[Interview] Uniting shareholders to make companies listen

When a shareholder raises concerns with a company, the response is often predictable: "You're the only one complaining." This familiar scene in Korea inspired Britain's institutional investors to establish the Investor Forum in 2014. Representing around 25% of FTSE market capitalization, the nine-person forum quietly made its influence felt in UK-listed companies' boardrooms for 12 years.

The forum's Managing Director, Victoria Sant, discussed the organization's workings with the Hankyoreh in London, particularly relevant as Korea undertakes the first major revision of its Stewardship Code since 2016. The forum's experience highlights four key takeaways.

Firstly, member firms conduct one-on-one engagement with invested companies, resolving most issues at this stage. Only when a company brushes off an investor does the member bring the issue to the forum. Secondly, the forum checks if other shareholders share the same concerns and assesses if a critical mass can be assembled to pressure the company.

This threshold differs significantly between small and large shareholders. Thirdly, the forum operates under a hub-and-spoke structure, ensuring no inside information leaks between members. Fourthly, the Collective Engagement Framework, guiding the forum's operations, avoids legal landmines such as obtaining inside information, market abuse, and "acting in concert."

Unlike activists who push for specific board changes, the forum raises general concerns about board composition, leaving the company to decide the response. This discretion often earns board chairs' trust. For instance, in a 2022 takeover attempt of a UK-listed property company, the forum successfully advocated for the company to remain public, impacting the outcome in favor of shareholders.

In Korea, the proposed collective engagement provision faces the "5% rule," which could label joint discussions of voting intentions as "joint holders." The forum's framework, reviewed every three years, provides a legal safeguard against such obstacles, ensuring companies listen to the collective voice of institutional investors.