Set up an enterprise in Korea

Korea has become one of the most prominent rising stars in East Asia in the 21st century. Accordingly, many businesses want to expand to this country. However, most of them are unfamiliar with how to set up an enterprise in Korea. In this article, we will discuss the 3 methods to set up an enterprise in Korea in the easiest way possible.

Establish a local corporation/FDI Company

Establish a local corporation/FDI Company means that the registration is for a local company but since the ownership is by a foreign individual or foreign enterprises, it’s categorized as Foreign Capital Invested Company (Foreign Direct Investment Company/FDI). 

Due to the integration process and the goal of Korea’s government which is to attract foreign investors to their country, the FDI companies in Korea will get certain larger benefits compared to the local companies. Accordingly, now is the right time to invest or establish an enterprise in Korea. 

In brief, FDI Company may be established in one of the following types of business:

• Joint Stock Company (in Korean: “Chusik Hoesa”): A Joint Stock Company is the most generally used type of corporate form in Korea, also for FDI companies because of its large scale of operations and easy business expansion from equity financing. Normally, a company registered under this form ended with Corp./Ltd/Co., Ltd.
• Private Limited Company (in Korean: “Yuhan Hoesa”): A Private Limited Company is limited to up to 50 shareholders and it’s closed to the public. Although there are some major differences, this form of company is sometimes referred to as an LLC. Normally, a company registered under this form ended with Pte Ltd.
• Limited Liability Company (in Korean: “Yuhan Chaekim Hoesa”): A Limited Liability Company is comparable to a limited liability company (LLC) in the US. Normally, a LLC can also be publicly traded but most are not publicly traded.
• General Partnership Company (in Korean: “Hapmyung Hoesa”): A General Partnership Company required two or more partners which maintain unlimited liability. It is the basic form of partnership under common law and under most circumstances, it must be created by agreement, proof of existence, and estoppel.
• Limited Partnership Company (in Korean: “Hapja Hoesa”): A Limited Partnership Company is different from a General Partnership Company. Specifically, in this type of company, some of the partners may maintain limited liability.
• Limited Liability Partnership (in Korean: “Hapja Johap”): A Limited Liability Partnership is similar to a Limited Partnership Company but its legal entity isn’t separated from its members. 

The establishment of a branch in Seoul, Korea requires the businesses to invest a minimum amount of contributed capital equivalent to 100,000 USD (One hundred thousand US dollars). Accordingly, in order to meet the conditions for transferring investment capital abroad, businesses must carry out the procedures for offshore investment registration with the Ministry of Planning and Investment in Vietnam. 

The time to complete the procedures for registration of outward investment in accordance with the law of Vietnam is 45 working days from the date of submitting the complete dossier to the competent state agency. In fact, this time may be extended because the competent state agency needs a lot of time to evaluate the investment capacity of businesses.

Establish a Branch Office/Representative Office

According to Korean law, in order to establish a Branch Office/Representative Office in Korea, the businesses must carry out procedures for business registration. The minimum capital contribution for the registration of a branch business in Korea is 100,000 USD (One Hundred Thousand Dollars). The estimated time to complete the establishment of a branch in Korea is 12 working days from the date of submitting a complete dossier to the competent state agency.

After completing the procedure for establishing a branch/representative office abroad, it is the business’s responsibility to update the establishment of the overseas branch on their business registration. The time limit for completing the procedures for updating the establishment of an overseas branch to business registration is 5 working days from the date of submitting a complete dossier to the competent authority.

Liaison Office

Like the Branch office, this form of business is also considered a foreign enterprise, However, unlike Branch offices, it can only carry out non-sales activities such as R&D, business development, market research, advertisement, etc., that on behalf of the foreign company.