South Korea on Friday approved guidelines for the exercise of shareholder rights by the country's largest state pension fund.

The management committee of the National Pension Service(NPS), the highest decision-making body of the state pension fund, made the decision at a meeting in Seoul.

The guidelines will enable the pension fund to actively exercise its stewardship and shareholder rights against companies that have been found to have committed serious crimes, like embezzlement or breach of trust.

Under the guidelines, the NPS can demand the dismissal of corporate directors who are suspected of involvement in illegal activities and call for changes to a company's articles of association.

Health and Welfare Minister Park Neung-hoo, the head of the management committee, said that the guidelines are part of efforts to ensure transparent and fair management of the state pension fund. 

Park added that faithful shareholder activism by the pension fund according to the guidelines will help develop the nation's capital market and boost the country's sovereign credit ratings.