Registering a company in Korea involves navigating the legal framework and understanding the procedural steps required. From selecting the appropriate business structure to ensuring all documentation is in place, each step is vital for establishing a successful business. This guide provides key considerations for foreign investors looking to register a company in Korea.
Prerequisites for Company Registration
To register a company in Korea, you need to meet certain prerequisites:
- Capital Allocation: Determine the initial capital required based on your business structure and sector. Make sure you have the necessary funds or a plan to secure financing.
- Business Proposal: Develop a comprehensive business proposal detailing your business nature, market analysis, target audience, and financial forecasts.
- Identification Documents: Gather identification documents for all individuals involved, such as passports or identity cards. Foreign nationals may need additional documents like a visa or Alien Registration Card (ARC).
- Office Address: Secure a registered office address in Korea. This can be a physical location or a virtual office that offers a professional business address and services.
Types of Business Entities in Korea
Foreign investors can choose from seven business structures:
- Limited Company: Common among foreign investors, it can have up to 50 shareholders with liability limited to their share capital.
- General Partnership: Partners share unlimited liability and joint responsibility for debts. Ownership transfer requires unanimous approval.
- Limited Liability Partnership: Partners can have limited or unlimited liability. Limited partners cannot make business decisions, while those with unlimited liability manage daily operations.
- Joint Stock Company: Shareholders’ liability is limited to their capital investment. Stock transfer is unrestricted with board approval, and annual shareholder meetings are mandatory.
- Branch Office: A local extension of a foreign parent company, conducting business activities but not a separate legal entity.
- Representative Office: Fully foreign-owned, conducting promotional and market research activities but cannot engage in direct sales.
Key Steps for Registering a Business in Korea
- Choose the Right Business Structure: Select a structure that fits your business needs regarding liability and management.
- Select and Register a Company Name: Ensure the name is unique and reflective of your business, then register it with the South Korean company registry.
- Draft Articles of Association: Outline your company’s operational rules, including purposes and responsibilities. Notarize the document before incorporation.
- Submit Required Documents: Provide the articles of association and other necessary documents to the South Korean registry, and pay incorporation fees.
- Obtain a Business License: After incorporation, acquire a license from relevant authorities.
- Register for Tax and Social Security: Register with the National Tax Service and the National Pension Service.
- Comply with Ongoing Obligations: File annual reports and hold shareholder meetings to stay compliant.
Steps to Register a Limited Liability Company
- Notify the Foreign Exchange Bank (FEB): Inform FEB of your investment, providing necessary identification.
- Transfer Share Capital: Deposit your investment capital in a temporary FEB account.
- Register the Company: Register with the Korean court, providing required documents. Obtain a certificate of incorporation.
- Register with the Tax Office: Complete business registration with the tax office.
- Open a Corporate Bank Account: Transfer capital to the company’s account.
- Register as a Foreign Direct Investment (FDI) Company: Complete FDI registration with FEB within 30 days of capital payment.
Conclusion
Registering a company in South Korea involves multiple steps, from government registration to obtaining a business license. Understanding these steps and the challenges posed by Korea’s evolving regulatory landscape is crucial. Pearson & Partners offer expertise in navigating these processes, ensuring a smooth incorporation experience. Contact us for assistance with your South Korean company registration.