How to Register a Company in South Korea: Complete Guide 2024

South Korea is a top choice for entrepreneurs aiming to start a business, thanks to its position as a leading Asian economy and its strategic location between China and Japan. The country's streamlined company registration procedures make it an attractive destination for setting up a business. Whether you are a novice entrepreneur or a seasoned business owner, this guide provides a comprehensive overview of the procedures and requirements for registering a company in South Korea.

Business Entity Types in South Korea

South Korea offers various company types tailored to different needs, influenced by factors like company size and ownership structure. Options include the Joint Stock Company (Chusik Hoesa), Limited Liability Company (Yuhan Hoesa), Partnerships, Branch Offices, and Liaison Offices. Note that private businesses in South Korea cannot use "hoesa" in their names, as it indicates a corporation.

Joint Stock Company (Chusik Hoesa)

The Chusik Hoesa is the most common business structure in South Korea and is preferred by foreign investors for setting up subsidiaries. It allows for the issuance of public shares, limits shareholders' liability to their invested capital, and enables share transfers with board approval. Annual general meetings of shareholders are required.

Limited Liability Company (Yuhan Hoesa)

The Yuhan Hoesa is favored for its simplicity and flexibility. It operates as a closely held entity with limited liability for shareholders, who are not personally liable for company debts beyond their investments. Key requirements include having at least one director and shareholder of any nationality, no minimum capital requirement, and a registered office address. Foreign-owned local corporations are classified as foreign investors under the Foreign Investment Promotion Law (FIPL) and must make a minimum investment of 100 million won.

Other Business Entity Types in South Korea

South Korea also accommodates various business structures, including partnerships, branch offices, and liaison offices.

Partnerships

Partnerships in South Korea involve two or more individuals sharing profits and losses. The main types are General Partnership (Hapmyeong Hoesa), Limited Partnership (Hapja Hoesa), and Limited Liability Partnership (Hapja Johap), each with different liability and operational features.

• General Partnership: Partners have unlimited liability, and ownership transfers require unanimous consent.
• Limited Liability Partnership: Combines features of traditional partnerships and limited liability companies (LLCs), offering liability protection to its members.
• Limited Partnership: Does not have separate legal status; it includes general partners and limited partners.

Branch Offices

Foreign companies can establish branch offices in South Korea, operating under the parent company's name and sharing its liabilities. There are no restrictions on ownership or investments.

Liaison Offices

Liaison offices, or representative offices, serve as entry points for foreign businesses into South Korea. They are limited to non-commercial activities such as market research and R&D and are prohibited from generating revenue or engaging in sales.

Steps to Establish a Company in South Korea

Starting a company in South Korea involves several key steps:

1. Choose the Legal Structure: Decide on the appropriate business entity type.

2. Reserve Company Name: Secure the desired name for your company.

3. Prepare Documentation: Draft and prepare essential documents, such as the Articles of Association.

4. Submit to Companies Register: File all necessary paperwork with the Companies Register.

5. Open a Bank Account: Set up a company bank account with a local financial institution.

6. Obtain Tax Identification Number: Register for a tax identification number.

7. Obtain Licenses: Apply for any industry-specific licenses needed for your business.

Company Registration Requirements in South Korea

South Korea does not mandate a minimum share capital for private companies, but it is advisable to allocate sufficient capital based on your business sector.

Special Requirements for Foreign Investors

Foreign entrepreneurs can choose from several options for establishing businesses in South Korea:

• Local Company Incorporation: Start a new company under South Korean law.
• Branch Office Establishment: Set up a branch of an existing foreign company.
• Liaison Office Setup: Establish a representative office for non-commercial activities.

These options fall under Foreign Direct Investment laws and come with specific compliance requirements. Local companies need a minimum investment of KRW 100 million (about USD 90,000), and the incorporation process includes notifying the Foreign Direct Investment Board.

Foreign investors also need an entrepreneur visa for business operations and potential residency in South Korea. Alien registration cards are required for extended stays and serve as identification for various activities.

For detailed guidance on starting a business in South Korea, consult with our local experts who specialize in navigating the complexities of company formation and compliance.

Conclusion

South Korea is an appealing destination for entrepreneurs due to its robust economy and strategic location. The streamlined company registration processes and diverse business structures make it easier to set up a business. However, adhering to Foreign Direct Investment regulations is crucial for foreign investors.

Contact us for expert assistance with starting your business in South Korea. Our experienced team is dedicated to guiding entrepreneurs through the intricacies of company formation, ensuring a smooth and successful launch of your business venture.