Establishing a Company in South Korea: A Comprehensive Guide

Hailey Kim

South Korea has emerged as a top destination for foreigners aiming to establish businesses. Its advanced economy and strategic location between China and Japan, as one of the Four Asian Tigers, make it an ideal jurisdiction for business setup. This guide will walk you through the procedures and requirements for registering a company in South Korea, whether you're a budding entrepreneur or a seasoned business owner.

 

Types of Business Entities in South Korea

In South Korea, the type of company you can establish depends on factors such as company size and ownership structure. Here are your options:

  1. Joint Stock Company (Chusik Hoesa): The most common structure for foreign investors, allowing for public share issuance. Shareholders' liabilities are limited to their capital investment.

  2. Limited Liability Company (Yuhan Hoesa): A popular choice with a maximum of 50 shareholders, offering limited liability and minimal setup requirements, including one director and one shareholder of any nationality.

  3. Partnerships: Includes General (Hapmyeong Hoesa), Limited (Hapja Hoesa), and Limited Liability (Hapja Johap) partnerships, each with different liability and ownership transfer rules.

  4. Branch Office: An extension of a foreign parent company, sharing its liabilities and without investment or ownership restrictions.

  5. Liaison Office: Used for non-commercial activities such as market research and R&D, without the ability to generate revenue.

 

Steps to Establish a Company in South Korea

To start a company in South Korea, follow these steps:

  1. Reserve a Company Name: Choose and reserve your trading name.
  2. Prepare Documents: Draft and prepare the Articles of Association.
  3. Submit to Companies Register: Submit all required documents.
  4. Open a Bank Account: Set up a company bank account.
  5. Obtain a Tax ID: Get a tax identification number.
  6. Apply for Licenses: Obtain any industry-specific licenses needed.

You need at least one shareholder and one director, with no nationality or residency requirements. The registration process usually takes about two weeks, while setting up a bank account and obtaining necessary licenses may take up to three weeks.

 

Requirements for Company Registration in South Korea

Minimum Share Capital

There is no mandatory minimum share capital for private companies, but it’s advisable to allocate at least USD 5,000, depending on the sector.

Special Requirements for Foreign Investors

Foreign entrepreneurs have several options, including:

  • Local Company Incorporation: Requires a minimum investment of KRW 100 million (approximately USD 90,000).
  • Branch Office: Requires initial notification to the Foreign Direct Investments Board.
  • Liaison Office: A simplified entry point, limited to non-commercial activities.

Foreign businesses must comply with Foreign Direct Investment laws and may need to register with Korean tax authorities if they employ local staff, even if not formally registered.

 

Visa and Residency

Foreign entrepreneurs need an entrepreneur visa and may need to obtain an alien registration card for stays longer than six months. This card provides a Resident Registration Number necessary for various activities such as opening bank accounts and registering with local healthcare services. It’s also the first step towards potential permanent residency.

 

Conclusion

South Korea's advanced economy and strategic location make it an attractive destination for business. The registration process is straightforward, with various company structures available. However, compliance with Foreign Direct Investment regulations is crucial. For expert assistance in launching your business in Korea, contact us. Our experienced team is dedicated to helping you navigate the complexities of company formation, ensuring a smooth and successful start to your business journey.

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