What is a foreign-invested corporation?
A foreign-invested corporation is a corporation in which a foreigner or foreign corporation has invested at least 100 million KRW and more than 10% of the capital. Once this requirement is met, a Foreign Investment Company Registration Certificate is issued, and the foreign investor becomes eligible for an investment visa.
Is it possible to establish a foreign-invested corporation in any industry?
Generally, retail and service industries are possible, but there are excluded industries that are not allowed under any circumstances, and restricted industries that require certain conditions to be met. These include religious organizations, environmental citizen groups, schools, public offices and administration, financial services, and others. Agriculture, power generation, air transportation, and broadcasting and communication industries are restricted and require prior approval from relevant authorities.
Is it possible to establish a foreign-invested corporation for any country?
Countries with foreign exchange restrictions in South Korea are not allowed. However, non-diplomatic countries (such as Taiwan) are allowed. If the investment does not meet the requirements of 100 million KRW and 10%, a securities transaction report is required, but the process is the same as for foreign investment reports.
How long does it take to establish a foreign-invested corporation?
Since it involves overseas documents, the preparation of documents may take a minimum of 7 days to a maximum of 3 months, depending on local conditions (usually 3 weeks for the United States). However, it may take longer depending on the local situation.
Why does it take so long to prepare the documents?
Documents issued by a foreign government or other authorized agency, or notarized by a notary public (only those qualified under the law) must be submitted with the confirmation of a consulate according to Article 30(1) of the Consular Notarization Act. However, in the case of countries that have joined the "Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents," the Apostille must be obtained and submitted according to the provisions of the Convention.
What is Apostille?
What is Apostille?
With the official enforcement of the [Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents] on July 14, 2007, South Korean public documents with an Apostille from the Ministry of Foreign Affairs and the Ministry of Justice are recognized as having the same legal effect as local public documents in the countries that joined the Convention.
Therefore, documents with an Apostille from a foreign country (public documents or private documents with notarization) also have the same legal effect as public documents for use in South Korea.
As a result, documents related to foreign-invested corporations, such as power of attorney, consent to appointment for registration, etc., can be used in the procedures required for foreign investment reports once they have received an Apostille.
Apostille participating countries status: As of June 4, 2022,
121 countries have joined.
Continent | Joined Countries |
Asia, Oceania (21) | New Zealand, Niue, Marshall Islands, Mauritius, Mongolia, Vanuatu, Brunei, Samoa, Singapore, Australia, India, Indonesia, Japan, China (parts: Macau, Hong Kong), Cook Islands, Tajikistan, Tonga, Palau, Fiji, Philippines, South Korea |
Europe (52) | Greece, Netherlands, Norway, Denmark, Germany, Latvia, Russia, Romania, Luxembourg, Lithuania, Liechtenstein, North Macedonia, Monaco, Montenegro, Moldova, Malta, Belgium, Belarus, Bosnia and Herzegovina, Bulgaria, San Marino, Serbia, Sweden, Switzerland, Spain, Slovakia, Slovenia, Armenia, Iceland, Ireland, Azerbaijan, Andorra, Albania, Estonia, United Kingdom, Austria, Uzbekistan, Ukraine, Italy, Georgia, Czech Republic, Kazakhstan, Kosovo, Croatia, Kyrgyzstan, Cyprus, Turkey, Portugal, Poland, France, Finland, Hungary |
North America (1) | United States (including Guam, Marshall Islands, Saipan, Puerto Rico) |
Central and South America (31) | Guyana, Guatemala, Grenada, Nicaragua, Dominican Republic, Dominica, Mexico, Barbados, Bahamas, Venezuela, Belize, Bolivia, Brazil, Saint Lucia, Saint Vincent, Saint Kitts and Nevis, Suriname, Argentina, Antigua and Barbuda, Ecuador, El Salvador, Honduras, Uruguay, Chile, Costa Rica, Colombia, Trinidad and Tobago, Panama, Peru, Paraguay, Jamaica |
Africa (12) | Namibia, South Africa, Liberia, Lesotho, Malawi, Botswana, São Tomé and Príncipe, Seychelles, Eswatini, Cape Verde, Burundi, Tunisia |
Middle East (4) | Morocco, Bahrain, Oman, Israel |
Establishing a foreign-invested corporation in South Korea
Prerequisites for establishment: The company's head office address, capital, board members, and shareholder composition are required. If a foreign individual or foreign corporation invests at least KRW 100 million per person and the investment satisfies both conditions of being more than 10% of the capital, a foreign investment corporation report is necessary. If these conditions are not met, a securities acquisition report is required.
