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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

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
Invest KOREA (KOTRA) or the headquarters
or branch of a foreign exchange bank
A branch of a foreign exchange bank
(notification), the Ministry of Strategy
and Finance (permission to operate
financial business, 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”.

The Procedure for Establishing a 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
  • Registration tax (0.4% of the capital, three times when a stock company is established in an overconcentration control area)
  • Local education tax (20% of the registration tax)
  • Revenue stamp of the supreme court(Fee for registration application)
  • Notarization fee. articles of association, etc.(exempted in case of incorporation by promotion with capital of 1 billion won or less)
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
  • Application for branch 
    establishment
    (a foreign exchange bank/
    Ministry of Strategy 
    and Finance)
  • Branch: Corporate registration 
    (a court registry office) 
  • Branch or liaison office:
    Application for issuance of
    business registration number
    or identification number
    (tax office)
Online
consultant
KOTRA
KIM Nam-hee Executive Consultant
Online
consultant
KOTRA
PARK Sang-ha Executive Consultant