Differences between Foreign Investment Companies Liaison Office and Domestic Branch

Foreign Investment Companies

There are several ways for a foreigner to start a business in Korea: by acquiring new shares (including corporation establishment) or existing shares under the "Foreign Investment Promotion Act", or by setting up a domestic branch or liaison office of a foreign corporation under the "Foreign Exchange Transactions Act". If a foreigner invests 100 million KRW or more with the intention to participate in management and acquires 10% or more of the voting rights of new or existing shares, it is classified as a foreign investment company under the "Foreign Investment Promotion Act". Such established companies are recognized as domestic corporations established under the "Commercial Law".

Local Corporation / Foreign Corporation Domestic Branch

Establishing a local corporation and registering as an individual business owner are recognized as foreign investments under the Foreign Investment Promotion Act, whereas setting up a domestic branch of a foreign corporation does not get recognized as a foreign investment and is subject to the Foreign Exchange Transactions Act.

Foreign Corporation's Domestic Branch / Liaison Office

Branches and liaison offices of foreign corporations are differentiated based on whether they can engage in business activities. Both branches and liaison offices belong to a foreign corporation; however, branches can carry out business activities while liaison offices cannot. Instead, liaison offices can conduct market research, marketing tasks, etc. Unlike when establishing a local corporation or registering as an individual business owner, setting up a domestic branch does not get recognized as a foreign investment and is subject to the Foreign Exchange Transactions Act.

Foreign-invested companies are domestic corporations established under the Commercial Law. Their forms include general partnerships, joint-stock companies, limited liability companies, private limited companies, and stock companies. The types of corporations that foreign investors usually establish are private limited companies and stock companies.

Foreign Investment Corporation Establishment Procedure

ALL VISA KOREA is a Ministry of Justice immigration civil petition agency that specializes in immigration. If you have any questions or difficulties preparing for the establishment of a foreign investment corporation, domestic branch, liaison office, and D-7 visa for foreign residents D-8 visa for foreign corporate investment, please contact us at the contact information below. We at ALL VISA KOREA Office will assist you with speedy business processing. Thank you.