PenCom restricts significant cross shareholding of companies in new guideliness

PenCom restricts significant cross shareholding of companies in new guidelines

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The National Pension Commission has issued guidelines on significant cross shareholding in Licensed Pension Fund Operators (LPFO).

According to the guidelines, Significant Shareholding means an equity interest, held directly or indirectly, amounting to 5% or more of the issued share capital of an entity, together with the corresponding voting rights attached to such shares or such other threshold may be prescribed by the Commission from time to time.

Significant Shareholder means any Person or entity that holds a significant shareholding in Licensed Pension Fund Operators (LPFO).

It stated, “The restriction on Significant Cross Shareholding applies regardless of how the stake is acquired, whether through mergers, acquisitions within or
outside the pension sector, direct investment, new licensing, or other means
whatsoever.

“The goal is to ensure that no shareholder or applicant company holds a direct or indirect ownership/shareholding of 5% or more in more than one LPFO. This includes affiliates, holding companies, subsidiaries, related parties of the shareholder, as well as its directors, employees, spouses, and family members of the shareholder or the new applicant company.”

PenCom states that the guidelines are issued to “Promote Transparency: Ensure openness in the ownership and control structures of LPFOs to foster trust and accountability within the pension industry; Mitigate Conflicts of Interest: Prevent situations where cross-shareholding could compromise the independence, objectivity, or fiduciary responsibilities of LPFOs;

“Strengthen Corporate Governance: Support sound governance practices by eliminating undue influence or control across LPFOs through significant cross-shareholding; Ensure Regulatory Compliance: Provide a clear framework for identifying, disclosing, and addressing instances of significant cross-shareholding in line with statutory provisions; Protect Pension Assets: Safeguard the interests of Retirement Savings Account (RSA) holders by maintaining the integrity and independence of pension fund management and custody functions.”