InvestKorea | What Investors Need to Know | FDI system

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 can establish a company in 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	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.

Go to FDI Procedures

The procedure for establishing a stock company

The Commercial Act recognizes five forms of companies - partnership company, limited partnership company, limited liability company, limited company, and stock 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., partially 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
(court registry office)
Branch or liaison office:
Application for issuance of
business registration number
or identification number
(tax office)