How to Incorporate a Company in Korea
What Is Foreign Investment?
Foreign investment means a foreign national or entity holding shares or equity interests in a Korean corporation. Both foreign individuals and foreign corporations may become shareholders.
To qualify as foreign investment, (1) the investment must be at least KRW 100 million, and (2) the foreign investor must hold at least 10% of the total voting shares issued by the Korean corporation.
Foreign investment may be prohibited or restricted in sectors designated as posing a threat to national security, such as defense materials.
Incorporation Procedure
Establishing a company in Korea generally involves the following four steps.
Of these, only steps 1 and 4 are additional to the ordinary incorporation procedure that applies to Korean nationals. Each step is explained in detail below.
- Foreign investment notification
- Remittance of investment funds
- Incorporation registration and business registration
- Registration as a foreign-invested company
1. Foreign Investment Notification
Why notification is required: remittance must be guaranteed, and a certificate of foreign investment notification is required for incorporation registration and business registration.
Where to file: notification may be made at KOTRA, KOTRA's overseas investment KBCs, designated head offices and branches of Korean banks, and Korean branches of foreign banks.
A remittance account is opened at this stage. A non-resident foreign currency account or a temporary account at a foreign exchange bank may be used for the foreign investment.
2. Remittance of Investment Funds
The investment funds may be remitted to the non-resident foreign currency account or temporary account described above.
Once the transaction is completed, the bank issues a certificate of custody of paid-in share capital, which is required for incorporation registration.
3. Incorporation Registration and Business Registration
First, the company is registered with the competent district court. Upon registration, it acquires a legal personality separate from its owners.
The business is then reported to the competent tax office and business registration is completed.
4. Registration as a Foreign-Invested Company
A certificate of registration as a foreign-invested company is issued upon submission of the application. This certificate is required when applying for a D-8 (corporate investment) visa and also simplifies the overseas remittance of investment profits.
Where to register: registration is completed at the institution where the foreign investment was notified. These institutions include KOTRA, KOTRA's overseas investment KBCs, designated head offices and branches of Korean banks, and Korean branches of foreign banks.
Why registration is required: the Foreign Investment Promotion Act aims to promote foreign investment by providing the support and assistance it requires, thereby contributing to the sound development of the national economy. Benefits are provided where an investment qualifies as foreign investment under the Act.
Benefits Related to Foreign Investment
- Tax support: corporate tax, income tax, acquisition tax, registration tax, property tax, and aggregate land tax may be reduced or exempted.
- Cash grants: the national and local governments may provide cash grants for the construction of new factories that satisfy certain requirements, such as technology transfer effects and the scale of job creation.
- Lease or sale of state-owned or publicly owned property: the national and local governments may allow foreign-invested companies to use or derive income from land they own at reasonable prices.
Timeline
The following timeline is stated on the existing page.
Address for sending documents (original): Jaekwon JUNG, HWAUM LAW Office, 4F, Summit Building, 10 Nonhyeon-ro 71-gil, Gangnam-gu, Seoul, South Korea 06248
- 1. Prepare the required documents and send them to Hwaum Law Office
- 2. Documents arrive at Hwaum Law Office in Korea (D-0)
- 3. Notify KOTRA of the foreign investment (D+1)
- 4. Apply to a Korean court for incorporation registration (D+3)
- 5. Complete incorporation registration (D+6)
- 6. Enter into an office lease (~D+7)
- 7. Apply to a tax office in Korea for registration as a foreign-invested company (D+7)
- 8. Complete registration as a foreign-invested company (D+9)
Service Fee
Company Incorporation: US$2,500.00