South Korea Economic Outlook 2024: Business Expansion Opportunities

The Bank of Korea raised its 2024 real GDP growth forecast to 2.5%, up from 2.1%, citing strong export performance. In its latest economic outlook released on May 23, the Bank noted that first-quarter growth exceeded expectations at 1.3% compared to an anticipated 0.6-0.7%. Governor Rhee Chang-yong attributed this upward revision to robust global IT sector performance and strong growth in the U.S. economy, contributing to a 0.3 percentage point increase. This optimistic outlook underscores South Korea's attractiveness for foreign entrepreneurs and investors seeking business expansion opportunities. This article provides insights into the procedures for setting up a company in Korea, tailored for foreign investors and entrepreneurs.

Procedure for LLC Formation

1. Business Registration Declaration at the Bank (5 Working Days):

Initiate LLC formation by declaring business registration at a bank, depositing paid-up capital into an escrow account to establish a solid financial base. This essential step is completed within five working days.

2. Document Preparation (Ongoing):

Prepare necessary registration documents detailing company specifics and activities to meet legal requirements. This phase demands meticulous attention to detail and is an ongoing process.

3. Submission to the Registry Office:

Submit finalized registration documents to the Registry Office for review, ensuring compliance with Korean business regulations.

4. Opening a Corporate Bank Account and Online Business Banking (5 Working Days):

Post-capital deposit, proceed to open a corporate bank account and set up online business banking within five working days, aligning with Korean banking regulations.

5. Issuance of Tax Registration Number (2 Working Days):

Obtain a tax registration number promptly, facilitating the commencement of legal and financial operations within just two working days.

Foreign Direct Investment (FDI) with a Paid-Up Capital of 100 Million KRW:

Foreign Direct Investment (FDI) involves establishing a new corporation or acquiring shares in an existing domestic company, fostering lasting economic partnerships and engagement. Investments exceeding 100 million KRW with foreign ownership exceeding 10% offer flexibility in conducting business locally, promoting economic collaboration and growth in South Korea.

Key Documents for LLC Formation

Application Form:

• Company Name
• Paid-Up Capital Amount
• Business Activities
• Tenancy Agreement for Business Address in Korea

The application form gathers essential information necessary for LLC formation, ensuring adherence to regulatory standards and transparency.

Director's Information:

• Passport Copy
• Proof of Address
• Acceptance Letter (provided by Pearson)
• Seal Impression (provided by Pearson)

Director's details, including passport information and documentation from Pearson & Partners, are critical for the registration process.

Shareholder's Information:

• Passport Copy
• Proof of Address
• Shareholder Resolution to Register a Company in Korea (provided by Pearson)

For Corporate Shareholders:

• Certificate of Business Registration
• Articles of Incorporation
• Shareholder List
• Passport of Corporate Representative

Shareholder information underscores the collaborative nature of LLC formation. Corporate shareholders must provide additional documents to ensure compliance and transparency.

Conclusion

Choosing a Limited Liability Company (LLC) is a strategic decision for businesses expanding into South Korea, enabling significant market presence without requiring a local headquarters. The LLC formation process ensures compliance with South Korean regulations and supports business development. Due to the relationship between registration fees and authorized capital, careful financial planning is essential.

Pearson & Partners offers comprehensive support throughout the LLC formation, including incorporation and tax accounting services. For expert guidance on legal requirements, regulatory compliance, and strategic decision-making in South Korea, contact us.