Establishing a Company
There are three ways by which foreigners (foreign corporations) can enter Korea for business purposes: By establishing a local corporation, a local branch, or a liaison office.
How foreigners advance into Korea
| Category | Foreign-invested company | Domestic branch of a foreign company |
|---|---|---|
| Form of entry | Local corporation | Branch and liaison office |
| Governing law | Foreign Investment Promotion Act | Foreign Exchange Transactions Act |
| Type of corporation | Domestic corporation | Foreign corporation |
| Identity |
The foreign investor and foreign-invested company are separate entities (independent accounting & settlement) |
The headquarter and branch are a single entity (consolidated accounting & settlement) |
|
Delegated agency to process notification and grant permission |
KOTRA (Invest KOREA) or foreign exchange bank | Designated foreign exchange bank, Ministry of Strategy and Finance (secutiries, insurance, etc.) |
|
Minimum (maximum) investment amount |
100 million won or more per case, no upper limit |
No limit on the investment amount |
|
Scope of tax obligations |
Tax obligations for all domestic and overseas income |
Tax obligations for income from domestic sources only |
Establishment of a local corporation
Procedure for establishing a local corporation
The procedure for establishing a local corporation consists of foreign investment notification, registration of incorporation, registration of business and foreign-invested company registration.
The procedure for establishing a stock company
The Commercial Act recognizes five forms of companies - partnership company, limited partnership company, limited liability company, stock company and limited company. Most companies fall into the category of “stock company”.
| Ways of establishing a stock company | Registration of incorporation of a stock company | Cost of establishing a stock company | Business registration |
|---|---|---|---|
| Promotion of incorporation | Within two weeks from the date on which the investigation of the process of establishment is completed |
|
Filed at a tax office or at KOTRA (Registration should be completed within 20 days from the date of business commencement) |
| Subscriptive incorporation | Within two weeks from the date on which the inaugural general meeting is closed |
Establishment of a foreign company’s domestic branch
There are two types of domestic branches: a branch and a liaison office. The establishment of a domestic branch is not recognized as foreign investment under the Foreign Investment Promotion Act, and is regulated by the Foreign Exchange Transactions Act.
Types of a foreign company’s domestic branch
Branch
Undertakes sales activities in Korea to generate profit
Liaison Office
Carries out non-sales functions such as business contacts, market research and R&D
Procedure for establishing a foreign company’s domestic branch
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- KOTRAKIM Nam-hee Executive Consultant
- 02-3497-1963
- nhkim@kotra.or.kr
-
- KOTRA PARK Sang-ha Executive Consultant
- 02-3497-1965
- shparksh@kotra.or.kr
-
Please visit the PC website to download PDF with more information.