiently while providing their clients with a complete, secure and secure experience. accessible from any device, anywhere, anytime.

“It has been an incredible journey to get to where we are today, delivering something the industry has never experienced before,” said Darren Tedesco, President of Advisor360 °. “The enhanced Advisor360 ° platform enables financial professionals affiliated with MassMutual to deliver value to their clients on a very different level than their peers. The system enables them to become a “personal finance director” for their clients with a consolidated view of everything that impacts a client’s life, including accounts and policies that they do not directly manage, which allows them to provide advice in a more transparent way and achieve positive results for their clients.

The story continues

Through the Advisor360 ° platform, configurable customer dashboards can be created by users, allowing a simpler view of progress towards goals and increased collaboration with customers. In addition, tax documents, wills, trusts and other important items can be stored and viewed on a secure online customer portal.

“This is a game-changer for MassMutual, the finance professionals associated with us and their clients,” Vaccaro concluded.

About Mass Mutual

MassMutual is a leading mutual life insurance company managed for the benefit of its participating members and policyowners. Founded in 1851, the company has always been guided by one constant goal: to help people secure their future and protect those they love. With a focus on long-term value creation, MassMutual offers a wide range of protection, accumulation, wealth management and retirement products and services. For more information, visit www.massmutual.com.

View the source version on businesswire.com: https://www.businesswire.com/news/home/20210607005091/en/

Contacts

Paula Tremblay, MassMutual, [email protected]