The establishment of a domestic branch of a foreign corporation is classified into branches and liaison offices, depending on whether or not there are business activities generating revenue in Korea.
A 'branch' is classified if it engages in business activities generating revenue in Korea.
A liaison office cannot engage in revenue-generating business activities in Korea and can only perform non-business functions such as business communication, market research, and R&D activities.
However, there may be cases where the initially established branch or liaison office needs to be closed due to various situations, although everything would have been smooth as planned.
Today, let's look at how to close a domestic branch (branch, liaison office) established by a foreign corporation and repatriate the funds.
Closing and Fund Repatriation of Domestic Branch
If a person who has received establishment permission or similar under the regulations intends to close a domestic branch or dispose of assets held in Korea after closing and repatriate them to a foreign country, they must report it to the designated foreign exchange bank manager.
The repatriation amount is limited to the range of the total amount of the domestic branch's operating funds, surplus earnings, and other reserves (if there is a deficit, the amount after deducting the deficit).
Documents to be submitted when closing a domestic branch
① Foreign Company Domestic Branch Closure Report: Apply in the name of the liquidator when appointing the applicant
② Closure proof documents (issued by the head office)
③ Original Foreign Company Domestic Branch Establishment Report
Documents to be submitted when repatriating funds
① Copy of the Foreign Company Domestic Branch Closure Report
② Certified public accountant's audited liquidation report (balance sheet and income statement as of the closing date and liquidation completion date included)
③ Tax payment certificate (national and local taxes, issued by the jurisdiction tax office)
④ Statement of operating fund inflows, surplus earnings, and other reserves
⑤ Deposit balance certificate (must match the transferable amount on the liquidation report)
⑥ For business activity branches, a copy of the registry of liquidation completion
⑦ If a copy of the liquidation completion registry cannot be submitted, submit the following documents:
- Business closure certificate (issued by the jurisdiction tax office)
- Documents proving the appointment of a liquidator
- Proof of debt announcement (copy of newspaper advertisement)
- Certificate of unpaid wages and products for Korean employees (issued by the jurisdiction labor office)
Documents for establishing a domestic branch in Korea
When a foreign company wants to establish a domestic branch in Korea, they must report and submit the following documents to the designated foreign exchange bank manager
① Foreign Company Domestic Branch Establishment Report
② Domestic Branch Appointment Letter
③ Documents proving the name, location, and main business activities of the parent foreign corporation (if a copy, notarization is required at the head office location)
④ Copies of documents proving the facts if the establishment is subject to permission, etc. according to other legal provisions
⑤ Articles of Incorporation of the head office
⑥ Board of Directors' minutes containing the intention to establish a branch or liaison office in Korea and appointing a Korean representative
⑦ Specification of the scope and content of the business to be conducted in Korea
⑧ Power of attorney if the branch manager delegates the branch establishment business to someone else (notarization is required at the head office location)
※ However, in the following cases, both branches and liaison offices must report to the Minister of Strategy and Finance:
① Financial-related businesses other than banking, such as fund lending, overseas financial mediation and brokerage, card business, and installment financing
② Business related to securities and insurance
③ Business not allowed under the "Foreign Investment Promotion Act" and other legal provisions
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