Company liquidation in Korea implies several stages, with dissolution or deletion from the Companies Register being the last one. Closing a company in South Korea is possible through two proceedings, depending on the reasons of termination.
Below, our company formation agents in Korea explain how to wind up a business. We are at your service if you want to close a company and need assistance.
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Company liquidation stages in South Korea
Before going into detail in relation to winding up a company in Korea, here is a brief presentation of the liquidation stages:
- passing the resolution of termination for which a shareholders’ meeting is necessary;
- appointing the liquidator;
- filing for the dissolution of the company;
- filing a public notice on the liquidation of the company;
- paying the creditors and distributing the remaining assets between the shareholders;
- deletion of the company from the Trade Register.
It should be noted that company winding up in South Korea can be voluntary or mandatory. In the latter case, additional steps must be taken.
Our Korean company formation consultants can explain when each of the procedures can be used for closing a business.
The liquidation resolution
The first step to close a company in South Korea is the adoption of a resolution by the shareholders. They must convene a general or an extraordinary meeting during which they will agree to the winding up of the company.
It is important to note that a Korean company cannot be liquidated voluntarily if it has debts that surpass the value of its assets. In such cases, there are two options:
- the company itself files for bankruptcy with a Korean court;
- the creditors file to recover their debts with the court.
In the latter situation, the liquidation decision will be passed after the court admits the company’s or creditors’ request.
Appointment of the liquidator
The next stage in winding up a company in Korea is appointing the liquidator. The nominated person can be one of the company’s directors in the case of voluntary liquidation. In case of judicial proceedings, the liquidator is chosen by the court.
From this stage on, the liquidator will handle all pending commercial matters of the company and will draft the necessary documents for closing the enterprise.
Among these documents are:
- the balance sheet;
- a business report;
- an inventory of the assets of the company.
These documents must be submitted to an auditor.
For support in financial matters for this purpose, you can also rely on our accountants in Korea.
Notifying the Korean authorities
One of the most important stages in company liquidation in South Korea is drafting a dissolution report and filing it with the court, the Trade Register, and the tax authorities. Following that, the decision must be published in a local newspaper.
Payment of the creditors and deletion from the Companies Register
The last stage in winding up a company in Korea is the payment of the creditor after the sale of assets. If there is any outstanding amount of money, it will be distributed among the shareholders.
Following the conclusion of these procedures, the company will also be stricken from the Trade Register’s records.
Company winding up timeline
Here is what to expect when closing a company in Korea:
- within 2 weeks from the adoption of the liquidation decision and appointment of the liquidator, the dissolution request must be filed with the Trade Register;
- the liquidator must then publish the liquidation notice within 2 months;
- the termination of the winding-up procedure must be filed within 2 weeks from the payment of the company’s creditors.
Apart from our services dedicated to companies, we can also assist foreign citizens to immigrate to Korea. You can rely on us if you want to apply for residency in Korea.
Feel free to contact us for support in company liquidation matters.