Q&A about setting up foreign-owned Limited Liability Company in South Korea

Q&A about setting up foreign-owned Limited Liability Company in South Korea
Drafted by Dale Chen 20230728 v1

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South Korea Foreign-funded Limited Liability Company
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South Korea – Organizational Structure of Foreign-funded Companies

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What are the types of Foreign-funded Companies in South Korea?

1. Wholly Foreign-Owned Subsidiary (WFOE): A separate legal entity where a foreign company owns 100% of the shares. This type of company offers maximum control and flexibility to the foreign investor.
2. Joint Venture (JV): A business entity formed through a partnership between a foreign investor and a domestic company in South Korea. Both parties contribute capital, technology, or expertise and share risks and profits.
3. Branch Office: A foreign company can establish a branch office in South Korea, which acts as an extension of the parent company. The branch office is not a separate legal entity but rather an administrative presence.
4. Representative Office: This is more limited in scope compared to a branch office. A representative office is established to carry out market research, promotional activities, and liaison work on behalf of the parent company. It cannot engage in profit-generating activities.
5. Limited Liability Company (LLC) (Yuhan Hoesa, YH): This structure is relatively new for foreign investors in South Korea. It allows for limited liability for investors while offering more flexible management and tax benefits.
6. Joint Stock Company (Chusik Hoesa, CH): Foreign investors can also participate in the stock market and acquire shares of publicly listed South Korean companies.
7. Free Economic Zones (FEZs): These are special economic zones that offer various incentives to foreign investors, such as tax benefits, simplified regulations, and streamlined administrative processes.
8. Foreign-Invested Venture Company (FVC): This is a designation given to small and medium-sized companies with foreign investment that meet certain criteria, making them eligible for government support and benefits.

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What are the procedures for setting up the Foreign-funded Limited Liability Company in South Korea?

1. Choose a Business Name: Select a unique and appropriate name for your LLC. The name should comply with the guidelines provided by the relevant authorities.
2. Appoint a Representative: Designate a representative of the foreign company who will be responsible for the establishment and operations of the LLC in South Korea.
3. Obtain Approval: Obtain approval for foreign investment from the South Korean authorities. Depending on the business sector, there may be restrictions or special requirements for foreign investment.
4. Register the LLC: Register the LLC with the relevant government authorities, such as the Korean Commercial Registry (KCR) or the local district office.
5. Capital Investment: Deposit the required minimum capital into a South Korean bank account. The amount of minimum capital may vary depending on the business sector and other factors.
6. Draft Articles of Incorporation: Prepare the articles of incorporation for the LLC, including details about the company’s purpose, management structure, capital distribution, and other relevant information.
7. Notarize and Certify Documents: Notarize and certify all required documents, including the articles of incorporation and the foreign company’s registration documents.
8. Business Registration Certificate: Obtain the Business Registration Certificate from the local tax office after completing the registration process.
9. Obtain a Corporate Seal (Inkan): Create a company seal (inkan) and register it with the local government.
10. Register with Tax Authorities: Register the LLC with the relevant tax authorities and obtain a tax number.
11. Register Employees for Social Security and Insurance: Register any employees with the appropriate social security and insurance programs.
12. Open a Bank Account: Open a corporate bank account in South Korea for the LLC’s operations.
13. Obtain Licenses and Permits: Depending on the business activities, certain licenses or permits may be required. Ensure that all necessary licenses are obtained before commencing operations.
14. Comply with Labor Laws: Familiarize yourself with South Korea’s labor laws and comply with all employment regulations.

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What are the requirements for holding a position of director, manager/ supervisor, company secretary, etc. in South Korea’s foreign-funded Limited Liability companies?

1. Director:
2. Age: There is no specific age requirement to become a director in a South Korean LLC. However, the individual should be of legal age (usually 19 years or older).
3. Residency: There is no mandatory requirement for the director to be a South Korean resident or citizen. Foreign nationals can hold the position of director in a foreign-funded LLC.
4. Eligibility: The director must not have a record of certain criminal convictions or disqualifications based on specific legal provisions.
5. Manager/Supervisor:

• Eligibility: There are no specific nationality or residency requirements to become a manager or supervisor in a foreign-funded LLC. Foreign nationals can hold these positions.
• Qualifications: The qualifications for managers and supervisors may vary depending on the industry or the company’s internal requirements. The individual’s educational background, work experience, and skills are typically considered.
• Company Secretary:
• Requirement: No mandatory requirement.
• Eligibility: There are no nationality or residency restrictions for the company secretary position in a foreign-funded LLC. Foreign nationals can be appointed as company secretaries.
• Responsibilities: The company secretary’s responsibilities include maintaining corporate records, handling communication with shareholders and government authorities, and ensuring compliance with corporate governance requirements.

