While teaching continues to be the principal choice of occupation for the majority of the foreign nationals in Korea, more and more individuals are taking hold of the opportunities that are being offered by the Land of the Morning Calm by starting a business in Korea.

Ranging across bars and restaurants and reaching out to dance workshops and societies, the variety of companies having foreigners in charge of the affairs is consistently on the rise. This is a result of their continuous attempts and successes to be part of the demanding Korean market.

It takes much more than simply businessperson’s enthusiasm and a great business concept for setting up a company in Korea and making it operational. Like any country, there are strict rules and regulations that demand strict compliance and adherence. This is the reason that help and consultation from the specialists of the (governmental, legal, or otherwise) are highly advised for your Korea company incorporation.

The exciting part is that in the past several years, the Government of Korea has been doing everything it takes to simplify the general start-up rules to help encourage foreigners to start businesses in Korea. Recently, Korea’s number of ‘start-up visas’ has seen a boost – which is a sign that the country’s government is launching new opportunities for attracting more foreign entrepreneurs. 

Large amounts of capital are required to get a D-series visa for foreigners who are keen to start a business from the beginning. Also, the tales of getting caught in regular administrative issues soon after, appear to suggest that hiring a Korean citizen - as an investor, partner, or assistant in the business framework - is stressed on.

Based on your nationality, circumstances, existing category of the visa and other factors, the process is different. Therefore, all who are keen to find out more about the best visa choice must get in touch with the right legal and governmental entities for the right guidance.

Once you get the appropriate visa and finalize the geography for your business in South Korea, the next step is to decide and finalize the classification of business you want to register. A few of the widely popular kinds of business structures are as follows:

✓ Subsidiary Office:  Set up as a regional enterprise, a subsidiary has deeper links with the local corporate circles. This helps the local firm increase its chances to avail investment incentives from the Korean government since it would be entitled to get corporate income tax incentives (Special Tax Treatment Law STTCL), in the event of fulfilling certain criteria. 

Branch or liaison offices are not eligible for these tax incentives.

✓ Branch Office:  The Korean law exempts a branch office from audits by external auditors. Its net revenues are as a matter of course considered as part and parcel of the headquarters balance sheet. 

A company that foresees its future growth as sufficiently large to call for the setting up of a subsidiary in the coming years, must take this into account right at the beginning, instead of launching a branch operation.

✓ Liaison Office:  A liaison office is only entitled to carry out marketing and support but not direct sales. A liaison office is the easiest-to-incorporate type of a business that can be conducted in Korea.

The Highlights of Setting up a Company in South Korea

·    A company incorporated in South Korea company is open for 100 percent foreign ownership

·    At least one shareholder is necessary for a limited liability company (a Yuhan Hoesa). It has no limitations on the citizenship of the owners.

·    Non-resident persons have the only liability as personal income tax on the calculable income earned in Korea

·    It is a requirement for companies to maintain accounts and keep a register of shareholders at the registered office. These records have to be in the Korean language.

·    The yearly tax returns must be filed to the National Tax Service of South Korea after the South Korean company is formed.

 

Points to be Aware of When Incorporating a Company in South Korea

Investors must be mindful of the following rules while starting a business in South Korea:

·    Corporate incomes attract a tax of 10% on the first 200 million won

·    Incomes amounting more than US$180,000 and less than or equal to US$20m are charged tax @ 20%

·    VAT totals to a maximum of 10% on the sale and transfer of goods and services. Invoicing for VAT must be through electronic means. The VAT has to be mandatorily filed once in every quarter.

·    Non-resident companies are liable to pay withholding tax

·    Foreigners settled in Korea are taxed according to their international income, only after their stay in South Korea exceeds 5 years from 10 years.

·    Korea does not levy export duties

·    Filing of annual tax returns happens at the National Tax Service of South Korea.

 

Company Incorporation in South Korea – It Can Be This Good

Few of the many advantages that are waiting to be taken by the investors incorporating their companies in South Korea are as follows:

·    South Korea places no limitations on foreign currency accounts or the return of capital income, which for investors is music to the ears.

·    Provided the conditions for a minimum of one shareholder and one director, who can be citizens of any country, are met, it does not take more than a week to set up and incorporate a limited liability company in Korea.

·    In terms of technology, South Korea is ahead of time with a land, air and sea transport systems that make it possible for companies to deliver raw materials and goods much faster, especially within the country.

·    The Foreign Investment Promotion Act of Korea supports 99.8% of the industries in inviting foreign investment and also provide the investors with a robust security cover.

·    Incheon International Airport operates as a front-of-the-line supply and transport hub in the north-east Asian region

 

 

South Korea Company Incorporation

If you think that incorporating a company in South Korea is an uncomfortable task, then by the time you reach the end of this article, you are sure to differ. We specialize in incorporation services and help you ease through the process that comprises but is not limited to the following procedures:

·    Engage the lowest essential number of shareholders for the incorporation

·    Create a company seal

·    Register the company with Start-Biz

·    Pay off the required incorporation charges

To bring foreign direct investment into South Korea, the government has been launching several tax benefits for small and mid-sized companies. Going ahead with its efforts to further improve as a great place to do business, South Korea invites tenders that will help in the development of its infrastructure and draw more foreign investors.

