How Can a Foreigner Set Up a Company in Korea?

Short Answer

A foreigner can set up a company in Korea by establishing a Korean subsidiary, typically in the form of a stock company (주식회사) or a limited liability company (유한회사).
The process generally involves foreign investment reporting, capital remittance, incorporation procedures, post-investment registration, and business registration.

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Can Foreigners Start a Business in Korea?

Yes. Foreign individuals and companies can establish and own a company in Korea.

In most cases, foreign investors set up a Korean subsidiary, which is a separate legal entity under Korean law.
This structure allows full business operations, including entering into contracts, hiring employees, and generating revenue.

Depending on the industry, certain restrictions or approval requirements may apply.

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What Is the Typical Structure?

The most common structure is a stock company.

Key characteristics include:

• Separate legal entity from the foreign investor
• Limited liability for shareholders
• Ability to conduct full commercial activities in Korea

Other structures may also be used depending on the company’s needs.

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Stock Company vs. Limited Liability Company

While a stock company is the most commonly used structure, foreign investors may also consider a limited liability company.

Key differences include:

Stock Company

• More commonly used for investment and expansion
• Easier transfer of shares
• Governance and registration requirements may be more structured

Limited Liability Company

• Simpler internal structure
• More flexible governance
• Governance and registration requirements may be more flexible depending on the specific structure

Both structures provide limited liability to investors. The choice depends on the company’s business model, ownership structure, and long-term plans.

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What Is the Basic Process?

Setting up a company in Korea typically involves the following steps:

1. Foreign Investment Report (Prior Filing)
   File a foreign investment report with a designated bank or authority
2. Capital Remittance
   Transfer the investment funds into Korea
3. Incorporation Procedures
   Prepare incorporation documents and complete company registration
4. Post-Investment Registration (FIE Registration)
   Complete foreign-invested enterprise registration after capital contribution
5. Business Registration
   Register the business with the tax office

Depending on the case, additional steps such as opening a corporate bank account or obtaining licenses may be required.

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How Long Does It Take?

In practice, once all required documents are prepared, the company registration process can typically be completed within a few days to approximately one week.

The overall timeline may vary depending on documentation, foreign investment procedures, and banking arrangements.

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Are There Minimum Capital Requirements?

For ordinary incorporation under Korean law, there is generally no statutory minimum capital requirement, although the capital must be actually paid in as registered.

However:

• Certain regulated industries may impose separate minimum capital or asset requirements depending on the nature of the business
• If the investment is intended to qualify as foreign direct investment (FDI) under the Foreign Investment Promotion Act framework, it generally requires an investment of at least KRW 100 million and either:
  • ownership of 10% or more of voting shares/equity, or
  • ownership of shares/equity combined with the right to dispatch or appoint an executive

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Is This Relevant for Cities Like Busan?

Yes. Foreign companies and investors frequently establish entities in cities such as Busan, particularly in industries such as logistics, manufacturing, and international trade.

The legal process is generally the same regardless of location, although local business conditions may vary.

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Practical Considerations for Foreign Investors

Before setting up a company, foreign investors should carefully consider:

• The appropriate structure (subsidiary vs. branch vs. liaison office)
• Tax implications, including potential permanent establishment issues
• Visa and immigration considerations
• The scope and scale of intended business activities

Proper planning at the outset can help avoid restructuring or compliance issues later.

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Conclusion

Foreigners can establish a company in Korea through a relatively straightforward process.
However, selecting the appropriate structure and ensuring compliance with foreign investment and corporate regulations are essential for successful operation.

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