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How long the share capital of a South Korea Foreign-funded Limited Liability Company must be hold before it can be sold?

There was no specific minimum duration for holding the share capital of a South Korea Foreign-funded Limited Liability Company (LLC) before it could be sold.
In South Korea, the sale or transfer of shares in a company is generally allowed once the shares are fully issued and registered in the shareholder’s name.

However, it’s essential to consider any restrictions or requirements that may be outlined in the company’s articles of incorporation or shareholders’ agreement.
Some companies may have specific provisions regarding the transfer of shares, such as pre-emptive rights, restrictions on selling to certain parties, or lock-up periods that prevent shareholders from selling their shares for a certain period after issuance.

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Is a Resident Shareholders required for incorporation of Foreign-funded Limited Liability Company in South Korea?

Having a resident shareholder was not a mandatory requirement for the incorporation of a Foreign-funded Limited Liability Company (LLC) in South Korea.
South Korea allows foreign investors to establish LLCs without any specific nationality or residency restrictions.

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Is a Resident Director required for incorporation of Foreign-funded Limited Liability Company in South Korea?

South Korea does not have a specific requirement for a resident director (also known as an “in-country” or “onshore” director) in the incorporation of a Foreign-funded Limited Liability Company (LLC).
Foreign investors are allowed to establish and operate an LLC without the need to appoint a local resident director.
Foreign investors, both individuals and legal entities, can hold directorship positions in a South Korean LLC.
This means that foreign nationals or foreign companies can serve as directors in the company without requiring a South Korean resident or citizen to hold the position.

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Is there a company secretary required for incorporation of Foreign-funded Limited Liability Company in South Korea?

South Korea does not have a specific requirement for a company secretary in the incorporation of a Foreign-funded Limited Liability Company (LLC).
Unlike in some other countries, South Korea does not typically mandate the appointment of a company secretary as a legal requirement for LLCs.
In South Korea, the responsibilities that are usually associated with a company secretary in other jurisdictions are often handled by other individuals within the company, such as the directors, managers, or administrative personnel.

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What are the qualifications of a legal representative in South Korea Foreign-funded Limited Liability?
Can a foreigner act as a legal representative?
If yes, he/she need a place of residence in South Korea?

1. Qualifications:
   • Age: The legal representative (representative director) must be of legal age (usually 19 years or older).
   • Eligibility: There is no specific nationality requirement, which means a foreigner can act as the legal representative of a Foreign-funded LLC.
2. Residence Requirement:
   • There was no mandatory requirement for the legal representative to have a place of residence in South Korea. A foreigner can serve as the legal representative without needing to be a resident of South Korea.

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Is it possible to establish a South Korea foreign-owned company through an offshore company as holding company?

Yes, it is possible to establish a South Korea foreign-owned company through an offshore company as a holding company.
This type of structure is commonly known as an “offshore holding company structure” or “international holding company structure.”

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What are the special features of South Korea wholly foreign-owned limited liability corporation (LLC)?

1. 100% Foreign Ownership: The WFOE allows foreign investors to have complete ownership and control over the company without any local shareholding requirements.
2. Limited Liability: The WFOE structure offers limited liability protection to its shareholders, meaning the shareholders’ personal assets are generally protected from the company’s debts and liabilities.
3. Independent Legal Entity: The WFOE is a separate legal entity distinct from its shareholders, which allows it to conduct business, enter into contracts, and own assets in its own name.
4. Flexibility in Operations: WFOEs have flexibility in their business operations and can engage in various activities permitted by their business scope and the relevant regulations.
5. Repatriation of Profits: WFOEs are generally allowed to repatriate profits and funds back to their home country, subject to any applicable tax and regulatory requirements.
6. No Requirement for Local Shareholder or Director: As mentioned earlier, WFOEs do not require a local shareholder or director, allowing foreign investors to maintain full control and management of the company.
7. Potential Tax Benefits: Depending on the tax treaties and regulations between South Korea and the home country of the foreign investor, there may be tax benefits or incentives for WFOEs.

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South Korea Foreign investment: permitted industries, restricted industries (licensed industries) and prohibited industries.
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Are South Korea foreign-investment industries and products be listed in a positive or negative list?
Or are there different approaches for foreign investment from different countries?

South Korea’s approach to foreign investment is based on the Foreign Investment Promotion Act (FIPA) and its related regulations.
South Korea used a negative list approach for foreign investment.
This means that foreign investors are generally allowed to invest in all industries and sectors in South Korea, except for those listed on the negative list.
The negative list includes specific sectors or industries that are restricted or partially restricted for foreign investment.
There may be variations in the application of the lists for different countries based on factors like bilateral investment treaties (BITs) or free trade agreements (FTAs) that South Korea has with specific countries.

