How to Complete Korea Business Registration: A Step-by-Step Guide for Foreign Companies

South Korea is preparing to introduce major reforms to its foreign exchange market, marking the most significant changes since the financial crisis of 1998. A key update includes extending trading hours until 2 AM to align with the close of the London market, with the long-term aim of enabling 24-hour trading. Additionally, foreign financial institutions will be allowed direct access to Seoul’s forex market, reducing reliance on non-deliverable forward (NDF) markets. Prominent banks such as KB Kookmin, Shinhan, Hana, and Woori are bolstering their teams to register overseas branches as Recognized Foreign Institutions (RFIs), thereby enhancing their global operations in the South Korean won market.

Furthermore, the development of corporate forex electronic trading platforms, like Hana Bank’s ‘Hana FX Trading System,’ is expected to stabilize the market by improving liquidity and reducing volatility. These updates offer new opportunities for foreign investors to broaden their influence and optimize trading strategies in South Korea’s evolving forex landscape.

Choosing a Business Structure in South Korea

Selecting the appropriate business structure is crucial for managing operations, ownership, and taxation. The main options include:

• Subsidiary: Operating as a separate legal entity owned by a parent company, a subsidiary provides autonomy and limited liability. It is a common choice for foreign companies entering the South Korean market.
• Private Company (Yuhan Hoesa): This limited liability company (LLC) offers flexibility in management and taxation. Foreign direct investments exceeding 100 million KRW qualify it as foreign-invested under the Foreign Investment Promotion Act, although it is treated as a domestic entity under commercial law.
• Branch Office: A branch office acts as an extension of the parent company without separate legal status, with specific reporting requirements.
• Liaison Office: Liaison offices engage in non-commercial activities like market research and promotion and are governed by the Foreign Exchange Transactions Act.

The choice of business structure depends on factors such as company size, industry, and objectives. Consulting legal and financial experts in South Korea is highly recommended to ensure compliance and make informed decisions.

Steps to Establish a Business in South Korea

1. Select a Company Name: The name must be in Korean, unique, and approved by the Korean Intellectual Property Office (KIPO).
2. Open an Escrow Account and Allocate Capital: Set up an escrow account and deposit the necessary capital to financially establish the business.
3. Submit Internal Documents: Prepare and file required internal documents, including bylaws and resolutions, for company registration.
4. Obtain a Corporate Registration Certificate: This certificate legally validates the existence of the company in South Korea.
5. Acquire a Corporate Seal Card: Necessary for signing official documents and conducting business transactions.
6. Register with the Tax Office: Complete the business registration with tax authorities to ensure compliance with local tax regulations.
7. Open a Business Bank Account: Using the corporate registration certificate and identification documents, open a business bank account.
8. Commence Business Operations: Once all requirements are met, the business can officially begin operations in South Korea.

Conclusion

South Korea presents vast opportunities for businesses seeking to establish themselves in a growing and dynamic market. From choosing the appropriate business structure to navigating regulatory requirements, understanding the process is essential for success.

Pearson & Partners Korea offers expert assistance in company formation, tax accounting, and compliance, helping businesses successfully expand into South Korea. For personalized support, visit Pearson & Partners Korea and embark on a successful business venture in this vibrant market.