Set up a company in Korea (Seoul or elsewhere)?

Author detail of this article

1. Legal Framework for Foreign Investment.

Foreign investment in Korea is primarily governed by the Foreign Investment Promotion Act (FIPA) and, in specific sectors, by the Commercial Act, the Foreign Exchange Transactions Act, and related tax and labor regulations. Foreigners can do business in Korea mostly through the following four methods: (1) establishing a local corporation or investing in an already established corporation; (2) opening a private business; (3) establishing a branch under the procedures prescribed by the Foreign Exchange Transaction Act; and (4) establishing a liaison office that does not generate profit in Korea. However, Foreign corporations cannot be registered as private businesses in Korea.

Under Korean law, a “foreign-invested company” as a legal term, is one in which:

1. A foreign individual or corporation owns at least 10% of the voting shares or equity, and
2. The total investment amount is at least KRW 100 million (approximately USD 70,000).

Thus, foreign investors may establish a presence in Korea through one of the following legal forms: ​

2.Key Procedures for Establishing a Local Corporation

Provisions of the Foreign Investment Promotion Act and the Commercial Act apply to investments made through local corporations established by a foreigner or a foreign company, and the established corporation shall be treated equally as domestic corporations.

As already explained, to be recognized as a foreign-invested company under the Foreign Investment Promotion Act, a foreigner should invest at least KRW 100 million to establish a local corporation. To invest in an already established company, a foreigner should invest KRW 100 million or more and acquire 10% or more of the stocks with voting rights. But even if an investment is made through the establishment of or contribution to a local corporation, investment of less than KRW 100 million or acquisition of less than 10% of stocks with voting rights is not recognized as foreign investment, and in such cases the Foreign Exchange Transaction Act shall apply.

The procedure for establishing a local corporation can be divided into four steps: i) foreign investment notification; ii) incorporation registration (private business registration); iii) business registration (at a jurisdictional tax office); and iv) foreign-invested company registration. The procedure is basically identical to the incorporation procedure applied to Korean nationals except for the additional steps of foreign investment notification prior to incorporation registration and foreign-invested company registration after incorporation registration.

1. Investment Notification

2. 1. A foreign investor—or his or her authorized representative—must submit the foreign investment notification to KOTRA, one of its overseas investment offices, or a designated domestic or foreign bank branch in Korea. The required documentation includes two copies of the investment notification form, proof of nationality (for individuals, a passport copy; for corporations, a certificate of incorporation issued by a competent foreign authority), and a power of attorney if a proxy files the notification. Once all documents are submitted, the notification is typically processed immediately on the spot.

3. Capital Remittance

4. 1. Foreign investment capital may be brought into Korea either by overseas bank remittance or by hand-carrying funds through customs. When capital is carried in, the investor must file a foreign-currency declaration at customs and obtain a certificate confirming the declaration. Funds are typically deposited into a non-resident foreign-currency account or a temporary account issued by the designated foreign exchange bank.
   2. The remitted foreign investment capital shall be converted into Korean currency and transferred to an account for depositing payment for stocks (securities subscription deposit account).
   3. When using a temporary account, the remittance can be processed with only the recipient’s name and bank details, without requiring full account opening in advance. When this transaction is completed, the bank shall issue a securities subscription deposit certificate, which is required for registration of incorporation.

5. Corporate Name Reservation and Articles of Incorporation

6. 1. The next step involves reserving the proposed company name with the Supreme Court’s Corporate Registry (法人登記所) and drafting the Articles of Incorporation, which define the company’s structure, capital, and business scope.

7. Incorporation Registration

8. 1. After notarizing the Articles of Incorporation, the investor must file incorporation documents with the local Registry Office (登記所) having jurisdiction over the principal office. Required documents typically include:
   2. 1. Articles of Incorporation
      2. Minutes of Incorporators’ Meeting
      3. Bank Certificate of Capital Deposit
      4. Seal Certificate of Directors (for Korean residents) ​
      5. Proof of Office Lease Agreement
         
         Registration is usually completed within 3–5 business days.

9. Tax Registration and Business License

10. 1. Following incorporation, the new company must:
    2. 1. Obtain a Business Registration Certificate from the National Tax Service (NTS);
       2. Register for Value Added Tax (VAT), if applicable; and
       3. Apply for any industry-specific licenses or permits (e.g., food, medical, IT, or education).

