South Korea stands out as a compelling destination for foreigners looking to establish businesses. It not only boasts one of Asia's most advanced economies, as part of the Four Asian Tigers, but also occupies a strategic position between economic powerhouses China and Japan. Consequently, South Korea is highly favored for business setup, thanks to its efficient company registration processes. Whether you're a new entrepreneur or an experienced business owner, this guide will outline the procedures and requirements for registering a company in South Korea.
In South Korea, the types of companies available to entrepreneurs depend on factors such as company size and structure. The options vary whether you intend to operate as the sole owner or in partnership with local or foreign investors. South Korea offers various forms of business entities, including Joint Stock Company (Chusik Hoesa), Limited Liability Company (Yuhan Hoesa), Partnerships (General, Limited, and Limited Liability), Branch Offices, and Liaison Offices.
It's important to note that the term "hoesa," meaning corporation, cannot be used in the name of a privately owned business in South Korea.
This comprehensive overview equips foreign investors with the necessary knowledge to navigate South Korea's diverse business environment, from choosing the right business entity to understanding legal obligations and market entry strategies.
Starting a company in South Korea involves navigating several crucial steps. After selecting the appropriate legal structure, follow these essential procedures:
Regardless of the entity type chosen, you'll need at least one shareholder and one director, with no residency or citizenship requirements if they are non-Korean residents.
Business registration with the Trade Register typically takes about two weeks. However, the processes for bank account setup and obtaining licenses may extend this timeline to approximately three weeks before commencing operations.
For foreign investors looking to establish a business in South Korea, consulting with local advisors is recommended. They can expedite due diligence processes and facilitate incorporation under your chosen legal structure.
One advantage of South Korea as a business destination is the absence of a mandatory minimum share capital for private companies. However, sufficient capital allocation (minimum USD 5,000) relevant to your industry is necessary.
Foreign entrepreneurs can opt for various registration options, including:
These options are governed by Foreign Direct Investment laws and entail specific compliance requirements. Local company incorporation, for instance, mandates an initial investment of at least KRW 100 million (about USD 90,000) and requires notification to the Foreign Direct Investments Board.
Businesses operating in South Korea, even without formal registration, or those employing local staff, may need to report to Korean tax authorities.
For foreign nationals, obtaining an entrepreneur visa is essential, leading to eligibility for a Korean residence permit. Alien registration cards are also necessary for extended stays beyond six months, serving as identification for expatriates and providing access to local services.
South Korea's advanced economy and strategic location make it an attractive destination for entrepreneurs. With streamlined registration processes and diverse company structures available, starting a business is straightforward. However, compliance with Foreign Direct Investment regulations is crucial, particularly for foreign investors.
Contact us for expert guidance on launching your business in Korea. Our experienced team ensures a smooth start to your business journey, navigating complexities and maximizing your chances of success.