South Korea is globally recognized for its exceptional infrastructure, including high-speed internet, state-of-the-art office spaces, and an efficient public transportation system. This advanced infrastructure creates an ideal environment for businesses, particularly in sectors that rely heavily on technology and connectivity. Additionally, South Korea’s smart cities and innovation hubs make it a prime destination for businesses seeking opportunities in a dynamic and future-forward economy.
Selecting an appropriate business structure is a crucial step that influences your company’s operations, ownership, and tax obligations. Here are the primary options available for businesses in South Korea:
Subsidiary
A subsidiary operates as a separate legal entity owned by a parent company. It provides autonomy in decision-making and offers limited liability, making it a popular choice for foreign enterprises entering the South Korean market.
Private Company (Yuhan Hoesa)
As a type of limited liability company (LLC), a private company offers flexibility in management and taxation. If the foreign investment exceeds 100 million KRW, it qualifies as a foreign-invested company under the Foreign Investment Promotion Act, although it is still governed by South Korea’s domestic commercial law.
Branch Office
Unlike a subsidiary, a branch office is not a separate legal entity but an extension of its parent company. It is subject to specific regulations and must fulfill certain reporting obligations.
Liaison Office
A liaison office is limited to non-commercial activities, such as conducting market research and promotional efforts. It cannot engage in direct sales or revenue-generating activities and is regulated by the Foreign Exchange Transactions Act.
Your choice of business structure should reflect your company’s size, industry, and long-term objectives. Consulting with seasoned legal and financial professionals is essential for making informed decisions and complying with South Korea’s regulations.
Choose a Company Name
Select a unique and available name in Korean, ensuring it complies with South Korean naming regulations. You can verify its availability through the Korean Intellectual Property Office (KIPO).
Set Up an Escrow Account and Allocate Capital
Open an escrow account and deposit the required capital to establish the financial foundation for your business.
Prepare Internal Documents
Prepare necessary internal documents, such as bylaws, resolutions, and incorporation forms, which are required for the business registration process.
Obtain a Corporate Registration Certificate
This certificate legally confirms your company’s registration and is vital for conducting business operations in South Korea.
Acquire a Corporate Seal Card
The corporate seal card is used for signing official documents and is an essential tool for business transactions.
Register with the Tax Office
Complete your business registration with South Korea’s tax authorities to ensure compliance with local tax regulations.
Open a Business Bank Account
Use your corporate registration certificate and identification documents to open a corporate bank account.
Start Business Operations
After completing all the steps, you can officially launch your business operations and begin implementing your strategies.
South Korea presents an attractive opportunity for businesses looking to grow in a highly innovative and competitive market. Understanding the process of selecting the right business structure and navigating regulatory requirements is key to ensuring a smooth and successful market entry.
At Pearson & Partners Korea, we specialize in assisting companies with their journey to establish and grow in South Korea. From company formation and tax services to regulatory compliance, our dedicated team of experts is here to support your business every step of the way. Contact us today and take the first step toward achieving your business goals in South Korea!