We established and implemented the 7 principles
described below of the
“Well to Sea Investment Stewardship Code”
as of August 1, 2019, based on the
“principles of institutional investors’ liability of trustees”
which was released in December 2016.
Principle 1
An institutional investor is responsible for the preparation and disclosure of clear
policies regarding the faithful fulfillment of its responsibilities as the trustees
who manage and operate assets entrusted by others such as clients and beneficiaries.
Well to Sea Investment is a management company registered as a business management
personnel of the Financial Services Commission (hereinafter referred to as “GP”) pursuant
of Article 249, Clause 15 of Financial Investment Services and Capital Markets Act
to operate private equity investment for management participation (hereinafter referred
to as “PEF”) pursuant of Article 249, Clause 10 of the same Act. Well to Sea Investment
fulfills its duty to take caution as a good manager in employing PEFs and prioritizes
the profit of limited liability partners (hereinafter referred to as “LP”) in the interest of
Well to Sea Investment, its shareholders and affiliated persons, and executives and
employees, while assuming trustee responsibility to maximize the profit of LPs.
In operating PEFs, Well to Sea Investment complies with the Capital Market Act
and strives to improve corporate value and support the growth of companies invested
through PEFs (hereinafter referred to as “investment target company”) continuously for the
long-term through active participation in the management of the investment target
company.
Well to Sea Investment’s endeavor to fulfill its trustee responsibility is incorporated
into the entire decision-making process covering investment, follow-up management,
and collection in operating the PEFs. The fulfillment of Well to Sea Investment’s
trustee responsibility consists of comprehensive consideration of not only quantitative/
financial matters, such as management performance and financial structure of
the investment target company, but also qualitative/non-financial matters, such
as business strategy, business risk, quality of the investment target company’s
products and service, impact on the environment and society, governance, and
sustainability of the investment target company.
Well to Sea Investment actively participates in the management of the investment
target company as it operates PEFs for a management buy-out (hereinafter referred
to as “buy-out”). The company directly appoints the composition and management
of the board of directors and is committed to the operation management task to
improve the corporative value of the investment target company through reporting
periodic management activity and regular monitoring.
Principle 2
An institutional investor should prepare and disclose effective and clear policies
regarding how to address conflicts of interest that may arise in the process of
fulfilling its responsibilities as a trustee.
In operating PEFs, Well to Sea Investment proactively reviews occurrence probability
based on internal conflicts of interest in management regulations and PEF articles
of association if there is a mutual conflict of interest or a concern for a conflict of
interest amongst Well to Sea Investment, Well to See Investment’s executives and
employees, PEFs, LPs, and affiliated companies. If a conflict of interest may arise
based on the results of the occurrence probability review, it should be notified to the
LPs and prevent infringement of their profit through appropriate measures, such
as restricting transactions in the conflict of interest.
When Well to Sea Investment confirms a conflict of interest or other matters of
concern, it immediately reports the reason to the person in charge of the compliance
monitoring task and provides appropriate measures to eliminate or alleviate such
conflict of interest so that there are no problems with reporting to the management and
the protection of PEFs and LPs.
For transactions with a potential conflict of interest, it takes measures to reduce
the possibility of a conflict of interest so that the interest of PEF and LP are not
infringed. If reducing the possibility of a conflict of interest seems unlikely, it restricts
trade and other transactions.
In addition to the internal control standards, when the PEF is established, the articles
of association include information on conflict of interest transactions. As a PEF
specialist operator, it has an internal process to review and report on the conflict
of interest to take preventive measures in advance of the conflict of interest and
sincere performance of duties and responsibilities related to the conflict of interest.
Principle 3
An institutional investor shall periodically inspect the investment target company
to preserve and increase the investment assets value by improving the mid to the
long-term value of the investment target company.
Well to Sea Investment is a PEF specialist operator that aims to maximize invesment
target company’s value-add and LP’s profit by participating in the management
of PEF’s investment target company.
