Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Listed companies concerned about possible NPS pressure over fatal accidents
The headquarters of the National Pension Service in Jeonju, North Jeolla Province / Yonhap
By Yi Whan-woo
An increasing number of listed companies are concerned that the National Pension Service (NPS) may use its shareholder rights against them, as part of the government’s broader push to penalize firms involved in fatal workplace accidents, according to industry officials, Monday.
The Lee Jae Myung administration has been considering new measures to enforce the Serious Accidents Punishment Act, which took effect in January 2022.
The law dictates criminal liability for CEOs and senior executives in the event of one or more deaths, two or more injuries requiring over six months of treatment, or three or more occupational diseases within a year.
In addition, the Lee administration has been reviewing non-criminal sanctions such as restrictions on corporate lending, exclusion from public procurement bids and other administrative actions that could severely impact company operations.
Speculation is mounting that the government may leverage the NPS’ influence to press listed companies found responsible for fatal accidents.
The NPS, a state-run pension operator, holds stakes of 5 percent or more in nearly 300 companies listed on the benchmark KOSPI and secondary bourse KOSDAQ.
A 5 percent stake is widely considered a critical threshold, enabling the shareholder to exert influence over corporate management, including by submitting proposals, voting on strategic decisions and holding executives accountable.
While the NPS has downplayed any intent to exercise such powers punitively, some market watchers remain skeptical.
“The NPS may sell its stakes in targeted companies, demand management changes or take other punitive actions,” Jung Eui-jung, head of the Korean Stockholders’ Alliance, said.
A securities analyst, who asked not to be named, described shareholder intervention by the NPS as a “very plausible scenario,” particularly in the construction sector, where the risk of serious accidents is inherently high.
The analyst noted the NPS held significant stakes in major construction firms, including 13.63 percent in Hyundai Development Company, 11.72 percent in Hyundai Engineering & Construction (E&C), 12.57 percent in DL E&C, 8.6 percent in GS E&C and 7.61 percent in Samsung C&T as of June this year.
“Any unfriendly move by a public institutional investor like the NPS could make a company appear effectively blacklisted,” the analyst said. “Firms may lose access to critical financing needed for daily operations, ultimately weakening their competitiveness.”
Others cautioned that the NPS should be shielded from political influence.
“The NPS must not be used as a politically motivated tool in the capital market,” a market observer said. “Weaponizing NPS stakes to pressure companies runs counter to the principles of a free market economy, especially considering that the Lee administration is trying to combat Korea’s chronic stock market undervaluation.”