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Q:
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What type of Companies can be incorporated in South Korea and what is the most common form of business vehicle used in South Korea for foreign investors?
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A:
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There are five main types of companies which can be incorporated in South Korea, including General Partnership (Hapmyeong Hoesa), Limited Liability Partnership (Hapja Hoesa), Joint Stock Company (Chusik Hoesa), Limited Liability Company (Yuhan Hoesa) and Private Limited Company (Yuhan Hoesa). Private Limited Company is the most common form of business entity for foreigners to enter the local market in South Korea (as a "Foreign Invested Enterprise").
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Are there any restrictions on the nationality of director for incorporating a Private Limited Company?
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No. Foreigner can be appointed as director for a Private Limited Company. If the Company has two or more directors, a representative director must be appointed.
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Can we appoint a corporate shareholder for a Private Limited Company and are there any restrictions on shareholders’ nationality?
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Yes. A Company can be incorporated by one or more shareholders who can be a natural person or corporation and there are no restrictions on their nationality or place of incorporation.
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What is the minimum capital requirement of a Private Limited Company?
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There is no minimum capital requirement for the Company. However, each foreign investor must contribute at least KRW100 million and acquire at least 10% of the shares and voting rights of the Company according to the Foreign Investment Promotion Law.
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Can a Private Limited Company register its English Company name without Korean name?
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No. Korean name is a must to register a Private Limited Company.
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Is it compulsory to have a registered and physical address for a Private Limited Company in South Korea?
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Yes. A Company must have a registered and physical address in South Korea where the correspondence from local government can be served and the business activities can be carried out.
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Is a Private Limited Company required to apply for working visa or permits for their foreign employee(s) who wants to work in South Korea?
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Yes. Working visa or permits are required if the Company would like to hire any foreign employees who wants to work in South Korea and they are also required to enroll in the Social Security System.
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Is it mandatory to open a bank account for a Private Limited Company in South Korea during the incorporation?
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Yes. It is mandatory for the investor to open a preparatory bank account for capital injection prior to the incorporation in South Korea. The capital amount must be transferred from the account outside South Korea under the investor’s name to the investor’s preparatory account in South Korea.
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