Stewardship Code

Stewardship Code
of Well to Sea Investment

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.