Korea Company Incorporation
Korea company incorporation – OVERVIEWS OF KEY FEATURES
| Classification | Type | Governing Law | Remark |
| 1 | Foreign-invested Domestic Corporation | Foreign Investment Promotion Act | Established as a domestic corporation under the Commercial Act |
| 2 | Branch | Foreign Exchange Transaction Act | Categorized as a domestic branch of a foreign corporation |
| 3 | Liaison office |
Comparison : Foreign-invested company VS Domestic Branch
| Classification | Foreign-invested Domestic Corporation | Domestic Branch of Foreign Company |
| Governing Law | Foreign Investment Promotion Act | Foreign Exchange Transaction Act |
| Corporate Character | Domestic | Foreign |
| Type Of Corporation | Corporation and Private Business company | Domestic Branch and Liaison Office |
| Relation with parent company | Separate company that conducts accounting and settlement independently | Consideration of the same entity as accounting and settlement |
| Declaration Agency | Invest KOREA(KOTRA) or Foreign Exchange Bank | Foreign Exchange Bank(Notification), Ministry of Strategy and Finance(Permit for the financial industry) |
| Investment amount | KRW 100 million minimum per case, no maximum limit | No limit on the amount |
| Tax obligation | Tax obligation for all income from domestic and overseas
Corporate Tax rate: 10% for KRW 200 million or less KRW 20 million + (Amount over KRW 200 million x 20%) for More than KRW 200 million, but not exceeding KRW 20 billion KRW 3.98 billion + (Amount over KRW 20 billion x 22%) for More than KRW 20 billion but not exceeding KRW 300 billion | Tax obligation for all income from domestic
Corporate Tax rate: Same as left An additional payment of some national branch tax |
| Registration Duty | Corporation:
Registration of establishment in court required Private business company: Registration of establishment in court not required | Branch:
Registration of establishment in court required Liaison Office: Registration of establishment in court not required |
Foreign-Invested Company
In Korea, foreign investors receive the same treatment as Korean nationals regarding their business unless otherwise stipulated in laws. However, foreign investment is restricted / prohibited in certain business categories.
Ways of Establishing a Foreign-Invested Company
To establish a foreign-invested company, a foreign investor should satisfy both conditions below.
- Minimum Foreign Investment Amount: 100 million won (KRW) which is about USD 100,000
- Foreign Investment Ratio: 10% or more of the voting stocks or total invested capital
- Foreign Direct Investment (FDI) generally refers to an investment made by a foreigner (either an individual or a corporation) for the purpose of establishing a corporation in the Republic of Korea, and it is mainly based on the Foreign Investment Promotion Act (FIPA) by the Ministry of Knowledge Economy.
Even with less than 10% ownership of a company’s shares or equity, it can still be considered FDI if proof of the following is provided
- a contract that allows the dispatch or election of executives,
- a contract for raw material purchase or product delivery for a period of at least one year, or
- a contract for a common R&D project or introduction or provision of technology.
Long-term loans provided by the overseas headquarters or a capital-affiliated company of the foreign-invested firm are also considered a type of foreign direct investment if the loan maturity is at least 5 years.
Matters to be decided prior to registration
- Office address in Korea (Lease contract)
- Trade names which is not clearly distinguished from the one that has been already registered and used by other businesses cannot be registered for the same line of business operated.
- Total paid-in Capital (Initial Investment) – If decided ; USD 100,000
When USD 100,000 is exchanged in Korea, it probably will be more than KRW 100,000,000 then what will Foreign Investors do with the rest,
- Can be back to the Investing company (where it came from)
- Can be given to Subsidiary but not be the initial capital (regarded as some kind of donation in terms of accounting)
- Can be initial capital up to the amount exchanged (e.g. KRW 112,250,000)
- Statement of Corporate objectives (in point form)
- Representative directors(President), directors, corporate auditors
Required Documents
For Newly appointed (Foreign National) board members.
Representative director
- Notarized “Attestation of Residence” (OR copy of Govn’t issued ID card with his/her personal address on it – English translation required)
- THIS MUST be notarized in his/her mother country.
