Incorporation and Branch Establishment Service

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We can assist a foreign company or a foreign individual to establish business presence in Korea.

 

Korean companies today commonly utilize the forms of a joint stock corporation called Chusik Hoesa in Korean or a limited liability company called Yuhan Hoesa in Korean, taking advantage of limited liability associated with those forms.

 

More specifically, Chusik Hoesa is the most prevalent form of a corporation that is used in Korea.  Shareholders of a stock corporation have limited liabilities, being liable only to the extent of their capital investment in the corporation made through the acquisition of its stock.  The capital of a corporation is a normal sum of the total face value (par value) of stock issued by the corporation.  The stock of a corporation may be freely transferable; however, the transfer of stock may be subject to the approval of the board of directors in accordance with its articles of incorporation.  By its nature, a corporation cannot increase the liabilities on its stockholders, neither by a provision in the articles of incorporation nor by a decision of the general meeting of stockholders.

 

Youhan Hoesa is also a type of a corporation that consists of members with limited liabilities (there is a limitation as to the number of members), who are responsible only to the extent of their capital investment. The advantage of Youhan Hoesa is that it has a much simpler corporate governance structure as compared to Chusik Hoesa.  However, because of certain limitations imposed on this type of a corporate vehicle, Youhan Hoesa is more suitable for a small and medium business to assume.

 

It is noted that if a foreign investor establishes a corporation, then such establishment can be characterized as a direct foreign investment under the Foreign Investment Promotion Act of Korea (FIPA).

 

A “direct foreign investment” under FIPA means a foreign investor’s acquisition of at least 10% of total issued shares of a domestic corporation, or a foreign investor’s acquisition of less than 10% of total issued shares of a domestic corporation accompanied by a secondment of an executive to the domestic corporation or a contract granting such secondment right to the foreign investor.

 

It should be noted that the minimum initial investment amount to qualify as a foreign investment is 100 million KRW.  If there are two or more foreign investors involved in a foreign investment transaction, each such investor must satisfy the minimum investment amount requirement of 100 million KRW.

 

Other than establishing a corporation as noted above, if you as a foreign investor desire to simply establish business presence in Korea by setting up a branch office, we could offer services in connection with such branch establishment.

 

If you desire assistance in connection with establishing a corporation or a branch office in Korea, please send your inquiry to email@doingbizinkorea.com, and we will respond as soon as possible.