Hello,

This is attorney Lee Kyusung from WEON Law.

Previously, I’ve discussed the establishment and benefits of foreign-invested companies. Today, let’s delve into an equally important topic: their dissolution and liquidation.

The process of dissolution and liquidation is as significant as the establishment of a company. However, many fail to recognize its importance and proceed without proper preparation, often encountering unforeseen complications. To prevent such situations, it’s wise to familiarize yourself with the process in advance.

If you have any questions or need immediate assistance regarding this topic, feel free to click the banner below to give us a call.

When a Corporation Ceases Business

< Dissolution and Liquidation Process >

Dissolution ▶ Liquidation ▶ Cancellation of Licenses and Permits ▶ Cancellation of Business Registration ▶ Cancellation of Foreign-Invested Company Registration

The entire process typically takes at least two months. According to Article 535 of the Korean Commercial Act, the notification period to creditors cannot exceed two months, meaning this timeline cannot be shortened.

< Grounds for Dissolution of a Corporation >

- Expiration of the company’s duration or occurrence of events stipulated in the articles of incorporation

- Mergers

- Bankruptcy

- Court orders or judgments

- Company division or division-mergers

- Resolution of the general meeting of shareholders: Requires approval from at least two-thirds of the voting rights of attending shareholders and more than one-third of the total issued shares.

While there are various reasons for dissolution, most companies dissolve through a resolution of the general meeting of shareholders. The required step in such cases is registering the dissolution, which can be completed via the Supreme Court’s online registration portal.

Liquidation of a Corporation

① Appointment of a Liquidator

In cases of dissolution, except for mergers, divisions, division-mergers, or bankruptcy, the director becomes the liquidator. However, if the articles of incorporation stipulate otherwise or if another person is appointed by the general meeting of shareholders, this rule does not apply.

② Reporting of Liquidator

The liquidator must report the grounds and specific date (year, month, day) of dissolution, as well as their name, resident registration number, and address to the court within two weeks of assuming the role.

③ Investigation and Reporting of Company Assets

The liquidator must promptly investigate the company’s assets, prepare an inventory and balance sheet, and submit them to the general meeting of shareholders for approval. Subsequently, these documents must be submitted to the court without delay.

④ Preparation and Submission of Financial Statements

The liquidator must prepare a balance sheet, supporting details, and a business report and submit them to the auditor at least four weeks before the regular general meeting.

⑤ Auditor’s Submission of Audit Report

The auditor must provide the liquidator with an audit report on the balance sheet, supporting details, and the business report at least one week before the regular general meeting.

⑥ Notice and Payment to Creditors

Within two months of assuming office, the liquidator must notify creditors to file claims within a specified period of at least two months. This notice must be published at least twice, with the warning that claims filed outside the period may be excluded from liquidation. Known creditors must be individually notified and cannot be excluded even if they fail to file claims.

⑦ Distribution of Remaining Assets

Remaining assets are distributed to shareholders based on their shareholdings.

⑧ Conclusion of Liquidation

Once the liquidation process is completed, the liquidator must promptly prepare a settlement report, submit it to the general meeting of shareholders, and obtain approval.

⑨ Registration of Liquidation Completion

Upon approval of the settlement report, the liquidator must register the completion of liquidation within two weeks at the company’s headquarters and within three weeks at branch offices.

Post-Dissolution and Liquidation Procedures

If the company has obtained operational licenses, registrations, or permits, it must complete the necessary closure procedures. The relevant authorities for these actions are the municipal or provincial offices, public health centers, and local food and drug administrations that issued the permits.

Additionally, businesses with a registered tax ID must promptly submit a closure notification to the tax office, either in person or via the National Tax Information Network.

Finally, when a foreign-invested company closes, its foreign investment registration must be canceled. Once the cancellation is complete, the entrusted institution issues a confirmation certificate for the cancellation.

Today, we explored the dissolution and liquidation of foreign-invested companies.

Just as starting a business is important, so is its conclusion. This process requires attention, as unexpected issues may arise at any time. If you need legal support, don’t hesitate to reach out to Attorney Lee Kyusung at WEON Law.

With extensive experience in studying abroad—including graduation from The Hotchkiss School and Brown University with honors in Economics—and comprehensive legal expertise, I am here to provide the assistance you need.

Email: kslee@weonlaw.co.kr

Phone: +82 2 6264 7604