 

The Requirements for Company Incorporation

There are quite a few legislative challenges active measures that are comprised within the process to incorporate and register a company. Each corporate entity has its responsibilities and necessities as per the appropriate rules and regulations.

Incorporating a company in a new country often looks like an uneasy task to a large number of businesses, especially to those with limited finances and staffing capacities. It requires a huge amount of research and preparedness to get to know the foreign incorporation laws and continue to adhere to policies that might not be the same as those applicable in the company’s home country.

 

The Company Incorporation Process

1. Seek Out the Company Name

It is not permitted to register a company name that does not differ from the one that another person has already registered, for the same field of business activity within the same suburbia, city or region.

2. Focus Factors for the Registration

i.       The Necessary

·    Head Office address

·    Names and resident registration numbers of the directors and the auditor

·    Name, resident registration number and address of the director who is the corporation’s representatives

·    Name, resident registration number and address of the promoters

·    Instrument of Incorporation

·    Total number and kinds of stocks issued

·    Stock unit cost

·    Full amount of the capital

·    Field of activity

·    Inventory of shareholders

 

 ii.       Optional

·    Rules regarding the movement of stocks, if it needs to be approved by the board of directors

·    Whereabouts of branch offices

·    Process of issuing convertible bonds

·    The rules about the cancellation by destruction, in case the stocks are to be demolished to counterbalance the dividend that has to be paid to the shareholders

·    The rules concerning several representations, in case multiple people represent the enterprise

·    Period for which the corporation has existed and the cause behind the dissolution, if some

·    Rules regarding the dispersal of dividend in case payment needs to happen before the day one

·    Name and address of the headquarter of the proxy, if some

 

3. How to draw up the Articles of Incorporation and get it notarized

i.       Importance

The instruments of incorporation are the basic standards of the company's organization and activities or stating them in writing. The language of the document can be Korean, or another foreign language or both.

 

ii.       Information Needed

A.        Crucial Information

a)        Particulars of the promoters

b)        Purpose

c)        Address of the headquarter

d)        Means of announcing

e)        Company Name: Should contain the word 'corporation'

f)         Sum count of the stocks to be issued

g)        The unit cost of stock: more than 100 won (mandatory least capital: 50 million won)

h)        Number of stocks to be issued while creating the corporation

 

B.     Selective Data

a)      Unusual Expenses

These are issues which if do not cater to the pursuit of self-interests by the organizers and the third parties, can pose a likely danger for the capital base of the enterprise and damage the interests of the enterprise and stockholders.

·         The corporation will bear the cost of incorporation and the payment amount for the promoters

·         The names of investors, intent, type and price of their investment in kind and type and quantity of stocks to be paid in exchange

·         Type, amount, price and the assignor's name of the assets promised to be transferred after the creation of the corporation

·         Specific allowances to be granted to the promoters and the list of the recipients of those benefits

b)      Other Selective Information

·         Issued related to stocks

·         Issues related to the general meeting of stockholders

·         Issues related to directors, auditor and liquidator

c)      Alternative Information

Location of branch offices, categories of stockholder's rights, date of the standard general meeting and others.

iii.            Notarization

·         The instruments of incorporation become effective after it is notarized by a public notary certified by the local district attorney's office that has jurisdiction over the area where the corporate headquarter is located.

Required Documents: Three copies of the instruments of incorporation, certificate of registered seal and resident registration card (The power of attorney is also needed for a proxy.)

 

 

4.      Incorporation steps

i.     Get approval from the Ministry of Finance about foreign direct investment

ii.     Register with the Commercial Registration Office of court

a)      Promoters are employed.

b)      The first meeting of promoters is organized and the minutes recorded.

c)      A public notary creates the instruments of incorporation and endorses them.

d)      Decision-making on issues of issue of stocks.

e)      Stocks are underwritten by the organizers. (promotion leading to incorporation)

f)       Stockholders get the subscription of stocks and the stocks are then distributed. (subscription leading to incorporation)

g)      Actual investment (also comprising not-in-cash investment) is done.

h)      The members of the board of directors and auditors supervise the incorporation procedure. (If the incorporation is done through promotion, this is necessary only when the articles of incorporation lack any clause that does not allow unusual expenses during the process of incorporation.)

The outcome of an examination on the unusual expenses through the process of incorporation happens either by an inspector or by an expert and is reported. (The report is made to the promoters if the incorporation is through promotion and to the inaugural meeting if the incorporation is through subscription.)

i)       The inaugural meeting is organized and convened. (This is exempted if the incorporation happens through promotion.)

j)       The meeting of the board of directors takes place.

k)      Incorporation is registered.

l)       A corporate is created and reported.

 

iii.    District tax office registration

iv.    Open bank account

v.     Register Ministry of Finance and get FDI certificate

 

Conclusion

This article was a generic guide to foreign entrepreneurs on relocating to South Korea for incorporating a company. In particular, it regards the usual runways to make a business footprint in South Korea.

Additionally, it also took a quick look at the positives, paperwork essentials and highlights of incorporation through sources of useful information that will benefit every foreigner who wants to be part of the Korean economy.

It is a joy for us to help you run and keep up your business.

Our professional experience and expertise will help your company incorporation process go ahead trouble-free so that in no time, you right in the middle of your thriving Korean. If that got you all geared up and enthusiastic to open a company in Korea, contact us now to begin your incorporation process!