New guidelines from the National Pension Commission have banned significant cross-shareholding in multiple licensed Pension Fund Operators.
In the guidelines, issued on Friday and which became effective immediately, the regulator stated that the move would promote transparency and good governance while protecting pension assets.
According to PenCom, significant cross-shareholding is a situation in which a significant shareholder in an LPFO thereafter a) acquires, or seeks to acquire, a significant shareholding in another LPFO; or b) otherwise becomes legally entitled, whether directly or indirectly, to hold such significant shareholding in another pension entity, by means including but not limited to the conversion of debt to equity, operation of law such as transmission on death, or any other form of vesting.
Secondly, significant cross-shareholding could arise from mergers and acquisitions outside the pension sector, which leads to individuals or entities holding equities of five per cent or more in multiple LPFOs.
Prohibiting such a situation, PenCom said, “No person shall hold, or continue to hold, or otherwise enter into any arrangement or agreement that would result in holding or continuing to hold a significant cross-shareholding.”
