Principles of
stewardship
responsibility of
institutional
investors for clients

Hana Alternative Asset Management Co., Ltd. (hereinafter 'Company') agrees with the 'Principles on the
Responsibilities of Institutional Investors' (hereinafter 'Stewardship Code') established by the Stewardship Code
Enactment Committee in order to faithfully fulfill their obligations as a institutional investor.
Accordingly, the following policies are established and implemented to enact the seven principles of the
Stewardship Code for the continued growth of the company to invest and the improvement of profits for
customers, beneficiaries, etc. (hereinafter 'clients').

  • Principle 1. Institutional investors, as a steward of assets entrusted to them by their clients, beneficiaries, etc. to take care of and manage, should formulate and publicly disclose a clear policy to faithfully implement their responsibilities.
    The company was founded in 2006 as the first real estate asset management company in Korea and it became part of the Hana Financial Group family in 2010. The company operates collective investment business, investment advisory business, and specialized private collective investment business under the 「FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT」 (hereinafter the 'Capital Markets Act') as its main business, representing the domestic alternative investment market. The company is pioneering the global market, providing clients with answers to investments beyond regions and assets. In addition, it is expanding the scope of investment into special asset funds by building a portfolio that reflects changes in various investment paradigms based on excellent management performance and rich experience.

    As an asset manager that puts client value first, the company promises Honesty, Apology, Rule, Morality, Noblesse Oblige, and You first. Its management philosophy is 'Harmony (H∙A∙R∙M∙O∙N∙Y). In addition, the goal of the operation philosophy is to realize the highest level of client satisfaction, to discover excellent investment targets, to establish a strict internal control and systematic risk management systems, and to fund management based on fiduciary duty. It aims to create sustainable and stable profits through differentiated capabilities in alternative investment.

    The company develops advanced management techniques and launches various products in the market to quickly respond to its changes. It leads the market by creating stable profits and differentiated investments from a long-term perspective through thorough research and systematic operation. To this end, it will actively comply with the Stewardship Code and contribute to enhancing shareholder and corporate value in the mid- to long-term through purposeful and constructive dialogue with the investment target company if necessary.

    However, since equity investment in a listed company among the company's assets under management is very limited, the company's stewardship responsibility is based on duty in good faith and fiduciary duty. However, it can be implemented differently depending on the type of collective investment vehicle, asset class, and investment period. At this time, not only the financial factors of the investment target companies but also non-financial factors (Environmental, Social, Governance; ESG) are considered together with the interests of stakeholders to pursue the sustainable development of the investment target companies and the expansion of client profits.

    The company operates the 'Investment Committee' (hereinafter the 'committee') headed by the CEO to deliberate and resolve major issues related to stewardship responsibility activities or to perform stewardship responsibility activities. The committee consists of the CEO, head of each division, the manager of the risk management, the leader of the compliance support team, and no more than five members designated by the chairperson. The chairperson may have employees other than the committee members present and hear their opinions on matters related to the duties of the committee.

    Inspection activities, related activities, and voting rights related to the fulfillment of the company's stewardship responsibilities are described in more detail in [Principle 3], [Principle 4] and [Principle 5].
  • Principle 2 Institutional investors should formulate and publicly disclose an effective and clear policy as to how to resolve actual or potential problems arising from conflicts of interest in the course of their stewardship activities.
    The company's compliance officer and compliance support team are the final officers in charge of enacting, revising, and checking the implementation status of the Stewardship Code, and they shall strive to systematically prevent conflicts of interest and ensure the legality and fairness of business performance. They perform their duties under the order of the board of directors and the CEO, can refer directly to the CEO and auditor, and maintain an independent position without order from other departments. In addition, there are no personnel disadvantages for reasons related to job performance.

    The following are examples of conflict of interest situations that the company may encounter.

    <Examples of conflict of interest>
    Relationship between the company and employees
    Relationship between the company and investors
    Relationship between the company's affiliates, etc. and investors
    Relationship between employees and investors
    Relationship between specific investors and other investors
    In the process of fulfilling the company's responsibilities, the company shall establish internal control standards to effectively resolve issues of actual or potential conflicts of interest between major stakeholders. In accordance with the principle of prioritizing client interests, the company shall take measures to prevent problems such as protecting client interests by actively responding to each situation.