- Notarized “Report of corporate seal”
- Notarized “Written acceptance of Corporate Inauguration”
- Copy of passport
Director / Auditor
- Notarized “Written acceptance of Corporate Inauguration”
- Copy of passport
Documents as the Result
- Copy of Corporate Register
- Certificate of Corporate Seal Impression
- Certificate of Business Registration
- Original copy of Foreign Investment Notification
- Certificate of Foreign-Invested Enterprise
Korea company incorporation - Branch
A branch undertakes sales activities in Korea to generate profits.
Types of Domestic branch
There are two types of domestic branches: a branch and a liaison office.
A branch undertakes sales activities in Korea to generate profit, whereas a liaison office does not conduct sales activities to create profit but instead carries out non-sales functions such as business contacts, market research and R&D.
Liaison offices can carry out quality control, market surveys, advertising, and other incidental and supportive roles.
However, they are limited in the scope of their activities since they are not permitted to sell products directly, or to stock inventory for sale on behalf of the headquarters.
Information & Document need to be provided prior to registration
- Office address in Korea (Lease contract)
- Statement of HQ Corporate objectives / Director, Shareholder’s Passport copy and Address proof
- Information of Brach representative – name / passport copy and address proof
- Date of the branch establishment
Required documents
From Head office
- Certificate of company registration (certificate of incorporation issued by Govn’t / governmental bodies)
- Articles of Incorporation ( “Articles of association” or “Company by-laws” etc.)
- Copy of passport (Head office’s president/CEO)
- Documents attesting the appointment of Korea branch representative
- Minute of board of directors meeting*
*Corporate resolution that decides the establishment of branch in Korea ; “where” & “when”) - Copy of ID card (Head office’s president/CEO)
- Power of Attorney*
Above all documents should be notarized and Apostilled (if applicable)
From Branch Manager
- Written Acceptance of Appointment
- Power of Attorney
- Copy of passport (Scanned copy)
- Report of Branch representative’s Seal Impressions
- Copy of ID card (must show the address in his/her native country)
Above documents should be notarized and Apostilled*
Documents as the Result
- Original Copy of Branch Register
- Original Copy of Certificate of Branch Seal Impression
- Certificate of Business Registration (issued by District Tax Office)
- Original Copy of “the Notification of Branch Establishment”
Korea company incorporation - Liaison Office
A liaison office does not conduct sales activities to create profits, but instead carries out non-sales functions such as business contacts, market research, R&D, etc. Liaison offices can carry out quality control, market surveys, advertisements, and other incidental and supportive roles. However, they are limited in their scope of activities, since they are not allowed to sell products directly, or to stock inventory for sale on behalf of the headquarters.
The Establishment of a domestic Liaison office is regulated by the Foreign Exchange Transactions Act of Korea (FETA).
Under the Commercial Act, the establishment and registration of a business office is required, where a foreign company carries out business in Korea.
Information & Document need to be provided prior to registration
- Office address in Korea (Lease contract)
- Statement of HQ Corporate objectives / Director, Shareholder’s Passport copy and Address proof
- Information of Brach representative – name / passport copy and address proof
- Date of the branch establishment
Required documents
From Head office
- Certificate of company registration (certificate of incorporation issued by Govn’t / governmental bodies)
- Articles of Incorporation ( “Articles of association” or “Company by-laws” etc.)
- Copy of passport (Head office’s president/CEO)
- Documents attesting the appointment of Korea branch representative
- Minute of board of directors meeting*
- *Corporate resolution that decides the establishment of branch in Korea ; “where” & “when”)
- Copy of ID card (Head office’s president/CEO)
- Power of Attorney*
Above all documents should be notarized and Apostilled (if applicable)
From Liaison Office Manager
- Written Acceptance of Appointment
- Power of Attorney
- Copy of passport (Scanned copy)
- Report of Branch representative’s Seal Impressions
- Copy of ID card (must show the address in his/her native country)
Above documents should be notarized and Apostilled*
Documents as the Result
- Original Copy of Branch Register
- Original Copy of Certificate of Branch Seal Impression
- Certificate of Business Registration (issued by District Tax Office)
- Original Copy of “the Notification of Branch Establishment”
Please contact Premia TNC for more information
