KB, Hana Financial See Top Shareholder Capital Group Set 30% Dividend Benchmark, Stricter Board Standards
Capital Group, a major shareholder in KB Financial Group and Hana Financial Group, has introduced a stand-alone voting policy specifically for South Korea, indicating a more tailored governance approach in one of its key Asian markets, according to industry sources on Monday.
This move marks the first time the US-based active asset manager has adopted a country-specific stewardship framework for Korea. This expands its broader Asia-Pacific policy that already covers Japan, China, Taiwan, Hong Kong, India, and Australia.
The new guidelines appear to be specifically calibrated for Korean companies’ ownership structure, particularly the prevalence of family-controlled conglomerates, known as “chaebols”.
Under this framework, Capital Group stipulates that independent directors should not represent a major shareholder – defined as one holding more than 10 percent of issued shares or wielding de facto influence over key management decisions, citing the Korean Commercial Code.
“The explicit reference to de facto influence isn’t typically seen in Capital Group’s policies in other markets. It appears specifically tailored to the chaebol ownership context,” noted an official at UK-based shareholder advisory firm SquareWell.
Regarding dividends, Capital Group has established a 30 percent payout ratio benchmark for Korean companies, which is lower than the 50 percent threshold it applies in Japan.
“We assess dividend proposals on a case-by-case basis and will conduct further analysis when payout ratios consistently fall below 30 percent,” the policy states. “We may vote against proposals if capital allocation hasn’t been in shareholders’ best interests without adequate justification.”
Furthermore, the firm endorsed cumulative voting and declared its opposition to any attempts to restrict or weaken its use in board elections – a more assertive stance than outlined in its global policy, according to SquareWell.
Capital Group’s governance position carries significant weight in the Korean financial sector as it holds substantial shares in several leading banking groups.
As of September, the firm possessed 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, positioning it 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 that Capital Group is formalizing its expectations regarding board independence, capital allocation, and shareholder rights in a market historically shaped by concentrated ownership structures. This move highlights the increasing scrutiny on corporate governance within South Korea’s financial landscape.
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