Hello, I am Attorney Kyusung Lee from WeOn Law.

According to statistics from the Ministry of Trade, Industry and Energy, Foreign Direct Investment (FDI) in Korea reached a record high this year, the highest since the data started being compiled in 1962.

As of the end of 2023, there are a total of 9,379 foreign-invested corporations operating in Korea. Among them, wholesale businesses make up the largest portion with around 4,000 entities, followed by services, manufacturing, transportation/storage/communications, and financial/insurance sectors.

With the increase in the establishment of foreign-invested corporations, inquiries regarding this process have also been on the rise.

In this post, I’d like to discuss the process of establishing a foreign-invested corporation, which many of you may be curious about.

First, for a foreigner to conduct business in Korea, they can either (1) acquire new shares (including incorporation) or existing shares under the <Foreign Investment Promotion Act>, or (2) establish a branch or liaison office of a foreign corporation under the <Foreign Exchange Transaction Act>.

A foreign-invested company is a domestic corporation established under the <Commercial Act>. Types include partnerships, limited partnerships, limited liability companies, limited companies, and corporations. Among these, limited companies and corporations are the most common types chosen by foreign investors.

The Two Main Types of Foreign-Invested Corporations

01 > Corporation (Chusik Hoesa)

Shareholders are liable up to the amount they invest. Corporations can easily transfer shares, issue bonds, and list on stock exchanges. Due to these features, most domestic corporations choose this structure.

02 > Limited Company (Yuhan Hoesa)

Members are liable up to their investment amount, with no further responsibility to company creditors. Share transfers can be restricted by articles of incorporation. Due to exemption from external audits, this structure is favored by foreign-invested companies that wish to limit exposure of company information. However, due to amendments in the *Act on External Audit of Stock Companies*, limited companies may also be subject to accounting audits.

Comparing Corporations and Limited Companies

Corporations are suited for large-scale companies due to the ease of raising capital from multiple shareholders, while limited companies are more appropriate for smaller businesses formed by individuals with established trust. Both require a minimum capital of KRW 100 million for foreign investments, and the minimum share unit is KRW 100.

The differences include that corporations do not restrict share transfers, while limited companies require approval from the members' meeting and cannot issue bonds. Other differences relate to the number of directors, auditors, and the ability to list on stock exchanges.

Process of Establishing a Foreign-Invested Corporation

The process includes: Foreign Investment Notification ▶ Remittance of Investment Funds ▶ Corporate Registration ▶ Obtaining Permits ▶ Corporate Establishment Notification and Business Registration ▶ Opening a Corporate Bank Account ▶ Registration as a Foreign-Invested Company

Except for the foreign investment notification and foreign-invested company registration, the process is generally similar to that for establishing a domestic corporation.

Each step has varying timelines, but if everything proceeds smoothly, the entire process can be completed within approximately two weeks. After the foreign-invested company registration, it is possible to apply for a residence visa.

Additionally, certain documents may require apostille certification when prepared by foreign investors. In countries that have not signed the Apostille Convention, general notarization and consular legalization by the Korean consulate in the home country are required.

Today, we covered the basics of foreign-invested corporations.

Although there is a wealth of information online regarding the procedures and required documents, some people attempt to handle the process on their own. However, it is often more convenient and cost-effective to have an experienced professional manage the entire process rather than navigating each step and preparing documents by yourself.

At WeOn Law, Attorney Kyusung Lee who graduated with honors in Economics from Brown University in Rhode Island, USA, has worked in securities research at Bank of America Merrill Lynch, and is a Certified Anti-Money Laundering Specialist (CAMS) provides consultations in English and helps find solutions tailored to your needs.

If you need a consultation at any time, please contact kslee@weonlaw.co.kr or +82 2 6264 7604.