Korea Company Setup: Step-by-Step Guide for Foreign Investors

Virtually anyone, whether an individual or a foreign entity, can establish a business or incorporate a company in South Korea. The choice of business entity depends on the nature of operations and compliance with relevant legal frameworks and regulations. Certified Korean legal professionals oversee the process of starting, registering, and incorporating businesses in South Korea to ensure high-quality service.

1. Local Corporation

This option is available to both Korean-owned and foreign-owned companies and is the most common form of incorporation in South Korea. It is open to foreign nationals as well as Korean citizens, with no minimum capital requirement, unlike Foreign Direct Investment Companies (described below). A domestic Korean company can be established under several business structures:

A Joint Stock Company (Chusik Hoesa) is the preferred structure for foreign investors looking to set up subsidiaries in South Korea. It is the only entity in South Korea allowed to issue shares publicly. Shareholders’ liability is limited to their initial investment, and shares can be transferred freely with board approval. The company is required to hold annual general meetings of shareholders, and a statutory auditor must oversee management and finances.

A Limited Liability Company (Yuhan Hoesa) is another common business structure in South Korea, allowing up to 50 shareholders. Shareholders are not personally liable for company debts beyond their capital contributions. Establishing a Limited Liability Company in South Korea requires minimal prerequisites, including at least one director and one shareholder of any nationality, no minimum paid-up capital, and a registered office address.

2. Foreign Direct Investment Company

Foreign individuals and entities can establish a local corporation as a Foreign Direct Investment Company (FDI). This option applies to various business types mentioned above. A minimum capital investment of 100 million KRW is required. FDI companies may receive certain legal benefits depending on their activities, in contrast to standard local Korean corporations.

3. Branch Office

A Branch Office in South Korea functions as an extension of its foreign headquarters and is legally considered part of the parent company. Branch offices can engage in profit-making activities in Korea and are subject to the same tax laws and rates as domestic Korean companies.

4. Liaison Office

Similar to a Branch Office, a Liaison Office is part of a foreign corporation, but its role is limited to non-commercial activities such as market research and promotion for the parent company. Although its scope is restricted, it must be registered with the appropriate tax office. A Liaison Office is often chosen by foreign investors who wish to establish a presence in South Korea and assess the market before launching full-scale business operations.

Conclusion

Pearson & Partners Korea specializes in helping establish and incorporate foreign businesses in South Korea. From the initial consultation to the final setup, we provide comprehensive support, assisting you in choosing the most suitable company registration structure. Our services include document preparation, certification, authenticated translations, power of attorney, bank account setup assistance, VAT registration, and visa application support for foreign executives.