Total : 33 records

• Title

  What procedure and documents are required to transfer shares of a foreign investor to a Korean or foreign national?

• Content

  If a foreign investor wants to transfer shares or stocks, which were acquired in accordance with FIPA, to a third party (Korean or foreign national), it should be carried out as soon as completing notification within 30 days after when the stock transfer contract was concluded.

   

  Documents to be submitted are as follows; 

  - Two application forms for the transfer of or decrease in stocks or shares

  - Document verifying the transfer of stocks or shares (sales contract); 

  -  A copy of certificate verifying the nationality of the transferee (if transferee is a foreigner)

• Title

  A domestic company has borrowed foreign currency with the company shares as security, but does not repay the loan. If the lender takes over the company's shares for the failure to repay the loan, is it considered foreign investment?

• Content

  It can be considered FDI as far as meeting requirement of FIPA. 

  If the total amount of the shares is more than KRW100 mil., and more than 10% of the total shares are acquired, then it is subject to FIPA. In this case, the foreign company has to notify foreign investment through the acquisition of existing shares pursuant to Art.6 of FIPA.

  Generally if foreign investment fails to meet the above requirement, the foreigner should notify the acquisition to a foreign exchange bank under the under the Foreign Exchange Transaction Regulation Article 7-32. But as regard to security, the acquisition is subject to exception of notification under the Foreign Exchange Transaction Regulation Article 32 (1) 9.

• Title

  What are the documents required to verify the nationality of a foreigner at the time of FDI notification?

• Content

  If the foreign national is a corporate body or a company 

  - Registration issued by the relevant government or other body with authority or other document verifying that the said corporate body or company is existent in that country.

   

  If the foreign national is an individual 

  - Certificate of the citizenship issued by the government or other body with authority verifying the nationality of the individual. 

   

  If an individual with Korean nationality has permanent residence in a foreign country

  - A certificate of permanent residence issued by the residing government or other body with authority, or registration certificate of permanent residency overseas Korean issued by a overseas institution of the Republic of Korea 

• Title

  Does foreign investment also includes acquisition of stocks for the purpose of capital gain, and not of participation in management?

• Content

  In general, simple stock trading is not considered foreign direct investment.

   

  - When trading listed stocks, it is necessary to open an account exclusively for stock trading. This account serves the purpose of receiving the necessary capital for stock trading from and sending profits overseas.

  But if a foreigner who had had less than 10% of a domestic company acquired additional stocks to hold more than 10%, the investment is subject to FDI notification within 30 days after acquisition under the FIPA Article 6. 

  If one wants to acquire stocks that are listed, or not listed, but do not meet the requirements for foreign direct investment, then a notification has to be given to a foreign exchange bank or Bank of Korea regarding "acquisition of stocks by a non-resident" according to the "Foreign Exchange Transaction Act," before acquisition of the stocks.

• Title

  Is it considered foreign investment, if 4,000 shares of a company with capital of KRW2 billion (nominal value KRW 5,000 per share, total number of issued shares is 400,000) are bought for KRW50,000 per share?

• Content

  No, it is not accepted as foreign investment. Even if the total investment amount is more than KRW50 mil., it is required that more than 10% of the total shares are acquired by the foreign investor. In this case, only 4,000 out of the total 400,000 shares were acquired, making up only 1%. Thus, it cannot be accepted as foreign investment in accordance with FIPA.

  However, in exceptional cases, an investment of more than 100mil. KRW, but less than 10% acquisition of shares, may be considered as foreign investment, if the contract was concluded pursuant to Art.2 (2) 2 of the Enforcement Decree of FIPA:

  - A contract for seconding or electing officers 

  - A contract for supply or purchase of raw materials or products for a period of at least one year

  - A contract for providing or introducing technology or for joint research and development

• Title

  Is it considered foreign investment, if a foreigner acquires more than 10% of preferred stocks of a domestic company?

• Content

  Acquisition of more than 10% of common stocks(common stocks) having decision-making power which value more than KRW 100million is considered foreign investment. As for acquired preferred stocks, having decision-making power, it is accepted as foreign investment.

  But regardless of kinds of stocks or ratio of investment, one of the contracts Enforcement Decree of Foreign Investment Promotion Act Article 2(2) 2 describes is considered foreign investment. 

  - A contract for seconding or electing officers 

  - A contract for supply or purchase of raw materials or products for a period of at least one year

  - A contract for providing or introducing technology or for joint research and development

• Title

  When a foreign corporation abroad invested by a Korean (or domestic corporation) invests in domestic corporation, is it accepted as a foreign investment?

• Content

  Foreign Investment Promotion Act(FIPA) Article 2(1) 1 defines "foreigner" as an individual with a foreign nationality, a corporation established in accordance with a foreign law or an international economic cooperative organization prescribed by Presidential Decree;

  Therefore if a foreign company invested by an individual with a Korean nationality or a corporation established in accordance with a Korean law is a corporation established in compliance with a foreign law, the foreign company is accepted as a foreigner under the FIPA. And foreign investment is possible. 

  But when giving incentives, in order to exclude indirect investment, portion of holding ratio calculated according to Enforcement Decree of the Restriction of Special Taxation Act Article 2 (11) and (12) is not included in foreign investment.    

• Title

  What are the disadvantages if a foreign invested company does not register?

• Content

  Foreign Investment Promotion Act(FIPA) makes foreign invested company registration mandatory when Completing the payment for the object of investment when acquiring newly issued stocks or it the existing stocks un the Article 21(1), acquiring stocks under the FIPA Article 7(1) 5, and completing payment under the FIPA Article 8-2 within 30 days after the date of occurrence.  

  Without the registration, it is not allowed to apply for visa to stay in Korea, report stock transfer and wire dividend and proceeds from the sale of stocks outside Korea. And application for bond purchase exemption under the Housing Act and Urban Railroad Act needs the certificate of foreign investment company registration to be added. 

• Title

  Why is foreign investment in the form of long-term loan not able to be written as investment capital on a certificate of foreign invested company registration?

• Content

  Foreign Investment Promotion Act (FIPA) Article 21(1) makes foreign invested company registration mandatory after investment by a foreigner. 

  FIPA Article 2(1) 4 (b) accepts foreign investment in the form of long-term loan as foreign investment, but not as capital investment (object of investment of FIPA Article 2(1) 7).

  Completion of the payment for the object of investment when acquiring newly issued stocks or it the existing stocks are accepted as foreign investment by FIPA Article 21(1). And acquisition of stocks under the FIPA Article 7(1) 5 and completion of payment under the FIPA Article 8-2 are accepted as foreign investment, too. 

• Title

  Is it possible to reissue a certificate of foreign invested company registration if it is lost?

• Content

  Foreign Investment Promotion Act (FIPA) does not prescribe reissuance of the certificate when it is lost or damaged. 

  But it can be eliminated when the certificate is transferred to others or unduly used under the FIPA Article 21 so that reissuance has no problem. (Explanatory statement of the loss should be submitted)