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Foreign Direct Investment & Procedure
Foreign direct investment means that a foreigner acquires stocks or shares of a domestic company for the purpose
of establishing a continuous economic relationship, including participation in management and technical cooperation
Type
Acquisition of shares or stocks of a domestic company
- Acquisition of new shares : Greenfield
- Establishment of corporation or factory
- ▶ investing foreign production facilities, technology, know-how, etc.
- Establishment of corporation or factory
- Acquisition of existing stock : M & A
- Foreign investors buy existing domestic corporations
- ▶ replacement of owners, application of advanced management technologies, etc.
- Foreign investors buy existing domestic corporations
Donating fund for non-profit corporation
It's required that foreigners' capital investment over 50 million won + Over 10% of the total capital investment + Foreign-invested-company possesses independent research facilities in the field of science and technology.
Long-term loan
Regarded as a foreign direct investment when a company in which foreign investors have invested capital extends a loan to the foreign-invested company over more than five years.
Requirements
- Foreign Investment Promotion Act, Enforcement Decree, and Enforcement Rule View Details
- Regulation on Foreign Investment View Details
- Tax Reduction Regulation on Foreign Investment, etc. View Details
- Restriction of Special Taxation Act, Enforcement Decree, and Enforcement Rules View Details
- Integrated Notification of Foreign Investment
(Korean) View Details
Procedure
- 01. Foreign Investment Notification (KOTRA or foreign currency exchange bank)
- 02. Investment funds remittance (banks available for foreign currency exchange)
- 03. Payments of stocks (banks available for foreign currency exchange)
- 04. Registration of incorporation (Court registry office)
- 05. Transfer of investment fund to corporate account (banks available for foreign currency exchange)
- 06. Register as a foreign-invested company (first reporting agency)
01. Foreign Investment Notification (KOTRA or foreign currency exchange bank)
Oreign Investment Notification
Report
Minister of Trade, Industry and Energy (branches, offices and trade agencies entrusted by the head of KOTRA or foreign exchange banks)
When to report
In advance (in case money is sent before the report, it is considered as a pre-report if it is reported within the day of exchange)
Issuance of a certificate
Upon receipt of a report, a certificate will be issued to the reporter without delay.
Legal binding of foreign investment notification
Legally not binding
※ The first notification can be changed at any time, if needed.
Documents required for reporting foreign investment
A report
Report form for each type (available in either Korean or English)
Power of attorney
A representative who, by granting the right of representation of a foreign investor, applies for permission to report pursuant to legal regulations.
- (Corporations or organizations) A certified copy of register issued by a government or other authority of the country or documents proving that the corporation or organization is located in that country
- (Individual) documents that prove the nationality or a citizenship, a passport, etc. issued by the government or other authority of the relevant country
02. Investment funds remittance (banks available for foreign currency exchange)
Remittance of investment funds
After the investment report, you can visit the bank and obtain a temporary account. Foreign investor and remitter on the foreign investment report must be the same person. In case of medium or large-scale investment, the amount of the initial remittance is limited to 100 million won. From the second remittance, you can send money as needed.
03. Payments of stocks (banks available for foreign currency exchange)
- Foreign investors must remit investment funds in their own name
* Domestic funds cannot be admitted. - Foreign investors receive a stock payment certificate and a foreign exchange purchase certificate from the bank.
04. Registration of incorporation (Court registry office)
Registration of incorporation (foreign invested company)
Need to confirm in advance
- Corporation type : Corporation, Limited liability company
- Company name: Check for existence of an identical name (not available for English name)
※ Supreme Court Internet : http://www.iros.go.kr/pos1/html/eng/PEngRegistryIntroH.html - Secure an office address
- Executives (regardless of nationality or residence in Korea)
Directors : Executive directors (CEOs), non-executive directors and other non-executive directors
(※ must have at least three directors in companies, but possible to have one or two if the capital of a company is less than one billion won)
Audit (no need to appoint when the capital is less than 1 billion won) - CEO's address certificate
- Foreign investment report (confirmed investor, the amount of investment, business field, etc.)
- Appoint a lawyer or accountant (Matching service is available, if needed.)
Corporate Establishment Report and Business Registration
Application documents
- Agency : Jurisdiction Tax Office
- Application form : Incorporation report and business registration application
Required documents
- A copy of articles of Incorporation
- A copy of lease agreement (only when renting a workplace)
- If you rent a part of the mall, which is covered by the law for protection of commercial building tenants, one copy of the relevant architectural drawings is needed.
- A copy of statement of shareholders or investors
- A foreign-invested company needs to open an account by using a business registration number.
05.Transfer of investment fund to corporate account (banks available for foreign currency exchange)
The bank claims the required documents and transfers the paid-in capital to the newly incorporated account.
06. Register as a foreign-invested company (first reporting agency)
Registered as a foreign invested company
- Application Form : Foreign-invested enterprise application form
- Applicant : Foreign investors or foreign invested companies
Required Documents (New Registration)
- One copy of certificate of purchased foreign currency or certificate of deposited foreign currency where remittance is confirmed
- One copy of each of the following documents of the enterprise to register as a foreign-invested enterprise
- A certified copy of corporate register
- A copy of business registration or identification number
Partial registration of foreign invested company
A foreign investor or a foreign-invested company can register as a foreign-invested company if it satisfies the minimum foreign-investment requirements, even before the completion of the payment for investment target or settlement of the acquisition price of stocks.