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In the positive list, what are the industries that foreign investment is allowed to invest in, which are the industries that are restricted for foreign investment (licensed industries), and the industries that are prohibited to invest in by foreign investment?
Will the positive list be different for different countries?

South Korea does not have a unified “positive list” for foreign investment.
Instead, it follows a “negative list” approach, which means that foreign investors are generally allowed to invest in all industries and sectors, except for those specifically listed on the negative list.

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In the negative list, what are the industries that foreign investment is allowed to invest in, the industries that are restricted to foreign investment (licensed industries), and the industries that are not allowed to invest in foreign investment?
Will the negative list be different for different countries?

1. Industries where foreign investment is allowed: Foreign investors are allowed to invest in all industries and sectors that are not listed on the negative list.
   These are the industries that are open to foreign investment without any specific restrictions.
2. Industries with restricted foreign investment (licensed industries): The negative list includes industries and sectors where foreign investment is subject to certain limitations, such as ownership restrictions, equity caps, or specific approval requirements. These restrictions are implemented to safeguard national security, protect domestic industries, or address other strategic concerns.
3. Industries not allowed for foreign investment: The negative list may also include industries and sectors that are completely prohibited for foreign investment. These industries are closed off to foreign investors, and they are not allowed to invest in such areas.
   The industries restricted, allowed, or prohibited for foreign investment in the negative list will differ from one country to another.
   

   Submit

   https://content.next.westlaw.com/practical-law/document/Ida002cb1f29511e498db8b09b4f043e0/Investing-in-South-Korea?viewType=FullText&transitionType=Default&contextData=(sc.Default)#co_anchor_a331595

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What are the restriction on foreign investment in South Korea? For instance, what is the minimum share capital amount?
What are the rules for foreign shareholding ratio? Other?
Are they different for different countries?

1. Minimum Share Capital Amount: South Korea does not have a specific minimum share capital requirement for foreign investment. The capital amount required for setting up a company can vary depending on the type of business and other factors. However, the company’s share capital should be adequate to support its proposed operations and business activities.
2. Foreign Shareholding Ratio: Some industries in South Korea may have restrictions on the maximum allowed foreign shareholding ratio. In certain strategic sectors, foreign ownership may be limited to protect national interests and maintain control over critical businesses.
3. Special Approvals: Certain sectors may require special approvals or permits for foreign investment to ensure compliance with regulations and safeguard national interests. These sectors could include defense, telecommunications, broadcasting, and others with strategic importance.
4. Screening and Approval Process: In some cases, foreign investments may be subject to screening by relevant government agencies to assess their potential impact on national security, competition, and other vital interests.
   The specific requirements, restrictions, and approval processes for foreign investment can differ from one country to another.

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What are the licensed industries in South Korea?
What is the difference between the industries that allow foreign investment, the industries that restrict foreign investment (licensed industries), and the industries that do not allow foreign investment?

Examples of licensed industries are defense, telecommunications, finance, broadcasting, and certain cultural industries are among the sectors that may have restrictions on foreign investment.
The classification of industries into these categories is based on the government’s assessment of national interests, economic priorities, and strategic considerations.
The aim is to strike a balance between attracting foreign investment for economic growth and safeguarding critical sectors and national security.

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South Korea-Foreign-funded Limited Liability Company document certification.
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What are the relevant investment documents required to establish a Foreign-funded Limited Liability Company in South Korea?
Are there different documents for different countries?

1. Articles of Incorporation: This document outlines the basic structure and operation of the company, including its name, purpose, capital, management structure, and other important details.
2. Certificate of Incorporation: This is an official certificate issued by the South Korean government confirming the registration of the company as a legal entity.
3. Proof of Capital: Foreign investors may need to provide evidence of the capital they are investing in the company.
4. Passport Copies and Identification: Identification documents of the foreign investors and company representatives will be required for the registration process.
5. Proof of Address: Some documents may require proof of the company’s registered address in South Korea.
6. Power of Attorney: If the investors are not present in South Korea during the registration process, a power of attorney may be required to authorize a representative to act on their behalf.
7. Business Plan: A detailed business plan outlining the company’s objectives, financial projections, and operational strategies may be necessary for certain investment approvals.
8. Approval Documents (if applicable): For investments in certain restricted industries or projects, specific approvals or permits from relevant government agencies may be required.
   Specific documents and procedures can vary depending on the country’s regulations and legal requirements.

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What are the procedures for the certification of documents related to the investment of Foreign-funded Limited Liability Company in South Korea?
Are there different document authentication procedures for different countries?

