Capital Group unveils Korea-specific voting policy

Capital Group has introduced a stand-alone voting policy for South Korea, signaling a more tailored governance approach in one of its key Asian markets, industry sources said Monday.

The move marks the first time the US-based active asset manager has adopted a country-specific stewardship framework for Korea, adding to its broader Asia-Pacific policy covering Japan, China, Taiwan, Hong Kong, India and Australia.

The new guidelines appear calibrated to Korean companies’ ownership structure, particularly the dominance of family-controlled conglomerates.

Under the framework, Capital Group states that independent directors should not represent a major shareholder — defined as one holding more than 10 percent of issued shares or exercising de facto influence over key management decisions, citing the Korean Commercial Code.

“The explicit reference to de facto influence is not something we see in Capital Group’s policies in other markets and appears specifically tailored to the chaebol ownership context,” said an official at UK-based shareholder advisory firm SquareWell.

On dividends, Capital Group set a 30 percent payout ratio benchmark for Korean companies, lower than the 50 percent threshold it applies in Japan.

“We evaluate dividend proposals on a case-by-case basis and will conduct further analysis when payout ratios remain consistently below 30 percent,” the policy states. “We may vote against proposals if capital allocation has not been in shareholders’ interests without adequate justification.”

The firm also endorsed cumulative voting and said it would oppose any efforts to restrict or weaken its use in board elections — a stronger position than outlined in its global policy, according to SquareWell.

Capital Group’s governance stance carries weight in Korea’s financial sector. It is a major shareholder in several leading banking groups.

As of September, the firm held a 6.62 percent stake in Hana Financial Group, making it the third-largest shareholder after the National Pension Service and BlackRock. Through its subsidiary Capital Research and Management Company, it also owned 8.22 percent of KB Financial Group, ranking as the second-largest shareholder behind the NPS.

The firm also holds more than 5 percent stakes in regional lenders JB Financial Group and BNK Financial Group.

The introduction of a Korea-specific voting policy suggests Capital Group is formalizing its expectations for board independence, capital allocation and shareholder rights in a market long shaped by concentrated ownership structures.