2024 Korea Branch Office Establishment: A Guide for Foreign Businesses

Many international investors prefer entering the Korean market by establishing a local company, but foreign corporations also expand their business presence in Korea through the establishment of a local branch. Even though the domestic branch is not formally categorized as foreign investment, multinational companies and foreign entrepreneurs choose this route to explore business opportunities in Korea and the broader Northeast Asia region. The following presents a formal overview of the steps involved in initiating a branch in Korea.

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

1. Registration for Incorporation (Court Registry Office)

2. Application for Issuance of Business Registration Number or Identification Number (Tax Office)

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

Branch Establishment Notification

Foreign enterprises are required to formally notify the head of a designated foreign exchange bank regarding the establishment of their branch. The form for notifying the establishment of a domestic branch of a foreign company includes the following:

• Required Documentation:

1. Certificate of appointment for the head of the domestic branch
2. Documentation confirming the foreign company's (headquarters) name, location, and primary business operations (Notarization of the headquarters' location is necessary if the documents are not original)
3. Copies of documents validating the obtained permit, etc., if mandated by other Acts or regulations for branch establishment
4. Articles of association of the headquarters
5. Minutes from board meetings outlining the company's plans for establishing a branch or liaison office in Korea, including details about the appointment of its representative in Korea
6. Details specifying the line of business that the company intends to operate in Korea and the extent of its business operations
7. Power of attorney in cases where the establishment of a domestic branch is delegated to an individual other than the branch head (Notarization of the headquarters' location is required).

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

Branch offices intending to engage in the activities listed below must formally inform the Minister of Strategy and Finance:

1. Financial operations, excluding banking, such as fund loans, brokering, arranging overseas finance, cards, and installment financing
2. Operations related to securities and insurance
3. Operations not covered under the Foreign Investment Promotion Act or other relevant statutes

Registration of Branch Office

In contrast to a liaison office, which is exempt from registration, a branch office planning to conduct sales activities must undergo registration as a corporation. The following documents are indispensable for the registration process of branch establishment.

Conclusion

In summary, the strategic entry of foreign businesses into the Korean market involves thoughtful decision-making, offering various options ranging from establishing local companies to creating branches. Despite the lack of formal recognition of domestic branches as foreign investments, many multinational companies and foreign entrepreneurs choose this method to explore business opportunities not only in Korea but also in the broader Northeast Asian region. The outlined process for establishing a branch in Korea includes crucial steps such as notification, incorporation registration, and obtaining a business registration number or identification number from the relevant authorities.

Pearson & Partners, a specialized consulting firm facilitating market entry into Korea, offers expert services in incorporation and tax accounting. With a dedicated focus on helping businesses navigate the complexities of expansion, Pearson & Partners serves as a reliable ally for companies seeking smooth integration into the Korean business landscape. Contact us for comprehensive support and customized solutions to ensure a successful and efficient entry into the Korean market.