Santa Monica, CA (Nov. 1, 2017) –Dalton Investments LLC (together with its affiliated entities, “Dalton”) is the first U.S.-based investment manager to join the Korea Stewardship Code and its aim to promote the sustainable growth of investee companies through investment and dialogue with company management. Adoption of the Code is consistent with our value investing discipline and reflects our commitment to capital preservation and long term growth. This statement describes Dalton’s adherence to the principles of the Korea Stewardship Code.
Principle 1: Institutional investors, as a steward of assets entrusted by their clients, beneficiaries, etc, to take care of and manage, should formulate and publicly disclose a clear policy to faithfully implement their responsibilities.
Dalton supports the Code by thorough analysis of portfolio companies including engagement with management, and thoughtfully voting proxies. These responsibilities are incorporated into our investment process and are summarized in Dalton’s Proxy Voting Guidelines and Proxy Voting Policies and Procedures (the Guidelines and the Policies and Procedures being together “Dalton’s Proxy Voting Policies”) which are (i) available to our clients upon request and (ii) summarized in Part 2A of Dalton’s Form ADV, available on the SEC website at the following location:
https://www.adviserinfo.sec.gov/IAPD/IAPDFirmSummary.aspx?ORG_PK=109538
These documents explain our voting policy and how we deal with conflict-of-interest and are reviewed and updated at least annually.
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.
We explain our approach to managing conflicts of interest in Dalton’s Code of Ethics and Dalton’s Proxy Voting Policies, which are summarized in Part 2A of Dalton’s Form ADV.
Dalton’s governance structure for monitoring conflicts of interest includes both Dalton’s Chief Compliance Officer and Dalton’s Risk Management Committee, which is composed of senior Dalton executives. Together, they monitor, minimize, and disclose conflicts of interest, including conflicts related to voting. Dalton’s policies and procedures enumerate specific circumstances which can give rise to conflicts of interest.
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.
Dalton typically monitors the companies in which it invests by focusing on alignment of interests between investee company management and shareholders. In conducting their ongoing monitoring, Dalton analysts and portfolio managers consider a variety of resources including company reports and press releases, third-party research, and independent proxy voting advisor reports and recommendations.
Dalton seeks to take an active approach in addressing corporate governance in fulfilling its fiduciary duties. Where possible and when deemed necessary, Dalton will engage companies seeking to promote positive change in matters of corporate governance.
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.
We believe that dialogue with investee companies as well as proxy voting are ways to add value to the investment process and that stronger governance practices will be reflected in better company and stock performance. Through constructive engagement with company management, from a medium term to long term perspective, we believe that we can help promote an investee company’s sustainable growth. Additionally we seek to enhance corporate governance at investee companies through proxy voting. From time to time, Dalton will collaborate with other institutional investors for collective engagement with investee companies, as necessary.
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.
Dalton’s Proxy Voting Policies are summarized in Part 2A of Dalton’s Form ADV available on the SEC website. We disclose our voting activity to the extent required by any applicable regulatory authorities, and we provide our clients periodic updates on our voting activities as required in the respective client agreements or upon client request. When Dalton discloses voting activity, Dalton may disclose its voting activity in the aggregate or on an individual agenda item basis, and Dalton may also explain reasons for voting for or against agenda items.
Principle 6: Institutional investors should regularly report their voting and stewardship activities to their clients or beneficiaries.
We keep records of our proxy voting activity. We disclose our voting activity as detailed in our statement regarding Principle 5, above. We also provide our clients periodic updates on our voting activities as required in the respective client agreements.
Principle 7: Institutional investors should have the capabilities and expertise required to implement stewardship responsibilities in an active and effective manner.
Dalton’s research team endeavors to develop an in-depth knowledge of investee companies. Dalton uses a number of external resources to deepen its knowledge of business and governance practices at investee companies, including daily market news, proxy voting research and external corporate governance sources. Dalton’s Management Committee, comprised of its senior officers including certain portfolio managers, ultimately oversees the firm’s governance activities.
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Name and contact of person in charge of compliance with Dalton’s Korea Stewardship Code obligations:
Steven Kramer
General Counsel & Chief Compliance Officer
Dalton Investment LLC
1601 Cloverfield Blvd, Suite 5050N
Santa Monica, CA 90404, United States
Phone: +1 424 231 9100
Email: legal@daltoninvestments.com