Korea Opens Door for Pension Fund to Nominate Financial Holding Directors

The government and the ruling Democratic Party announced a financial company governance reform plan on November 12, 2026, following a policy consultation meeting. The measures establish a legal basis for the National Pension Service to nominate independent directors, formerly called outside directors, at financial holding companies without declaring an intent to participate in management. Regulators say the changes aim to curb self-serving reappointments and excessive spoils-sharing in the financial industry, although some market participants argue the government is intervening too heavily.

Under the plan, executive nomination committees must be composed entirely of independent directors and must accept nominations for independent director candidates from institutional investors such as the NPS that have held stakes of 0.1% or more for six months. The plan also raises the approval threshold for reappointing a financial holding company chief executive. Currently a simple majority of voting rights present at a shareholders' meeting is sufficient; under the revised rules, a first additional term requires two-thirds approval and a second or subsequent term requires three-fourths approval.

Transparency provisions target the nomination process itself. Chief executives will be barred from attending nomination committee meetings that recommend independent directors or audit committee members and must disclose the reasons for any contact with committee members. The committee chair must personally explain the grounds for candidate nominations at the shareholders' meeting.

Financial Services Commission Chairman Lee Eok-won said financial companies must secure a level of accountability and transparency commensurate with their public role. The original reporting was produced by Cho Ji-won for Seoul Economic Daily.