Foreign Direct Investment - Establishment of a Corporation - Business Start Up in South Korea

The procedures for the local corporation establishment by a foreign investor are mostly similar to those for domestic corporation establishment except for the pre-report of foreign investment and the registration of a foreign-invested company.

• 1.The Procedure for Local Corporation Establishment
• 2.The Procedure for Stock Company Establishment

1.The Procedure for Local Corporation Establishment

The procedures of local corporation establishment consist of foreign investment report, registration of the establishment of a corporation, business registration and registration of a foreign-invested company, which are the same with the foreign investment procedures. The following includes the details of company establishment and business registration procedures which are significant in establishing a local corporation.

2.The Procedure for Stock Company Establishment

Partnership company, joint stock company, limited liability company, stock company and incorporated company are recognized as companies under the Commercial Act. As most companies fall into the category of "stock company," the procedures of stock company establishment will be explained here.

 Types of Stock Company Establishment 

There are two types of stock company establishment: promotion of incorporation and subscriptive incorporation. Promotion of incorporation means that promoters subscribe for all of the shares issued at the time of incorporation. Subscriptive incorporation means promoters do not subscribe all the shares issued at the time of incorporation and offer shares for subscription.

 Registration of Incorporation of Stock Company 

The registration of incorporation of a stock company shall be effected within two weeks from the day when the investigation in the process of establishment has been completed in cases where the promoter subscribed for all the shares issued at the time of incorporation, and within two weeks from the day on which the inaugural general meeting has been closed in cases where the promoters have offered shares for subscription. The composition of promoters and whether the trade name or title has been used by other companies shall be reviewed before the registration. Since no trade name which has been registered by another person shall be registered as a trade name of the same kind of business in the same Seoul Special Metropolitan City, Metropolitan City, and city/gun, the company name shall be checked in advance on the Supreme Court website (www.iros.go.kr).

Required Documents in Registration of Incorporation

1. Application for the registration of the incorporation of a stock company 2. Articles of incorporation (It shall be notarized by a public notary - Notarization is exempted where the total capital of the newly incorporated stock company is less than one billion won.) 3. Documents certifying subscription for shares 4. Subscription form (in the case of subscriptive incorporation ) 5. Written consent to matters concerning issuance of shares 6. Written consent to shorten the period the notice of convocation is dispatched before the date of the inauguration general meeting 7. The minute of the inaugural general meeting (It shall be notarized by a public notary. Notarization is exempted where the total capital of the newly incorporated stock company is less than one billion won.) 8. The minute of the Board of Directors (It shall be notarized by a public notary. Notarization is exempted where the total capital of the newly incorporated stock company is less than one billion won.) 9. A certificate of paid-up stocks or balace certificate 10. An investigation report of a director, auditor, or the audit committee 11. Certificate of the delivery of pertinent property (in the case of investment in kind) 12. The public notary's report on particulars of abnormal incorporation 13. A written statement by an appraiser 14. A certified copy of the report by an inspector

15. Report certificate of foreign investment 16. Certificate of inauguration acceptance a. A Korean national shall put his/her seal on the certificate, and attach a certificate of the seal and a certified copy of resident registration b. A foreigner national shall attach a notarized original signature and certificate of the address and a copy of the passport 17. A certificate of the registration of a seal impression 18. Translation of documents (In case where the required documents including the directors inauguration acceptance are written in a foreign language) 19. A certificate of paid registration tax (issued by a district office which has jurisdiction over the area where the headquarters is located) 20. Revenue stamp of Supreme Court of Korea 21. The power of attorney (where an agent makes the report) 22. Corporate seal 23. Application form for corporate seal card (after the registration of incorporation) * The foregoing 11, 12, 13 and 14 are applied in cases where there are particulars of abnormal incorporation, such as in-kind investment.

 Required Documents for a Foreign Investor

The documents a foreign investor shall submit differ, depending on whether the investor concerned is an individual or a corporation. A foreign investor of Japan and Taiwan shall submit the same documents with a national of the Republic of Korea and a Korean corporation.

<Required Documents for Individual Investors>

A report card of seal impression	Put a seal or signature on a report card of seal impression and have it notarized
A certificate of inauguration acceptance a certificate of seal impression	Those who are inaugurated as executives of new corporations - Korea/Japan/Taiwan: put a seal on the certificate of inauguration acceptance with a certificate of seal impression attached - Other countries: put their sign on the certificate of attorney and have it notarized
Abstract of resident registration or Address certificate (for CEOs)	Attached to a certificate of inauguration acceptance - Korea/Japan/Taiwan: Abstract of resident registration or card - Other countries: notarized address certificate of respective countries (not a requirement for directors and auditors)
Power of attorney	When delegating registration of foreign investment - Japan/Taiwan :Put a seal on the power of attorney with a certificate of seal impression attached - Other countries :put their sign on the power of attorney and have it notarized
Passport copy	All foreigners

<Required Documents for Corporate Investors>

Corporate certified copy of register (Corporation as investors)	Taiwan and Japan:1 copy of certified copy of register Other countries: Certificate of corporation with notarization
Corporate report card of seal impression (for newly founded corporations)	Put a seal or signature on a report card of seal impression and have it notarized
A certificate of inauguration acceptance a certificate of seal impression	Those who are inaugurated as executives of new corporations - Korea/Japan/Taiwan: put a seal on the certificate of inauguration acceptance with a certificate of seal impression attached - Other countries: put their sign on the certificate of attorney and have it notarized
Abstract of resident registration or a certificate of address (for CEOs)	Attached to a certificate of inauguration acceptance - Korea/Japan/Taiwan: Abstract of resident registration or card - Other countries: notarized address certificate of respective countries (not a requirement for directors and auditors)
Power of attorney	When delegating registration of foreign investment - Japan/Taiwan: put a seal on the power of attorney with a certificate of seal impression attached - Other countries:put a signature of CEO and have it notarized
Passport copy	All foreigners

 Business Registration 

Business registration may be carried out at a jurisdictional tax office of the company headquarters or at all tax offices, or at KOTRA (Inbound Investment Consulting Division). It shall be done within 20 days after the commencement of business operation.

Required Documents

 Business registration form

 Articles of association (Specifications of object of investment shall be attached in case of investment in kind)

 A certified copy of corporate registration

 Specifications of shareholders etc.

 A certificate of permission for business (where the business requires permission, authorization, report etc.)

 A copy of rental contract (where workplace is rented)

 Others

- Report form of the appointment of a tax agent (where there are no directors and employees to handle matters related to domestic tax)

- A copy of certificate of foreign currency purchase

- A copy of certificate of alien registration or a copy of passport (where the representative is a non-resident)

In cases where a foreign investor makes an investment in kind to establish a corporation, a certificate of business registration is required to receive value added tax refund when the object of investment in kind clears customs. Therefore, the business registration has to be completed prior to the import of investment object.

Required Documents for Business Registration Prior to Investment

Application form of business registration

Certified copies of resident registration of all promoters

Application form for business permission (where the business requires authorization and permission)

Business plan

* A certified copy of corporation registration is not required when applying for business registration, while all other required documents shall be submitted after establishing the company.

<Original Source : http://www.investkorea.org/ikwork/iko/eng/cont/contents.jsp?code=102040203>

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