11. Transfer of Paid-in Capital to a Corporate Account

12. 1. After completing incorporation and business registration, the company becomes a legal entity, and the paid-in capital held in a temporary account can be transferred to its official corporate bank account. To do so, the company must present key documents—such as the corporate registration certificate, seal certificate, business registration certificate, corporate seal, and the representative director’s identification—though exact requirements may vary by bank, so advance confirmation is recommended.

13. Foreign-Invested Company Registration

14. 1. A foreign-invested company registration must be filed with the same institution where the initial investment notification was made, within 60 days after the investment capital has been fully paid. The application is submitted after obtaining the business registration certificate from the relevant tax office.
    2. The required documents include: an application form for registration of a foreign-invested enterprise, a certified copy of corporate registration, proof of foreign-currency deposit or purchase, and a shareholder ledger. Once submitted, the authority issues a foreign-invested company registration certificate, which serves as official proof of the company’s foreign investment status.
    3. This certificate is essential for overseas remittance of dividends or investment profits. The process has been simplified—foreign investors may now remit profits abroad by submitting the registration certificate, a board resolution specifying dividend details, and an audited financial statement prepared by a certified public accountant.

15. Visa Matters

16. 1. Once the company registration is complete, the foreign investor can open a corporate bank account and apply for a D-8 Visa (Visa for Foreign Investors), which grants long-term residency rights to manage the company.

3.Sectoral Restrictions and Regulatory Compliance.

While most sectors in Korea are open to foreign investment, certain industries remain restricted or require prior approval (e.g., broadcasting, defense, telecommunications, or energy). Investors should also be mindful of:

1. 1. Foreign Exchange Reporting Obligations for cross-border payments;
   2. Tax Compliance, including corporate income tax and withholding obligations; and
   3. Employment Laws, such as mandatory severance pay and social insurance enrollment.

4. Common Practical Challenges

Foreign investors often face several practical difficulties when incorporating in Korea:

1. Language and Documentation – All incorporation filings and court registrations must be in Korean; foreign documents require notarization and apostille.
2. Bank Account Opening – Due to anti-money-laundering rules, personal verification of directors or investors may be required by the bank.
3. Office Lease Requirements – Proof of a valid business address is mandatory before registration.
4. Post-Incorporation Tax Filing – Corporate tax registration, VAT reporting, and bookkeeping must begin immediately after registration.

To streamline the process, most investors engage local legal and accounting advisors to coordinate filings, translations, and compliance documentation

5.Strategic Considerations for Foreign Companies

Foreign investors seeking long-term operations in Korea should carefully assess their corporate governance by appointing at least one resident director for administrative efficiency, implement tax planning to leverage Korea’s tax treaties and prevent double taxation, secure intellectual property rights early through the Korean Intellectual Property Office (KIPO), and ensure all employment contracts comply with the Korean Labor Standards Act.

Key Takeaways:

1. Korea offers a transparent legal framework and robust investor protection under FIPA, making it one of Asia’s most foreign-friendly business jurisdictions.
2. A minimum investment of KRW 100 million is required for foreign-invested corporations.
3. The incorporation process typically takes 6 weeks to 3 months, and preparation of Korean-language documentation and notarization are often time-consuming.
4. Engaging local legal counsel ensures smoother registration, visa processing, and post-incorporation compliance.

This article focuses primarily on the establishment of a local corporation in Korea. For foreign investors seeking to set up a branch office or liaison office, our firm can provide detailed guidance and professional assistance tailored to each structure’s legal and regulatory requirements.

Our firm, a leading domestic boutique firm, offers a comprehensive full-service platform staffed with experienced professionals specializing in corporate law, taxation, and company formation including the company registration work. We provide one-stop, end-to-end legal support to foreign investors seeking to establish and expand their presence in Korea. Legal and administrative costs vary depending on company type, industry, and translation requirements.

NOTICE: THIS ARTICLE IS BASED ON CURRENTLY APPLICABLE KOREAN LAWS AND REGULATIONS. THE CONTENT MAY VARY DEPENDING ON LOCAL PRACTICES AND INTERPRETATIONS, AND IT DOES NOT CONSTITUTE FORMAL LEGAL ADVICE OR AN OFFICIAL LEGAL OPINION.