2023 Korea Branch Office Setup: A Guide for Foreign Businesses

While many foreign investors enter the Korean market by establishing a local company, foreign companies also expand their business to Korea by setting up a local branch. Although the domestic branch is not recognized as foreign investment, multinational companies and foreign entrepreneurs establish branches to cultivate business opportunities in Korea and Northeast Asia. The following outlines the procedure for setting up a branch in Korea.

Establishment of Branch Notification (Foreign Exchange Bank/Ministry of Strategy and Finance)

1. Incorporation Registration (Court Registry Office)
2. Request for Issuance of Business Registration Number or Identification Number (Tax Office)

For liaison offices, applying for the issuance of a business registration number or identification number at the tax office is sufficient.

Branch Establishment Notification

Foreign companies are required to inform the head of a designated foreign exchange bank about the establishment of their branch.

• Required Documentation:
  1. Notification form for the establishment of a domestic branch of a foreign company
  2. Certificate appointing the head of the domestic branch
  3. Documents verifying the foreign company's (headquarters) name, location, and major business operations (Notarization of the headquarters' location is necessary if the documents are not original copies)
  4. If required by other Acts or statutes for branch establishment, a copy of documents proving the obtained permit, etc.
  5. Articles of association of the headquarters
  6. Board meeting minutes outlining the company's plans for establishing a branch or liaison office in Korea, along with details about the appointment of its representative in Korea
  7. Specifications of the line of business that the company intends to operate in Korea and the business scope
  8. Power of attorney in cases where the establishment of a domestic branch is delegated to a person other than the branch head (Notarization of the headquarters' location is necessary).

Notification to the Minister of Strategy and Finance for Specified Business Activities

Prospective branch offices engaging in the following businesses are required to notify the Minister of Strategy and Finance:

1. Financial activities, excluding banking, encompassing fund loans, brokering, arranging overseas finance, cards, and installment financing
2. Activities related to securities and insurance
3. Activities not permitted under the Foreign Investment Promotion Act or other applicable laws

Branch Registration

While a liaison office is exempt from registration, a branch office intending to undertake sales activities must undergo registration as a corporation. The following documents are necessary for the registration of branch establishment.

Conclusion

In conclusion, the expansion of foreign businesses into the Korean market involves a strategic decision-making process, with options ranging from establishing local companies to setting up branches. Despite domestic branches not being formally recognized as foreign investments, multinational companies and foreign entrepreneurs often choose this avenue to explore business opportunities not only in Korea but also in the broader Northeast Asian region. The outlined procedure for setting up a branch in Korea includes the essential steps of notification, incorporation registration, and obtaining a business registration number or identification number from the relevant authorities.

Pearson & Partners, a consulting firm specializing in facilitating entry into the Korean market, offers expertise in incorporation and tax accounting services. With a focus on supporting businesses in navigating the complexities of expansion, Pearson & Partners stands as a reliable partner for companies seeking successful integration into the Korean business landscape. Contact us for comprehensive assistance and tailored solutions to ensure a smooth and efficient entry process into the Korean market.