1. Notarization: Before submitting the documents to the relevant authorities in South Korea, the original documents may need to be notarized by a notary public in the home country. Notarization involves the authentication of the signatures and seals on the documents.
2. Apostille: If the home country is a member of the Hague Apostille Convention, the documents may require an Apostille certification. The Apostille is a standardized certificate that simplifies the process of document authentication between member countries.
3. Consular Legalization: If the home country is not a member of the Hague Apostille Convention, or if the specific documents require further legalization, consular legalization may be necessary. This involves the verification of the documents by the consulate or embassy of South Korea in the home country.
4. Translation: In addition to the authentication process, any documents not in the Korean language will need to be translated into Korean by a certified translator.
5. Submission to South Korean Authorities: Once the documents are duly notarized, apostilled, legalized, and translated, they can be submitted to the relevant South Korean government authorities for review and registration during the establishment of the Foreign-funded Limited Liability Company.
   There can be variations in the specific requirements and procedures depending on the country of origin of the documents and its relationship with South Korea.

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What is the sequence steps of set up a Foreign-funded Limited Liability Company in South Korea with share capital paid in place and opening a bank account? Which one should come first?

1. Company Registration and Remittance of Foreign Investment Capital: The first step is to register the Foreign-funded LLC with the relevant authorities in South Korea. During the company registration process, the shareholders or investors are required to deposit the share capital into the temporary account. A temporary account number issued by the designated foreign exchange bank is used for remitting funds. When this transaction is completed, the bank shall issue a securities subscription deposit certificate, which is required for registration of incorporation.
2. Bank Account Opening: Once the company is successfully registered, and the paid-in capital deposited in a temporary account can be transferred to a corporate account.
   

   Submit

   http://dl.kotra.or.kr/pyxis-api/1/digital-files/c16960ef-f0f2-018a-e053-b46464899664

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What are the usual KYC regulations when opening a bank account with a Foreign-funded Limited Liability Company in South Korea?

1. Identification Documents: The bank will require identification documents of the company’s shareholders, directors, and authorized signatories. This may include passports, national ID cards, and proof of residential address.
2. Certificate of Incorporation: The bank will need a copy of the Certificate of Incorporation to verify the company’s legal existence and registration in South Korea.
3. Articles of Incorporation: The bank may request a copy of the company’s Articles of Incorporation to understand its business activities and corporate structure.
4. Business License and Permits: If the business requires specific licenses or permits to operate in certain industries, the bank may ask for copies of these documents.
5. Proof of Share Capital: The bank will likely need evidence of the share capital being deposited into the company’s bank account.
6. Business Plan: A detailed business plan may be required, outlining the company’s objectives, sources of funds, and expected financial transactions.
7. Beneficial Ownership Information: The bank may request information about the ultimate beneficial owners of the company to comply with anti-money laundering regulations.
8. Source of Funds: The bank may inquire about the source of the company’s funds, especially if there are significant transactions or capital inflows.
9. Purpose of the Account: The bank will ask about the intended use of the account and the nature of the company’s business activities.
10. Additional Information: Depending on the bank’s policies and risk assessment, they may request other documents or information deemed necessary for KYC compliance.

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Will the bank require a South Korea local director when opening a bank account for a South Korea wholly foreign-owned limited liability company (LLC)?

Generally, most banks in South Korea do not require a local director for the LLC when opening a bank account.
A wholly foreign-owned LLC in South Korea is a type of company where all the shareholders are foreign entities or individuals.
In such cases, it is common for the shareholders or designated representatives to act as directors or authorized signatories to handle the company’s affairs, including banking transactions.

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Will the bank require foreign legal representative have to be physically present for the bank interview, when opening a bank account with a Foreign-funded Limited Liability Company in South Korea?

In many cases, banks may require the presence of at least one authorized signatory or representative during the bank account opening process.

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Can a Foreign-funded Limited Liability Company in South Korea send expatriates to South Korea as the Investor’s role?
What are the application requirements, documents and procedures for the work permit, visa, and residence permit?
Are there differences in different countries?

Yes, a Foreign-funded Limited Liability Company (LLC) in South Korea can send expatriates to South Korea to fulfill the Investor’s role.

