Types of Foreign Enterprises (FIE)
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- Types of Foreign Enterprises (FIE)
The Commercial Act recognizes five types of corporations: unlimited partnership companies, limited partnership companies, limited liability companies, limited companies, and stock companies. The most common types of foreign-invested companies in Korea are limited companies and stock companies.
- How foreigners can start business in Korea
- Types of Foreign Enterprises(FIE)
- Incorporation Procedure
Stock Companies
Shareholders who have invested in a company hold limited liability of their investment amount. Transfer of stocks is easy. Corporate bonds can be issued, and stocks can be listed.Most domestic corporations choose this type.
Limited Companies
Partners hold limited liability of their investment amount only, thus, do not hold responsibility to creditors. Transfer of shares may be restricted under the articles of association.As limited companies were previously exempted from external audits, many foreign-invested companies, that were reluctant to disclose company information, chose this type. Limited companies, however, are now subject to audits according to an amendment of the Enforcement Decree of the Act on External Audit of Stock Companies(November, 2018).
Comparison of Stock Companies and Limited Companies
| Stock Company | Limited Company | |
|---|---|---|
| Purpose |
Suitable for large companies; easy to invite shareholders |
Suitable for SMEs; composed of minority with mutual trust |
| Minimum Investment Amount |
No restrictions (KRW 100 million in the case of FDI) |
Same as for stock companies |
| Equity Unit | KRW 100 or more | Same as for stock companies |
| Transfer of Capital | No restrictions | Approval by general meeting of partners required |
| Issuance of Bonds | Yes | No |
| Board of Directors | Yes | No |
| Number of Directors |
At least 3 directors (at least 1 director when total capital is less than KRW 1 billion) |
At least 1 director |
| Number of Auditors |
Required (except when total capital is less than KRW 1 billion and a non-investment executive is listed) |
N/A |
| Listing | Yes | No |