Company Incorporation Procedures in South Korea

TOPIC : Business in Korea Incorporation

Establishing a legal corporate entity in South Korea is the first step to doing business in Korea. The following is the procedure for setting up the most common form of a corporate entity in Korea: a local corporation as a stock company.

1. Foreign Investment Notification

2. Remittance of Investment Funds (Temporary Account)

3. Registration of Incorporation

4. Notification of Incorporation and Business Registration

5. Transfer of Paid-In Captial to a Corporate Account

6. Foreign-Invested Company Registration

Foreign Investment Notification

The incorporation process for a foreign investor is almost the same as that for a local person. However, a foreigner must complete Foreign Investment Notification at a foreign exchange bank in Korea before registering for incorporation.

Required documents

- Notarized Power of Attorney

- Foreign Investment Notification Form for the Acquisition of Newly Issued Stock (2 copies)

- Proof of Identity

i. A copy of the passport for a foreigner

ii. A certification of corporate registration for a foreign corporate entity

If the documents are good and ready, the notification will be processed on the spot. Then the designated foreign exchange bank will issue a temporary account number, or a non-resident account will be opened for the purpose of remitting the initial investment funds.

For the Power of Attorney and Foreign Investment Notification Form for the Acquisition of Newly Issued Stock, you may download the forms in our Downloads section. For the Power of Attorney, you need to get an apostille for the document in your home country or have it notarized if your home country is not a member of the Apostille convention (China, Canada, etc.). The Power of Attorney will allow Pearson & Partners to handle the entirety of the incorporation process of a foreign-invested enterprise on behalf of foreign investors. In addition to signing the power of attorney, you will also need to fill out two copies of the Foreign Investment Notification Form to incorporate a company in Korea.

For proof of identity, if the investor is an individual, a copy of the passport will suffice and if the investor is a foreign corporation, documents that is equivalent to Certification of Corporate Registration in your home country is required for submission.

Remittance of investment funds

When a temporary account number is granted upon completion of foreign investment notification, a foreign investor may remit their initial investment funds. When the funds are remitted, it shall be converted into Korean currency at a designated foreign exchange bank. There are a few things you must take note of before making the remittance.

-The funds remitted must be in foreign currency.

-The remitter, payee, and the name of the foreign investor must match.

-The purpose of remittance should be noted as “Investment fund to establish 000 Korea Co., Ltd.”

The converted funds should be transferred to an account for a securities subscription deposit. Then the bank will issue a certificate for the deposit which will be required for registration of incorporation.

Registration of incorporation

Registration of incorporation in Korea happens at the court registry office. If the documents are ready, incorporation is registered within 3 working days. The following is the list of required documents for incorporation.

	Required documents
1	Application form for stock company incorporation registration
2	Articles of incorporation (notarization required if the total capital of the company is KRW 1 billion or more)
3	A certificate of deposit of payment for shares or certificate of balance
4	The minutes of the inaugural meeting (notarization required if the total capital of the company is KRW 1 billion or more)
5	The minutes of the Board of Directors (notarization required if the total capital of the company is KRW 1 billion or more)
6	Receipt for payment of registration tax (issued by the district office which has jurisdiction over the area where the company headquarters is located)
7	Application form for business registration
8	Application form for issuance of corporate seal card (after registration of incorporation)
9	Written consent to matters concerning the issuance of shares
10	Certificate of inauguration acceptance (Apostille required)
11	A review report by a director, auditor or the audit committee
12	Resident registration certificate (certification of address) (Apostille required)
13	Certificate of seal registration (with his/her signature notarized) (Apostille required)
14	Foreign investment notification certificate
15	Power of attorney (where an agent makes the application)

Some of the documents listed above will be filled out by us with the information provided by foreign investors and the rest will be filled out by investors themselves. Incorporation Information Document can be downloaded in our Downloads section which is designed to help foreign investors provide necessary information to Pearson & Partners such as shareholder statements.

Other documents are also available for investors to download. Some of them that need the issuance of apostille are marked to do so. For inquiries on the preparation of particular documents to incorporate a company in Korea, feel free to contact Pearson & Partners directly.

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Foreign Investment Promotion Act (FIPA): FIPA streamlines administrative processes, enhances access to government support, and simplifies approval procedures for foreign investors. 5. Special Economic Zones (SEZs): SEZs across South Korea offer tax breaks, regulatory simplification, and other incentives to encourage foreign investment. Strategic Engagement with Korean Business Culture Beyond grasping legal and regulatory frameworks, foreign investors must navigate the intricate nuances of Korea's unique business culture. Korea's hierarchical and collectivist culture underscores the importance of authority and seniority, shaping business interactions. Here's how foreign investors can effectively navigate Korean business culture: 1. Cultivate Personal Bonds: Trust and personal connections are central to Korean business dynamics. Building relationships and understanding Korean counterparts are fundamental for success. 2. Honor Hierarchy: Korea's deeply ingrained hierarchical structure necessitates deference to seniority and authority. Addressing individuals by their titles and using honorific language is customary. 3. Exercise Patience: Korean business relationships thrive on trust developed over time. Patience and persistence are invaluable virtues when fostering professional connections. 4. Prepare for Negotiations: Koreans are adept negotiators who expect thorough preparation and understanding of potential risks and benefits. Strategic negotiation tactics are essential for successful business dealings. 5. Language Proficiency: While fluency in Korean is not mandatory, basic language skills can facilitate rapport-building and convey respect for Korean culture. Embracing these cultural insights can significantly enhance foreign investors' effectiveness in navigating the Korean business landscape. Conclusion This guide offers essential guidance for foreign investors venturing into South Korea's dynamic business environment. Covering economic prospects, legal frameworks, and taxation, it delves into critical aspects such as company establishment, employment regulations, and labor laws. Pearson & Partners specializes in facilitating market entry into Korea, providing support with incorporation and tax compliance. Emphasizing the importance of compliance for sustained success, this guide underscores understanding employment contracts, labor unions, and tax incentives. Pearson & Partners remains a trusted ally for cultural acumen, relationship cultivation, and negotiation strategies. Contact us for tailored assistance as you embark on your business journey in South Korea.