The operating personnel of the investment target company directly participates
in board meetings of the investment target company to strengthen the board function
and frequently discusses the company’s management matters and business direction
with the investment target company. They also visit the investment target company
every month and participate in major decisions to promote value-add and continuous
growth of the investment target company and provide value-add strategies, such
as management coaching and financial structure improvement for the long-term
growth of the investment target company.
Well to Sea Investment prevents damage by proactively preventing issues that
could undermine the corporate value in advance and preparing countermea sures
through regular/occasional inspections of the investment target company.
It also it periodically inspects the financial status and performance of the invest
ment target company and conducts a general, comprehensive inspection, including
not only quantitative/financial factors but also qualitative/non-financial items, such
as personnel management, compliance with business-related regulations, and lawsuit
occurrence.
Principle 4
An institutional investor shall aim to form a consensus with the investment
target company, and if necessary, prepare internal guidelines related to
development opportunities, procedures, and methods for the fulfillment
of the trustee’s responsibilities.
Well to Sea Investment appoints management or directly participates as the board
of director of the investment target company. The operating personnel participates
in regular management strategy meetings of the investment target company and
forms a consensus with the executives and employees of the investment target company
through inspection of management performance and implementation of mid to long-term
management strategies.
Well to Sea Investment consults follow-up management priority inspection matters
with each investment target company in accordance with the follow-up management
standard of the investment target company. It also prepares countermeasures incase
a problem arises, categorize by grading standard, and establish and execute a
follow-up management plan by grade.
It jointly resolves the investment target company’s issues based on its regular inspection
of the performance and major issues of the investment target company and occasional
inspection of the company’s situation.
Well to Sea Investment forms a consensus to improve the value of the investment
target company by jointly participating in the establishment of the investment
target company’s business plan to set goals and creating an appropriate compensation
system for executives and employees of the investment target company.
Principle 5
An institutional investor shall prepare and disclose a voting policy that includes
guidelines, procedures, and detailed criteria for a faithful exercise of voting rights,
along with specific information and reasons for the exercise of voting rights to
identify the appropriateness of voting rights.
Well to Sea Investment’s principle prioritize the interests of PEFs and LPs when
exercising voting rights at the shareholder meeting or the board meeting of the
investment target company. As for the major agenda items, they are approved by
the Investment Review Committee prior to the exercise of voting rights.
Well to Sea Investment reports the breakdown of the exercise of voting rights to
LPs, but due to the nature of PEFs, it does not disclose such information to the
public. However, if the investment target company is a listed company, it discloses
information as prescribed by the law.
Principle 6
An institutional investor shall periodically report to the customer and the
beneficiary about the exercise of voting rights and the performance of the
trustee’s responsibilities.
Well to Sea Investment recognizes the importance of maximizing the profit of
LPs and fulfilling the trustee’s responsibilities in the entire PEF operation, and
ensures that the fulfillment of the exercise of voting rights and trustee’s responsibilities
correspond to the principles of this Stewardship Code.
Well to Sea Investment conducts LP reporting and active collection of opinions
on investment activities through general employee meetings, regular (half-year)
investment reports, occasional written reports on issues within the scope of the
Capital Market Act to fulfill the activities of breaking down the exercise of voting
rights and trustee’s responsibilities.
Principle 7
An institutional investor shall have the necessary capabilities and expertise
for active and effective implementation of the trustee’s responsibilities.
To fulfill the trustee responsibility of maximizing LP revenue, Well to Sea Investment
has outstanding personnel with expertise, related experiences, and capabilities
to discover promising investment target companies, improve the value of investment
target companies, and perform recovery for maximizing profit.
Well to Sea Investment encourages continuous capability development of executives
and employees through an internal employee educational support system, such
as support for participating in external institution’s education, certifications, and
tuition support. It also strengthens its expertise in fulfilling the trustee’s responsibilities
by securing a permanent advisory system with law firms and accounting firms.