The D-8 visa is a specific type of visa in South Korea that is issued to foreign nationals who are engaged in intra-company transfers or are assigned to work at branch offices, subsidiary companies, or affiliated companies of their overseas employer in South Korea.
The D-8 visa is intended for key personnel or employees with specialized skills and knowledge who need to work in South Korea for their company’s operations.
Here are some key points about the D-8 visa application requirements, documents, and procedures:

1. Eligibility:
   • The applicant must be an employee of a foreign company that has a business relationship with a company in South Korea (e.g., parent company, branch office, subsidiary, or affiliated company).
   • The applicant must have a managerial, executive, or specialized knowledge position in the company.
2. Sponsorship:
   • The applicant’s overseas employer must sponsor the D-8 visa application.
   • The employer in South Korea (the branch office, subsidiary, or affiliated company) must provide an invitation letter for the employee.
3. Documents:
   • Valid passport with at least six months’ validity.
   • Completed visa application form.
   • Passport-sized photos.
   • Employment contract or letter of appointment from the overseas employer.
   • Invitation letter from the employer in South Korea.
   • Proof of the business relationship between the foreign company and the company in South Korea.
   • Additional documents may be required based on the specific circumstances of the applicant and the companies involved.
4. Procedures:
   • The applicant submits the required documents to the Korean embassy or consulate in their home country or country of residence.
   • The processing time for the D-8 visa application may vary, so applicants are advised to apply well in advance of their intended travel date.
   • Once the visa is issued, the applicant can enter South Korea and apply for an Alien Registration Card (ARC) within 90 days to stay and work in the country.

Visa and work permit requirements can vary depending on the expatriate’s nationality, the specific job position, and the duration of stay.
Some countries may have different visa categories and requirements for work permits, and the process may also vary based on bilateral agreements and immigration policies.

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Can a Foreign-funded Limited Liability Company in South Korea send expatriates to South Korea as the employee role?
What are the application requirements, documents and procedures for the work permit, visa, and residence permit?
Are there differences for different countries?

Yes, a Foreign-funded Limited Liability Company (LLC) in South Korea can send expatriates to South Korea to fulfill the employee’s role.

1. Work Permit (E-1 to E-9):
   • The employer in South Korea must sponsor the work permit application.
   • The specific documents required will vary based on the visa category, but typically include a job offer letter, employment contract, and other supporting documents.
   • The employer submits the application to the relevant Korean immigration office or the Human Resources Development Service of Korea (HRDK).
2. Work Visa (E Visa):
   • After obtaining the work permit, the applicant can apply for a work visa at the Korean embassy or consulate in their home country.
   • The required documents for the work visa application may include a valid passport, visa application form, passport-sized photos, work permit certificate, and visa processing fee.
3. Residence Permit (Alien Registration Card – ARC):
   • After entering South Korea with a work visa, the applicant must apply for an Alien Registration Card (ARC) within 90 days of arrival.
   • The ARC application requires submission of the visa approval certificate, health examination report, and other necessary documents.
   • The applicant must visit the local immigration office in South Korea to complete the ARC registration process.
4. Additional Requirements:
   • Some nationalities may require additional documents or undergo specific medical tests.
   • Language proficiency tests may be required for certain job positions or visa categories.
   • Criminal background checks and degree authentication might be necessary, depending on the nature of the work.
   

   Submit

   https://www.internations.org/south-korea-expats/guide/visas-work-permits
   https://www.usemultiplier.com/south-korea/work-permit

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What are the evaluation factors or requirements for a Foreign-funded Limited Liability Company in South Korea when applying work permit, visa, and residence permit?
What is the relationship with the salary, capital, and turnover of Foreign-funded Limited Liability Company?
Are there differences for different countries?

1. Job Position: The job position and responsibilities of the expatriate employee must match the designated visa category. Different visa categories have specific requirements and eligibility criteria based on the nature of the job.
2. Qualifications and Experience: The expatriate employee’s qualifications, educational background, and relevant work experience will be assessed to ensure they are suitable for the job they will be performing in South Korea.
3. Employer Eligibility: The Foreign-funded LLC must be a legally registered entity in South Korea, in good standing with relevant government authorities, and must have the necessary licenses or permits to operate legally.
4. Salary and Compensation: The salary and compensation offered to the expatriate employee should meet the minimum requirements set by the South Korean government for the specific visa category. Sufficient proof of financial capability to support the employee’s stay in South Korea may also be required.
5. Capital and Turnover: The capital investment and turnover of the Foreign-funded LLC may also be considered as a measure of the company’s financial stability and ability to sustain employment for expatriate workers.
6. Market Demand: In certain visa categories, the market demand for specific skills and expertise may play a role in the approval process.
7. Compliance with Labor Laws: The company must demonstrate compliance with South Korean labor laws and regulations, including adherence to working hours, labor contracts, and employee benefits.
   Different visa categories and requirements may have varying criteria, and the specific evaluation factors can differ based on the visa type and the expatriate’s nationality.
   

   Submit

   https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/01/TIES-SouthKorea.pdf

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South Korea- Registered Address and Operating Address of Foreign-funded Limited Liability Company in South Korea.
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What are the regulations on the registered address during the company registration and future operating address of a Foreign-funded Limited Liability Company in South Korea?