    <Principles of prioritizing clients' interests>
    The interests of clients take precedence over the interests of the company and its shareholders and employees
    The company's interests take precedence over the employee's interests
    All clients' interests are treated equally
    The company has established a system to regularly independently monitor and audit the adequacy and efficiency of work performance for all tasks performed by employees through internal control standards and internal control checklist. The company establishes, manages, and supervises matters related to system construction and operation in order to properly prevent and manage situations such as violations of related laws and regulations and other operational and legal risks such as controlling all documents sent to the outside.

    The employees of the company shall strive to ensure that no actual or potential conflict of interest arises in relation to all trading of financial investment products, and that the entire process is fair and transparent without using a superior position in business.

    The compliance officer must take measures to prevent problems in protecting clients, etc. if there is a conflict of interest between the company and clients or between clients and clients, or when there is a concern regarding conflict of interest. In other words, for transactions that may cause a conflict of interest, proactive measures must be taken so that the interests of clients are not infringed upon, and if such measures are deemed difficult, follow-up measures shall be taken according to the procedure. In addition, they shall endeavor to prevent conflicts of interest by listing and managing items and company names that are concerned with the occurrence of a conflict of interest with the company as a list of trade restrictions or traders.

    Finally, the compliance officer shall check the compliance with related laws and regulations, internal control standards, and information protection, and take necessary measures such as sanctions against illegal acts and improvement of the internal control system. In addition, actions taken in response to a conflict of interest shall be recorded and kept for 5 years from the date of creation.
  • Principle 3 Institutional investors should regularly monitor investee companies in order to enhance investee companies’ mid- to long-term value and thereby protect and raise their investment value.
    Among the company's asset management, investment in stocks of listed companies is very limited, but if necessary, the investment team in charge of managing the collective investment scheme invested in the investment target company (hereinafter the 'investment team') shall carefully analyze and inspect the financial factors affecting the corporate value and shareholder value of the investment target company and ESG factors, which are non-financial factors, to actively manage risk. In addition, they may flexibly conduct inspection by setting different levels of inspection in consideration of the investment scale of the collective investment property in the investment target company.

    If a problem is identified during the inspection process, the investment team reports it to the management and can step up the level of involvement activities to resolve the problem. In addition, the risk management department shall check the adequacy of the investment team's management status and can monitor the financial and non-financial factors of the investment target company if necessary for the committee's decision-making. The activities involved in fulfilling the company's responsibilities are described in more detail in [Principle 4].
  • Principle 4 While institutional investors should aim to form a consensus with investee companies, where necessary, they should formulate internal guidelines on the timeline, procedures, and methods for stewardship activities.
    When the company invests in the stocks of listed companies during asset management, the company shall perform engagement activities based on constructive dialogue so that the mid- to long-term profits of clients can be promoted by improving corporate value through stewardship responsibility activities. Engagement activities take place in a variety of ways, including attendance at the general shareholders' meeting and exercise of voting rights, meetings with related departments, constructive dialogue and discussions with the board of directors or management, and delivery of opinions. The company complies with relevant laws and regulations and establishes and complies with internal control standards, etc., for fair and objective engagement activities.

    Engagement activities are conducted by the investment team, led by the head of the investment headquarters, and, if necessary, can be differentiated by taking into account the size of the investment in the investment target company and the holdings.

    In principle, for the transparency of activities, the company may disclose the results of its activities by posting them on the company website or by reporting them in a separate form. However, if necessary, it may not be disclosed after taking into account the overall impact of disclosure of engagement activities such as the value of shareholders and assets.

    The company and its employees shall not take advantage of unfair transactions by using the undisclosed information of the investment target company acquired during the above activities. Undisclosed information refers to information that may have a significant impact on the financial soundness or management of the company, regardless of the record type or the presence or absence of the record, and personal information, transaction details, account number, or password regarding clients or counterparties (including employees if the counterparty is a corporation or other organization) as well as information on the company's business strategy or new products and business.

