Foreign Joint Venture:
A foreign Joint Venture Investment is a method of establishing a Korean corporation through a joint capital contribution by foreign and Korean investors.
Recently, Our Law Firm Hwaum assisted two individual investors from Vietnam and one individual Korean investor in establishing a joint venture corporation in Korea with a total capital contribution of KRW 150 million.
In this case, although the foreign investors collectively hold a 60% equity stake, the structure does not qualify for the issuance of a Certificate of Registration of a Foreign-Invested Enterprise.
In principle, for an investment to be recognized as foreign investment through the acquisition of shares, each foreign investor must satisfy both of the following requirements: (1) an investment of at least KRW 100 million per foreign investor, and (2) ownership of at least 10% of the voting shares or the total amount of capital contribution.
Furthermore, where there are two or more foreign investors, their investment amounts are not aggregated. Instead, the requirements are assessed separately based on the amount invested by each individual foreign investor.
Why Is Registration as a Foreign-Invested Enterprise Not Possible?
In this case, the two Vietnamese investors each invested KRW 30 million and KRW 60 million, respectively. Although each investor holds more than 10% of the shares, neither investor meets the minimum investment requirement of KRW 100 million.
Therefore, it is possible to establish the Korean corporation, but the corporation cannot be registered as a foreign-invested enterprise.
Relevant Law: Article 2 of the Enforcement Decree of the Foreign Investment Promotion Act
Joint Venture Incorporation Procedure
- Review of the investment structure
- Determination of the investment amounts and equity ownership percentages
- Confirmation of whether the investment qualifies as foreign investment
- Preparation of required documents, including apostille-certified documents
- Payment of the investment capital
- Registration of the corporation
- Business registration
- Opening of a corporate bank account
※ If the investment satisfies the requirements for foreign investment, additional procedures for foreign investment notification and registration as a foreign-invested enterprise will be required.
Assistance with Overseas Investors’ Documents and Apostille
As part of the incorporation process in this case, we also assisted with the apostille procedures for the documents required from the overseas investors.
We prepares and provides guidance on incorporation documents requiring apostille certification in both Korean and English.
Consultation Available in Korean, English, Chinese, and Japanese
We provides legal communication and consultation in Korean, English, Chinese, and Japanese. Depending on the circumstances, we provide guidance on investment structures and the incorporation process through video conferences or in-person consultations.
Drawing on our experience with various foreign investment matters and Korean corporate incorporations, we assist clients throughout the process, from reviewing the investment structure and preparing the required documents to completing corporate registration and subsequent procedures.