1. Registered Address:
   • The registered address is the official address of the company, and it is used for legal purposes, official documentation, and communication with government authorities.
   • The registered address must be a physical address in South Korea where the company can be reached for official correspondence.
   • It is important to provide accurate and up-to-date information about the registered address during the company registration process.
2. Future Operating Address:
   • The future operating address refers to the location where the company will conduct its business activities and operations in South Korea.
   • This address may or may not be the same as the registered address, depending on the company’s business needs and location decisions.
   • If the company’s business activities change or if it plans to relocate its operations, it must update the relevant authorities with the new operating address.
   

   Submit

   https://companyformationkorea.com/virtual-office-in-korea/

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What are the specific regulations or requirements of a registered office address for a permitted industry of an LLC in South Korea?

1. Physical Address: The registered office address must be a physical location in South Korea. It cannot be a P.O. Box or virtual office address. It should be a place where the company can be reached and where official documents and communications can be delivered.
2. Compliance with Zoning Regulations: The registered office address must comply with local zoning regulations and be in an area where commercial or industrial activities are permitted. Certain industries may have specific zoning requirements, and the company must ensure that its registered address is suitable for its business activities.
3. Business Activities Alignment: The registered office address should align with the nature of the company’s permitted industry. The business activities declared during the company registration process should be consistent with the regulations governing the permitted industry.
4. Valid Documentation: The company must provide valid documentation proving its right to use the registered office address. This could include a lease agreement or ownership documents of the premises.
5. Accessibility: The registered office address must be accessible to government authorities, and the company must be able to receive official notices and communications at this address.
6. Change of Address Reporting: If there are any changes to the registered office address, the company must promptly report the change to the relevant authorities to update the company’s records.

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Amount of investment, registered capital, and government fees for Foreign-funded Limited Liability Company in South Korea.
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Are there any regulations on authorized share capital, registered share capital and paid-up share capital of a Foreign-funded Limited Liability Company in South Korea?
Is there any requirement for minimum funds to be in place within a certain period?

1. Authorized Share Capital:
   • The authorized share capital represents the maximum amount of capital that the company is allowed to raise by issuing shares to its shareholders.
   • In South Korea, there is no specific minimum or maximum requirement for authorized share capital. However, the company should have sufficient authorized capital to accommodate potential future fundraising needs if necessary.
2. Registered Share Capital:
   • The registered share capital refers to the portion of the authorized share capital that the company officially registers with the government authorities during the company registration process.
   • The registered share capital can be any amount decided by the company’s shareholders and is usually stated in the company’s constitutional documents.
3. Paid-up Share Capital:
   • The paid-up share capital represents the actual amount of capital that shareholders have contributed and paid for the shares they hold.
   • South Korean law does not specify a minimum requirement for paid-up share capital. However, it is common practice for companies to have a portion of the registered share capital fully paid-up at the time of registration to demonstrate the company’s financial credibility and commitment.

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What is the relation between government fees with authorized share capital, registered share capital, and paid-up share capital of a Foreign-funded Limited Liability Company in South Korea?

1. Authorized Share Capital:
   • The government fee for registering an LLC is often calculated based on the company’s authorized share capital. A higher authorized share capital may result in higher registration fees, as it reflects the company’s potential capacity for fundraising and business operations.
2. Registered Share Capital:
   • The registered share capital is the portion of the authorized share capital officially registered with the government during the company registration process.
   • The registration fee is typically based on the amount of the registered share capital, so a larger registered share capital may lead to higher registration fees.
3. Paid-up Share Capital:
   • The paid-up share capital represents the actual amount of capital that shareholders have contributed and paid for the shares they hold.
   • The government fees are not directly related to the paid-up share capital. However, a company with a significant paid-up share capital may be seen as more financially stable, which could positively impact the company’s image and potential dealings with government authorities.

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Application of Certificate Number for a Foreign-funded Limited Liability Company in South Korea

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What are the company certificate numbers needed to apply with the relevant legal entities for a foreign-funded Limited Liability Company in South Korea?

1. Business Registration Number (사업자등록번호):
2. The Business Registration Number is a unique identification number assigned to every registered business entity in South Korea, including LLCs.
3. It is obtained during the company registration process and is used for various official purposes, including tax filings and business transactions.
4. Foreign Investment Notification Number (외국인투자신고번호):
5. For a foreign-funded LLC, a Foreign Investment Notification Number is issued upon completing the foreign investment notification process to the relevant authorities in South Korea.
6. This number confirms that the company has fulfilled the necessary requirements for foreign investment in South Korea.
7. Corporate Registration Number (법인등록번호):
8. The Corporate Registration Number is a unique identification number given to LLCs and other corporate entities in South Korea.
9. It is used for various legal and administrative purposes to identify the company as a legal entity.
10. Tax Identification Number (세무신고번호):
11. The Tax Identification Number is assigned to companies for tax-related purposes.
12. It is used for filing tax returns, paying taxes, and other tax-related matters.
13. VAT Registration Number (부가가치세 등록번호):
14. If the company is subject to Value Added Tax (VAT), a VAT Registration Number will be assigned for VAT-related transactions.

