There are four ways in which a foreigner or a foreign entity can establish a corporate entity in Korea: 1) by establishing a Korean legal entity, 2) via direct investment, 3) by establishing a branch office or a 4) liaison office. In the first two cases, the Foreign Investment Promotion Act applies, whereas in cases three and four the Foreign Exchange Transactions Act is implemented. This is due to the fact entities in the first two cases are considered a Korean corporation, independent legal personalities from that of the foreign investor. A branch or liaison office, on the other hand, is no more than an extension of the foreign company on Korean territories. They are equivalent legal entities to that of their foreign companies.

Why is this important? This means that if the company meets the minimum investment requirement of 100,000,000 KRW, the company can file a Foreign Investment Report to KOTRA and gain numerous benefits from the Korean government. Further information on benefits of being recognized as a foreign investment company under the Foreign Investment Promotion Act will be uploaded on later posts. 

Of the four methods of establishing a corporate in Korea, establishing an independent Korean legal entity is by far the most complicated. Required documents vary depending on which of the five types of business structure allowed under the Korean Commercial Act one wishes to establish. But some of the common documents include:

• Articles of Incorporation,
• a consent form of directors or members appointing the company representative,
• the consent form of the company representative appointed,
• Registration of Corporate Seal Impression,
• and two original copies of POA(Power of Attorney)—one for the bank and one for the registry office.

Instead of the Resident Registration Card which Koreans use to verify their identification, foreigners or the representative of foreign firms needs to submit a notarized copy of his/her passport, and proof of address. Foreigners living in Korea can streamline this process via using their Alien Registration Number, which can only be obtained after six months of living, with an address, in Korea.

Bear in mind that local tax estimated about 1,500,000 KRW (this is an estimate given that the total amount of capital is 100,000,000 KRW), and corporate registration fees of about 30,000 KRW needs to be paid among registration. And of course, each of the documents listed above needs to be legalized by public notary or apostilled under the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents.

For more information, contact us at Cha & Kwon Law Offices.