A Guide to Foreign Direct Investment (FDI) in Korea 2024

Foreign Direct Investment (FDI) is about establishing lasting economic connections with Korean enterprises. With incentives like tax breaks, guaranteed transfers, and streamlined visas, Korea beckons investors. Its skilled workforce, cutting-edge research, and strong financial standing make it an attractive destination. Explore diverse sectors for investment, from IT to renewable energy. Setting up a business is straightforward, with support from regulatory frameworks. Discover Korea's dynamic economy and embark on a journey of growth. What is Foreign Direct Investment (FDI)? Foreign Direct Investment (FDI) involves a foreign entity creating a new establishment in Korea or purchasing shares or equity in an existing Korean company. It aims to forge a lasting economic connection with Korean enterprises, often involving participation in management or collaboration on technological advancements. FDIs can manifest in diverse ways, such as establishing a new entity in Korea, acquiring shares or equity in a Korean company, contributing to non-profit entities, or providing long-term loans, among other methods. Incentives for Foreign Direct Investment - Assured overseas wire transfer/remittance: Companies registered as FDI entities are guaranteed the ability to transfer or remit profits, dividends, liquidation proceeds, share sales proceeds, as well as principal, interest, and commissions, among other funds, overseas. - Tax incentives: The Korean government and local administrations provide tax breaks on corporate taxes, income taxes, local taxes, and customs duties, subject to relevant laws and conditions. - Visa and residency privileges: Officers and employees of FDI companies are eligible for D-8 visas, enabling them to freely enter, exit, and reside in the country. What Makes Korea an Attractive Choice for FDI? 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Incentives Offered by the South Korean Government to Entice FDI - Tax support, which includes reductions in corporate and income taxes, as well as reductions in acquisition and property taxes, along with exemptions from customs duties. - Cash grants for land purchases or leases, and employee training or education. - Industrial site support, such as location assistance and subsidized purchase prices or rents. Investment Prospects for FDI in South Korea Promising sectors for foreign direct investment in South Korea encompass a diverse range, including IT, aerospace, biotechnology, cybersecurity, renewable energy, semiconductors, displays, environmental industries, real estate development, and venture capital. However, certain sectors are off-limits to foreign investment entirely, such as nuclear energy, broadcasting (TV and radio), water and thermal energy, newspaper publications, and telecommunication services. 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The FETA governs foreign currency transactions and cross-border transactions, particularly when the investment amount falls below 100 million won or involves minority interest acquisitions below 10%. Conclusion Foreign Direct Investment (FDI) in Korea presents lucrative opportunities for investors, with incentives like tax breaks and streamlined processes. Korea's strong workforce, advanced technology, and favorable business environment make it an attractive destination. Despite some sectoral restrictions, setting up a business is straightforward, fostering growth and innovation in the region. Interested in expanding your global reach? Contact us to tap into the opportunities presented by Foreign Direct Investment (FDI) in Korea and capitalize on the potential for growth in Asia's thriving economy.

2024 Korea Company Registration Guide

South Korea, known as the business hub of Asia, holds significant appeal for foreign investors seeking access to its thriving economy. While establishing a company in Korea presents lucrative opportunities, navigating the registration process can be daunting for those unfamiliar with its legal system. In this guide, we offer a comprehensive overview of the registration procedure, equipping you with the knowledge required to successfully register your company in Korea. Step 1: Selecting the Appropriate Business Structure The initial step entails choosing the suitable business structure among four options: sole proprietorship, partnership, limited liability company (LLC), and corporation. Each structure carries its own set of advantages and disadvantages, necessitating careful consideration to align with your business objectives. Step 2: Company Name Registration Following the selection of a business structure, the subsequent task involves registering your company name. Ensuring uniqueness and non-infringement of existing trademarks is crucial. The Korean Intellectual Property Office (KIPO) website facilitates a search for available company names. Step 3: Acquiring Business Licenses and Permits Prior to commencing operations in Korea, securing requisite business licenses and permits is imperative. Requirements vary based on industry and business structure, encompassing licenses such as business registration, tax registration, and employment insurance. Step 4: Opening a Bank Account Establishing a business presence in Korea mandates the opening of a bank account for financial transactions. Typically, banks necessitate a business registration certificate and identification documentation for account setup. Step 5: Registration with the Korean Tax Authority Every company operating in Korea must register with the Korean tax authority, encompassing obtaining a tax identification number (TIN) and registering for value-added tax (VAT) and corporate income tax. Step 6: Enrolling in Social Insurance Employers in Korea are obligated to enroll in social insurance schemes, comprising national health insurance, national pension, and employment insurance. Employers bear a portion of the insurance premiums for their employees. Step 7: Annual Report Filings Submission of annual reports to the Korean government is mandatory for all companies. These reports encompass financial statements, business activities, and any alterations in company structure or management. Conclusion While the process of registering a company in Korea may seem intricate, it is essential for foreign investors seeking to leverage the country's dynamic economy. Adhering to the outlined steps empowers you to successfully register your company in Korea and embark on business endeavors within one of Asia's most vibrant economies. Should you require assistance during the registration process, seeking guidance from Korean legal experts or business consultants is advisable. Feel free to contact us to explore seamless avenues for setting up your company in Korea.

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