Korea Business Incorporation: Step-by-Step Guide for Foreign Investors in 2024

On April 3, 2024, Korea’s Ministry of Trade, Industry, and Energy, alongside KOTRA’s Foreign Investment Ombudsman, held a strategic meeting with CEOs of foreign-invested companies and representatives from foreign chambers of commerce in Korea. The aim was to discuss new initiatives to enhance Korea’s investment environment and attract more Foreign Direct Investment (FDI). The government has set a target of $35 billion in foreign investment for 2024 and is committed to implementing policies that simplify market entry for foreign companies.

The Minister of Trade emphasized recent measures to increase financial support and raise operational limits for foreign-invested companies. Additionally, new regulations have been introduced to help foreign firms recruit local talent. This guide outlines the necessary steps for foreign investors and entrepreneurs looking to incorporate a company in Korea.

Essential Steps for Setting Up a Company in Korea

To establish a business in Korea, follow these key steps:

1. Capital Allocation

   Initial capital will depend on your business’s legal structure and industry. Access to adequate funds or a solid financing strategy is crucial.

2. Business Proposal

   Prepare a comprehensive proposal detailing your business model, market analysis, target demographics, and financial projections. This will serve as a roadmap for your venture.

3. Identification Documentation

   Collect identification documents for all parties involved, such as passports or ID cards. Foreign nationals may also need visas or Alien Registration Cards (ARCs).

4. Office Setup

   Every business in Korea must have a registered office. This can be a physical or virtual location that provides an official address and administrative support.

Business Structures for Foreign Investors in Korea

Foreign investors can choose from several business entity options:

1. Limited Company

   A commonly chosen structure offering shareholders limited liability.

2. General Partnership

   In this setup, all partners have unlimited liability for debts, with unanimous approval required for ownership transfers.

3. Limited Liability Partnership (LLP)

   Partners choose between limited and unlimited liability roles, with limited partners restricted from daily operations.

4. Joint Stock Company

   Here, shareholder liability is limited to their investment, with annual shareholder meetings required.

5. Branch Office

   Functions under the parent company as a non-independent legal entity, allowing it to conduct business in Korea.

6. Representative Office

   Fully foreign-owned and limited to conducting market research and promotional activities without sales functions.

Steps for Business Registration in Korea

Incorporating a company in Korea involves several critical steps:

1. Selecting the Right Business Structure

   Choose the structure that aligns with your liability and management needs.

2. Choosing a Company Name

   Select a unique name that reflects your brand and complies with local regulations.

3. Registering the Company Name

   Ensure your chosen name is properly registered with Korea’s company registry.

4. Drafting Articles of Association

   Prepare a notarized document that outlines the company’s objectives, shareholder rights, and decision-making processes.

5. Submitting Documentation

   Submit the necessary incorporation documents, including the certificate of incorporation and applicable fees.

6. Obtaining a Business License

   Secure the relevant license to legally operate in Korea.

7. Registering for Tax and Social Security

   Register with the National Tax Service and National Pension Service to meet tax and social security obligations.

8. Ongoing Compliance

   Fulfill ongoing legal requirements, such as filing annual reports and conducting shareholder meetings.

Conclusion

Starting a business in Korea requires navigating regulatory frameworks and selecting a business structure that aligns with your goals. With proper planning and adherence to local requirements, foreign investors can establish a robust presence in Korea’s dynamic economy.

For professional guidance throughout the incorporation process, Pearson & Partners Korea offers comprehensive services to ensure seamless registration and regulatory compliance. Contact us for expert assistance tailored to your business needs.