    The company's compliance officer prohibits the use of undisclosed information in accordance with internal control standards and related laws. In the event that employees inevitably acquire undisclosed information in the process of engaging in activities, they shall fill out an acquisition report for this and report the item and its contents to the compliance officer. If the reported information is important undisclosed information, the compliance officer shall decide on measures to prohibit the sale of stocks of the investment target company and take measures such as requesting the disclosure of the information from the target company to minimize the impact on the market.
  • Principle 5 Institutional investors should formulate and publicly disclose a voting policy that includes guidelines, procedures, and detailed standards for exercising votes in a faithful manner and publicly disclose voting records and the reasons for each vote so as to allow the verification of the appropriateness of their voting activities.
    Among the company’s assets under management, equity investment in listed companies is very limited. Therefore, the company rarely exercises voting rights as part of fulfilling its responsibilities. However, if necessary, the company shall exercise voting rights at the shareholders meeting of the investment target company in accordance with 'Guidelines for the exercise of voting rights for asset management companies'. The key principles of the guidelines are as follows.

    <Key principles of guidelines for the exercising of voting rights>
    Enhancement of long-term corporate value
    Securing responsibility of managers and directors for shareholders
    Securing management transparency
    Equal treatment of all investors
    Setting strategic directions and securing management monitoring functions
    When it is necessary to exercise voting rights, the company's investment team is in charge of the exercise, and in the mid- to long-term, it is exercised in the direction of maximizing the corporate value and shareholder value.

    The investment team, the department in charge of exercising voting rights, shall identify in advance the matters to be held at the general shareholders meeting, such as the date, location, and agenda of the shareholders meeting of the investment target company, and the target and quantity of voting rights. In addition, the investment team leader receives the final decision from the CEO and exercises voting rights accordingly. However, if it is determined that it has a significant impact on the collective investment property, a committee meeting may be held for decision making purposes.

    In principle, the company faithfully exercises voting rights for all stocks of domestic listed companies held in the collective investment property. However, in consideration of the efficiency of internal resources and costs, etc. invested in the analysis of agenda and exercise of voting rights, if the committee determines that it is efficient to exercise only on stocks with a certain proportion or amount (5/100 of the total assets of each collective investment property or KRW 10 billion), voting rights may not be exercised on other items.

    The company transparently discloses the voting rights exercised for one year from April 1 of the previous year until April 30 every year on the company's web page and the Korea Exchange. The compliance officer checks whether the company's voting rights are in compliance with relevant laws and voting guidelines. However, the company shall post and announce the exercise of voting rights for stocks that hold 5/100 or KRW 10 billion or more of the total assets of the collective investment property in consideration of management costs and work efficiency. This can be increased if necessary. In the case of voting rights that have not been posted or announced, information can be provided after reviewing a written request from clients.
  • Principle 6 Institutional investors should regularly report their voting and stewardship activities to their clients or beneficiaries.
    The company shall expand the scope of not only quantitative evaluation but also qualitative evaluation and review this regularly to contribute to the improvement of corporate value and make efforts to raise the level of overall stewardship responsibility activities. In addition, the company intends to secure transparency and enhance fairness in the capital market by faithfully reporting the fulfillment of its responsibilities to clients and beneficiaries.

    For example, if the company has exercised voting rights for an investment target company, which is one of its representative responsibility fulfillment activities, the details of the event shall be selected and reported to clients in the form of a management report or it can replace direct reporting to clients through management reports by posting the details on the company's web page. However, it may be made non-disclosable in consideration of the overall impact of the disclosure of the record on the shareholder and asset value.

    In addition, reports of activities for fulfilling its stewardship responsibilities shall be kept for 5 years in order to ensure integrity of the activities, objectivity, and transparency.
  • Principle 7 Institutional investors should have the capabilities and expertise required to implement stewardship responsibilities in an active and effective manner.
    The company has a professional management organization system led by the compliance officer in order to actively and efficiently realize stewardship responsibilities. In addition, it provides opportunities to secure various forms of expertise such as meetings with industry and securities analysts, due diligence, and participation in external training programs and forums in order to improve the competency of each professional related to stewardship responsibility activities.

    The company actively utilizes the Daishin Economic Research Institute, an external voting rights advisory organization, to resolve conflicts of interest related to the exercise of voting rights and shareholder activities and to strengthen expertise, independence, and fairness in agenda analysis. However, despite the use of such an advisory organization, the stewardship responsibility for the overall operation of the Stewardship Code lies with the company, not external advisory organizations.

Stewardship Code manager

Compliance officer
Director Im Jin-gwan
Phone number
(02)2190-6512
E-mail
jk2lim@hanafn.com