R-kr-llc-8-20
What are the certificate application for the Foreign-funded Limited Liability Company in South Korea as a tax entity?

1. Business Registration Certificate (사업자등록증):
2. This certificate is obtained during the company registration process and serves as proof of the company’s legal existence and business registration in South Korea.
3. It contains the Business Registration Number, which is essential for various tax-related transactions.
4. Corporate Tax Certificate (법인세신고증명서):
5. The Corporate Tax Certificate is issued by the National Tax Service (NTS) in South Korea and is required to declare and pay corporate income tax.
6. It confirms the company’s registration as a corporate taxpayer.
7. Value Added Tax (VAT) Certificate (부가가치세 일반과세자증명서):
8. The VAT Certificate is issued by the NTS and is required for businesses subject to VAT in South Korea.
9. It confirms the company’s registration as a VAT taxpayer.
10. Withholding Tax Certificate (원천징수영수증):
11. If the company is withholding taxes from its employees’ salaries or from payments made to vendors, it will receive withholding tax certificates as evidence of tax deduction and payment.
12. Defense Industry Promotion Fee Certificate (국방산업진흥기금 납부증명서):
13. For companies in certain industries, such as defense, a Defense Industry Promotion Fee Certificate may be required to prove the payment of the Defense Industry Promotion Fee.
14. Local Tax Certificates (지방세납세확인증):
15. These certificates are issued by local tax offices and confirm that the company has fulfilled its local tax obligations, such as property tax and acquisition tax.

R-kr-llc-8-30
What are the certificate application for Foreign-funded Limited Liability Company in South Korea in relation to withholding tax on salary and employee benefits?

1. Withholding Tax Deduction Certificate (원천징수영수증):
2. This certificate is issued by the company to its employees as evidence of the withholding tax deduction from their salaries.
3. It provides details of the amount of income tax withheld from the employee’s wages.
4. Year-end Tax Settlement Certificate (연말정산원천징수영수증):
5. At the end of each tax year, the company issues this certificate to employees for tax settlement purposes.
6. It reflects the total amount of tax withheld during the year, and employees use it to file their annual income tax returns.
7. Certificate of Benefits (수당확인서):
8. This certificate is provided to employees to verify any additional benefits or allowances received during the year, such as bonuses, incentives, or special allowances.
9. The amounts included in this certificate may be subject to withholding tax.
10. Certificate of Employment (재직증명서):
11. This certificate confirms an employee’s employment status with the company.
12. It is often required for various official and financial purposes, including loan applications, visa applications, and housing arrangements.
13. Health Insurance and Pension Certificates (건강보험, 연금보험 증명서):
14. These certificates are issued by the National Health Insurance Corporation and the National Pension Service, respectively.
15. They confirm an employee’s participation in the national health insurance and pension systems.

R-kr-llc-8-40
What are the other independent certificate numbers or application, or declaration related to the government’s jurisdiction for Foreign-funded Limited Liability Company in South Korea?

1. Importer-Exporter Code (수출입업자신고번호):
2. If the company is involved in import or export activities, it may need to obtain an Importer-Exporter Code from the Korea Customs Service. This code is used for customs clearance and import/export-related transactions.
3. Environment-Related Certifications (환경관련인증서):
4. Certain industries and businesses may require environment-related certifications or permits to comply with environmental regulations and standards.
5. Business Specific Licenses and Permits:
6. Depending on the industry or sector in which the company operates, there may be specific licenses or permits required to conduct certain types of business activities, such as food and beverage licenses, construction permits, or health-related certifications.
7. Occupational Safety and Health Certificates:
8. Companies may need to obtain certificates related to occupational safety and health compliance, especially in industries where workplace safety is a concern.
9. Construction-Related Certifications:
10. If the company is involved in the construction industry, it may need to obtain specific certifications or registrations related to construction projects.
11. Intellectual Property Rights Certificates:
12. If the company holds intellectual property rights, such as patents, trademarks, or copyrights, relevant certificates may be required to protect and enforce those rights.

R-kr-llc-8-50
To summarize: Which of the following certificate numbers do Foreign-funded Limited Liability Company in South Korea need to apply for?

