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FAQs

Here are the most asked questions about doing business in Korea.

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  • Incorporation

    What is the difference between Stock Company and Limited Liability Company?

    There are five different forms of companies in Korea: General(unlimited) Partnership Company, Limited Partnership Company, Private Limited Company, Limited Liability Company (LLC, Yuhan Hoesa), and Joint Stock Company (JSC, Jusik Hoesa).

     

    • Unlimited or limited partnership companies are rarely used in Korea. 

     

    • Foreign investors generally use the Joint Stock Company. JSC may issue preferred shares, bonds and debentures. There is no limit to the number of shareholders. 

     

    • However, use of Limited Liability Company (Yuhan Hoesa) by foreign investors has increased recently for its less strict obligation to disclose financial statements and stockholder’s list.

  • Incorporation

    What is the difference between Local corporation / Branch / Liaison Office?

    There are three types of corporate entities that foreign entrepreneurs can establish to do business in Korea. The following are few characteristics for each.

     

    • Local corporation: Recognized as a foreign direct investment and as a domestic corporation. It is qualified for tax incentives under the Foreign Investment Promotion Act (FIPA) and the Restriction of Special Taxation Act (RSTA). It is taxed on its worldwide income. 

     

    • Branch: Recognized as a foreign corporation and taxed only for income from domestic sources. Foreign investment incentives usually do not apply to branches or liaison offices. Notification for setting up a local branch is processed in few days. It is widely used for exports.

     

    • Liaison office: Carrying out non-sales function such as R&D and is not subject to taxation. It does not need to undergo registration. Issued an identification number equivalent to the business registration number at a jurisdictional tax office in Korea.

  • Incorporation

    Am I a foreign investor?

    If you are a foreigner or a foreign corporate entity, and you want to establish a company in Korea, you must first ask yourself whether you are a “foreign investor.”

     

    Foreign investor is a special status granted to a foreigner or a foreign company that meets certain qualifications stipulated in the Foreign Investment Promotion Act (FIPA). 

     

    * Qualifications for a Foreign Investor 

    1. Invest KRW 100 million (approx. $90,000) or more in the local corporation 

    2. Acquire 10 percent or more of the company’s stocks with voting rights Under the Commercial Law of Korea, anybody including foreigners can establish a company without any special requirements such as minimum capital. 

     

    There is no need to acquire a visa for incorporation and business registration. However, if you are recognized as a foreign investor, you can apply for D-8 (corporate/foreign investor) visa and bring your spouse and children with F-3(dependent family) visa. 

     

    Acquiring a visa will allow a foreigner to stay in Korea for longer than 90 days. A foreign investor will also be eligible for tax incentives in Free Economic Zones, etc.

Thank you for your interest in Pearson.

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