Both are pre-reporting systems, and funds from abroad that are not reported in advance will not be recognized as foreign investment funds due to their unclear origin.
Documents required for pre-reporting include documents related to the payment of the capital when establishing the corporation, a comprehensive power of attorney for foreign shareholders (not required if the investor visits in person), and the shareholder register of the corporation if a foreign corporation is a shareholder.
In addition, if a foreign corporation is a shareholder, the real owner of the corporation must be verified according to the Anti-Money Laundering Law (International Law), and a passport (ID) of the real owner is required.
Verification of the real owner of a foreign corporation applies only to major shareholders and is applicable when the ultimate major shareholder is an individual or a country (local government).
When a foreign corporation is a shareholder, it is more difficult than when an individual is a shareholder because the corporation's establishment permit is thoroughly reviewed to determine if it is a legally established corporation and if its domestic business is within the scope of its purpose according to its articles of incorporation.
However, there are more cases where foreign corporations invest, rather than individuals, for reasons such as requiring large capital, providing benefits to employees of foreign corporations, or expanding foreign corporations' businesses in Korea.
Once pre-reporting is complete, the funds can be remitted to the designated bank. Since there are strict requirements for the outflow of funds from abroad, it may take a considerable time to remit the funds depending on the case. In cases where the government restricts remittance (e.g., China) or suspects capital outflow, documents such as the articles of incorporation of the company to be established, various contracts, and the company's information may be required.
In addition to transferring funds through a bank, you can also transport cash directly.
In this case, you must make a clear declaration of the purpose of the funds at the airport where you enter and submit the declaration and the funds to the bank where you pre-reported.
When reporting funds, you must not have any omissions or errors in the company name, capital, etc., and you must not arbitrarily exchange, circulate, or use the funds without the bank's confirmation.
If the funds are transported in multiple parts, the entire declaration and all the funds are required, and copies are not accepted.
Documents required for establishing a Foreign Investment Corporation
1.Comprehensive Power of Attorney
2.Passport copy of the shareholder(s) (for both representative and major shareholder if the shareholder is a foreign corporation)
3.Shareholder register of the foreign corporation (including the register of individual major shareholders and the final real owner confirmation)
4.Establishment permit and articles of incorporation of the foreign corporation
5.Address verification of the representative director of the corporation to be established
6.Documents related to the acceptance of office for all executives of the corporation to be established
7.Seal registration documents of the representative director of the corporation to be established
8.Relevant documents for domestic corporations or domestic shareholders, if any
9.Articles of incorporation of the corporation to be established (required when paying capital)
10.Minutes of the inaugural general meeting of the corporation to be established (required when paying capital)
11.Share distribution table and shareholder register of the corporation to be established (required when paying capital)
12.Foreign Investment Corporation report
13.Capital payment report
14.Capital payment certificate
15.Translations of foreign documents
16.Corporate seal
There may be additional documents such as contracts, but the above 16 documents are generally required. Furthermore, all documents coming from abroad, as initially explained, must have an apostille or consular confirmation depending on the country.
What if the foreign investment corporation has only foreign shareholders or foreign corporations, and even the executives are foreigners? What if they are all from different countries? What if they are multinational, with apostilles, consular confirmations, and seal certificates from Taiwan, China, Japan, the US, and Canada? It's not very common, but there are many such cases nowadays with active international exchanges. In particular, executives of multinational companies may have different nationalities and residences, and the nationality of the corporation may differ from that of the representative. In these cases, it takes a considerable amount of time to prepare the documents.
The general process for establishing a foreign investment corporation is as follows
Confirm the details of the corporation establishment
Prepare documents
Pre-report to KOTRA
Remittance and confirmation of remittance
Issuance of capital payment certificate
Register the establishment
After registering the establishment, the procedures are the same as for general corporations. Obtain a business registration certificate from the tax office, receive business permits from the relevant authorities if there are permitted businesses, and open a bank account. Opening a bank account at the bank where the capital was paid and receiving the foreign investment corporation establishment report from the bank completes all procedures. Subsequently, a foreign investment corporation change report is required in case of capital increase, decrease, or shareholder change.
Please note that you may lose your foreign investment corporation qualification if the requirements for a foreign investment corporation are not met during capital increase, decrease, or shareholder change. If the shareholders are 100% foreign corporations, even minor content changes require shareholder approval, which may take a long time, so it is recommended to start preparing documents at least three months in advance.
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