Objects of Investment

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Objects of Investment

Foreign Direct Investment (FDI) is defined as an investment with an investment threshold contributed by foreigners amounting to at least KRW 100 million and being 10% or more of the total amount. Foreigners are able to do business in Korea without restraint, except as otherwise prescribed by regulations.

Types of FDI include the acquisition of stocks of domestic companies, long-term loans (five or more years) from parent companies outside Korea, and investments in non-profit corporations in the fields of science and technology.

Cases in which a foreign company uses unappropriated earned surpluses for building new or additional factories are now also considered FDI (to be enforced by 2020). Objects of investment to acquire stocks or shares include foreign currency, capital goods, proceeds from acquired stocks, etc., and industrial property rights.

Any object in which a foreign investor invests in order to possess stocks, etc., should fall under any one of the following conditions

A means of international payment (foreign currency) as defined under Article 3.1 of the Foreign Exchange Transactions Act or a means of domestic payment (national currency) incurred by international payment;
Capital goods;
Proceeds (dividends) from stocks, etc., acquired under the Foreign Investment Promotion Act;
Industrial property rights, intellectual property rights (including copyrights to be utilized for industrial activities under the Copyright Act, and the layout-design rights prescribed by the Act on the Layout-Designs of Semiconductor Integrated Circuits), and other technologies and rights pertaining to the use of such technologies;
Residual property to be distributed to a foreigner upon liquidation of a domestic branch or liaison office of a foreign corporation or a foreign-invested company;
The amount of redemption of long-term loans or other loans from a foreign country;
Stocks of a foreign corporation listed on foreign stock markets;
Stocks owned by a foreigner under the Foreign Investment Promotion Act or the Foreign Exchange Transaction Act;
Domestic real estate owned by a foreigner (a certificate of completion of capital transaction report in accordance with Article 18 of the Foreign Exchange Transactions Act must be attached); or
Proceeds from the sales of stocks, etc., of a domestic company or Korean real estate owned by a foreigner.

※ Related law: Article 2.1.8 of the Foreign Investment Promotion Act

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Objects of Investment