How to Successfully Start a Business in South Korea: A Guide to Korea Business Incorporation

Starting a business or incorporating a company in South Korea is open to almost anyone, whether an individual or a foreign entity. The type of business entity chosen will depend on the specific nature of operations and adherence to relevant legal frameworks and regulations. To ensure the highest quality of service, the processes of initiation, registration, and incorporation in South Korea are handled by certified Korean legal professionals.

Foreign individuals or entities without South Korean residency have four main options for starting and registering a business in the country:

1. Local Corporation

This type of registration applies to Korean-owned companies and is the most commonly used form of incorporation in South Korea. It is available to both foreign nationals and Korean citizens. Unlike Foreign Direct Investment (FDI) Companies (explained below), there is no minimum capital requirement. A domestic Korean company can be established under various business structures, including:

Joint Stock Company (주식회사)

A Joint Stock Company (Chusik Hoesa) is preferred by foreign investors for setting up subsidiaries in South Korea. It is the only business entity that can publicly issue shares. Shareholders’ liability is limited to their capital contributions, and shares can be transferred with board approval. Annual general shareholder meetings are mandatory, and a statutory auditor must oversee the company’s management and accounts.

Limited Liability Company (유한회사)

A Limited Liability Company (Yuhan Hoesa) is another popular business type in South Korea, allowing up to 50 shareholders. Shareholders' liability is limited to the value of their shares. Establishing this type of company requires minimal conditions, such as at least one director and one shareholder of any nationality, no minimum capital requirement, and a registered office address.

2. Foreign Direct Investment Company

Foreign individuals and companies can establish a local corporation as a Foreign Direct Investment (FDI) Company, applicable to various business types mentioned earlier. An FDI company requires a minimum capital investment of 100 million KRW. These companies may qualify for certain benefits under Korean law based on their specific activities, benefits that are not available to standard local corporations.

3. Branch Office

A Branch Office in South Korea operates as an extension of its foreign parent company and is considered a single entity with it. Branch offices can engage in profit-making activities within the country and are subject to the same tax laws and rates as local Korean companies.

4. Liaison Office

A Liaison Office is also recognized as a foreign entity but is limited to non-commercial activities such as market research and promotional work for the parent company. Despite its limited role, it must still be registered with the relevant tax office. This option is ideal for foreign investors who want to establish a presence in South Korea and assess the market before starting full business operations.

Conclusion

Pearson & Partners Korea offers expert support in helping foreign enterprises establish and incorporate businesses in South Korea. From initial consultation to final setup, we provide comprehensive services, including document preparation, certification, authenticated translations, power of attorney, assistance with bank account setup, VAT registration, and visa application support for foreign managers.