National (federal) company certificate number, provincial (state) company certificate number, national (federal) tax certificate number, provincial (state) tax certificate number, national value-added tax certificate number, provincial (state) value-added tax certificate number, social insurance card number, medical insurance card number, pension certificate number, other funds such as housing fund certificate number, labor union certificate number, import and export certificate number, and franchise industry certificate number.

1. National (federal) company certificate number: Business Registration Certificate to prove the company’s legal existence and business registration.
2. National (federal) tax certificate number: Corporate Tax Certificate for filing and paying corporate income tax.
3. National value-added tax certificate number: Value Added Tax (VAT) Certificate for companies subject to VAT.
4. Social insurance card number: Used for employee social insurance registration.
5. Medical insurance card number: Used for employee medical insurance registration.
6. Pension certificate number: Used for employee retirement pension registration.
7. Import and export certificate number: Importer-Exporter Code for companies involved in import and export activities.
8. Franchise industry certificate number: Industry-specific licenses for businesses operating in franchising or specific regulated industries.

R-kr-llc-9
Incorporation procedures of South Korea-Foreign-funded Limited Liability Company and key matters
R-kr-llc-9-10
What are the procedures of setting up a Foreign-funded Limited Liability Company in South Korea? Documents required? Competent Government unit? Websites?

1. Reserve Company Name: Choose a unique company name and submit a name reservation application to the Korean Intellectual Property Office (KIPO) to ensure the name’s availability.
2. Prepare Articles of Incorporation: Draft the Articles of Incorporation, which include information about the company’s purpose, capital, management structure, and other essential details.
3. Capital Deposit: Deposit the required share capital in a designated bank account and obtain a certificate of deposit.
4. Notarization and Authentication: Notarize and authenticate the company’s Articles of Incorporation and other relevant documents at a Korean embassy or consulate in the country where the parent company is registered.
5. Business Registration: Submit the notarized and authenticated documents to the competent local district office for business registration.
6. Obtain Company Certificate Numbers: Apply for various company certificate numbers, including the National Company Certificate Number (사업자등록증), National Tax Certificate Number (납세자등록증), and National Value-Added Tax Certificate Number (부가가치세 일반과세자), at the local tax office.
7. Register for Social Insurance and Labor Affairs: Register with the National Pension Service (국민연금), National Health Insurance Corporation (건강보험), and Employment Insurance (고용보험) for social insurance and labor affairs.
8. Register for Importer-Exporter Code (if applicable): If the company will engage in import or export activities, apply for an Importer-Exporter Code with the Korea Customs Service.
9. Register for Other Industry-Specific Certificates (if applicable): Depending on the nature of the business, there may be specific industry-related certificates or permits required.

Competent Government Unit and Websites:

• The Korean Intellectual Property Office (KIPO) handles name reservation and trademark registration: www.kipo.go.kr
• Local district offices are responsible for business registration.
• The local tax office deals with tax-related matters.
• The Ministry of Employment and Labor oversees labor affairs: www.moel.go.kr
• The Korea Customs Service manages import and export related matters: www.customs.go.kr
• Industry-specific certificates may be obtained from relevant government agencies based on the industry’s regulatory requirements.

R-kr-llc-9-20
What are key consideration matters of when deciding to set up foreign-funded limited liability company in South Korea?

1. Business Environment: Evaluate the overall business environment in South Korea, including market potential, competition, regulatory environment, and economic stability.
2. Legal and Regulatory Framework: Understand the legal and regulatory requirements for setting up and operating an LLC in South Korea, including foreign investment regulations and industry-specific restrictions.
3. Market Analysis: Conduct thorough market research to assess the demand for your products or services in South Korea and identify potential customers and competitors.
4. Company Structure: Determine the appropriate company structure and decide on the level of foreign ownership in the LLC.
5. Investment Capital: Consider the required initial investment capital, ongoing operational expenses, and potential funding sources.
6. Taxation and Incentives: Understand the tax implications of doing business in South Korea, including corporate income tax, value-added tax, and any available tax incentives for foreign investors.
7. Workforce and Labor Regulations: Evaluate the availability of skilled labor in South Korea and be aware of labor laws and regulations that may impact employment practices.
8. Location: Choose a suitable location for the company’s operations, considering factors such as proximity to customers, suppliers, and transportation infrastructure.
9. Intellectual Property Protection: Assess the need to protect intellectual property rights in South Korea and understand the local procedures for trademark and patent registration.
10. Language and Cultural Considerations: Be aware of language barriers and cultural differences that may impact business operations and communication.
11. Exit Strategy: Consider an exit strategy in case of any future changes in business plans or economic conditions.
12. Professional Assistance: Seek advice from legal, financial, and business experts familiar with the South Korean market and regulations to navigate the setup process effectively.

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(version: 2024/07)

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