Establishment

Q

What are the conditions for the establishment of FDI company?

A

* If you are a foreigner, it does not matter whether you are an individual or a corporate.

* One foreign investor needs to make an investment of KRW 100 million or more for the purpose of capital amount for the intended company. The foreign investor’s shares (equities) must be 10% or more of the intended company’s total shares (equities).
* The investment fund needs to be transmitted from overseas through the necessary procedure including foreign investment reports.
Q

Can a foreigner (individual or corporate) establish a general corporate entity instead of a FDI company?

A

Yes, it is possible. In such case, there is no requirement on the minimum capital amount and thus you may determine the capital amount in light of the actually necessary expenses for the management of your company.

What are the differences between a FDI company and a general corporate entity?

Q

How many officers are required to establish a company?

A

For companies with the capital amount of KRW 1 billion or more, three or more directors and one or more auditor need to be appointed.
For companies with the capital amount of less than KRW 1 billion, there is no restriction or requirement on appointment of officers. Thus, you may appoint only one representative director (i.e., CEO) and it would be sufficient.
Q

Do I need a Korean officer or shareholder to establish a company?

A

Korean officer or shareholder is not mandatory. In other words, you can establish a company with foreign officers and shareholders only.
However, if your company officers will consist of non-resident foreigners only, the Korean tax office may request you to appoint a tax manager in Korea.
Q

How long does it usually take to establish a company?

A

It typically takes around 15 days from the moment of completion of transmission of capital amount and preparation of necessary documents in case of FDI companies and from the moment of completion of preparation of necessary documents in case of general corporate entities.
Q

What types of taxes would be payable to establish a company?

A

In case of company establishment, 0.4% of capital amount would be payable as registration license tax, and 20% of registration license tax would be payable as local tax (education tax).
In addition to the foregoing, there are additional expenses such as application fees.
Please note that the foregoing taxes are one-off payments only; they are different from the company’s corporate tax.
In addition to the foregoing, there are additional expenses such as application fees.

	General corporate entity	FDI company
Conditions for establishment	Same conditions for Korean’s establishment but there is a difference in the necessary documents.	One foreign investor to make an investment of KRW 100 million or more as capital amount and needs to own 10% or more of the intended company’s total shares (equities)
Establishment process	Same process with Korean’s establishment process.	Certain process including a foreign investment report is required in order to be recognized as a FDI company.
Granted benefits	Equal treatment with general domestic corporate entities.	Tax benefits under the relevant laws and the relevant local government’s policies. Overseas remittance of dividend and liquidated amount, etc. is guaranteed. Example: find out about the benefits offered in Incheon Free Economic Zone