Guide to Setting Up a Company in Korea: Essential Steps & Requirements

The Bank of Korea has upgraded its 2024 real GDP growth projection to 2.5% from 2.1%, citing strong export performance. According to its latest economic forecast released on May 23, the bank noted that first-quarter growth significantly exceeded initial expectations, reaching 1.3% compared to the anticipated 0.6-0.7%. Governor Rhee Chang-yong attributed this upward revision to robust global IT sector performance and strong U.S. economic growth, contributing to a 0.3 percentage point increase. This optimistic economic outlook positions South Korea as an increasingly attractive destination for foreign entrepreneurs and investors seeking business expansion opportunities.

Procedure for Establishing an LLC

1. Declaration of Business Registration at the Bank (5 Working Days):

Initiate LLC formation by declaring business registration at a bank, depositing paid-up capital into an escrow account to establish a secure financial base. This step, completed within five working days, marks the beginning of the formation process.

2. Document Preparation (Ongoing):

Prepare necessary registration documents detailing company specifics, activities, and compliance with legal requirements. This ongoing phase demands meticulous attention to detail due to its complexity.

3. Submission to the Registry Office:

Submit finalized registration documents to the Registry Office for thorough review, ensuring adherence to Korean business regulations.

4. Opening Corporate Bank Account and Online Business Banking (5 Working Days):

Proceed with opening a corporate bank account and setting up online business banking following capital deposition. This step, complying with Korean banking regulations, is completed within five working days.

5. Issuance of Tax Registration Number (2 Working Days):

Obtain a tax registration number promptly within two working days post-Registry Office submission, facilitating the commencement of legal and financial operations.

Foreign Direct Investment (FDI) with Paid-Up Capital of 100 Million KRW:

Foreign Direct Investment (FDI) involves establishing a new corporation or acquiring shares in an existing domestic company. This approach fosters enduring economic partnerships with local businesses and ensures sustained economic engagement. Investments exceeding 100 million KRW and foreign ownership exceeding 10% entail fewer operational restrictions, encouraging foreign entities to participate actively in South Korea's business landscape. This flexibility promotes economic collaboration and growth, attracting foreign investors to explore diverse business opportunities in the country.

Key Documents Required for LLC Formation

Application Form:

• Company Name
• Paid-Up Capital Amount
• Business Activities
• Tenancy Agreement for Business Address in Korea

The application form collects essential details necessary for LLC formation, ensuring adherence to regulatory standards and transparency in business operations.

Director's Information:

• Passport Copy
• Proof of Address
• Letter of Acceptance (provided by Pearson & Partners)
• Seal Impression (provided by Pearson & Partners)

Director's information, including passport details and documents issued by Pearson & Partners, plays a pivotal role in the registration process.

Shareholder's Information:

• Passport Copy
• Proof of Address
• Shareholders' Resolution to Consent to Register a Company in Korea (provided by Pearson & Partners)

If Shareholder is a Corporation:

• Certificate of Business Registration
• Memorandum of Articles and Association
• List of Shareholders
• Passport of Corporate Shareholder's Representative

Shareholder information underscores the collaborative aspect of LLC formation. For corporate shareholders, additional documentation ensures compliance and transparency in corporate governance.

Conclusion

Opting for a Limited Liability Company (LLC) is a strategic move for businesses expanding into South Korea, allowing them to establish a robust market presence without necessitating a local headquarters. The LLC formation process ensures full compliance with South Korean regulations and supports business growth. Given the intricate relationship between registration fees and authorized share capital, meticulous financial planning is imperative.

Pearson & Partners offers comprehensive support throughout the LLC formation journey, encompassing incorporation and tax accounting services. For expert guidance on navigating legal requirements, ensuring regulatory compliance, and making informed strategic decisions in South Korea, contact us.