Foreign companies seeking to test the Korean market can set up liaison offices for this purpose. Also known as a representative office, this is a non-corporate form suitable for specific activities with limited character only.
Below, our company formation officers in South Korea explain the procedure to create a liaison office and the activities it can engage into. You can rely on our experts no matter the type of entity you decide on.
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Korean liaison office registration procedure
The Korean representative office is a non-corporate form that is recognized by Company Law for certain activities. However, the law under which it falls is the Foreign Exchange Transaction Act. This is why its incorporation procedure must follow similar steps to those of registering a branch, for example. This means that:
- the parent company must draft a set of documents to file with the Trade Register;
- the foreign business must also secure an operational space for the representative office;
- the parent enterprise must appoint a local agent to maintain the relation with all interested parties in Korea, including the authorities;
- the Korean liaison office must obtain a tax identification number.
These are the mandatory steps to complete in order to open a liaison office in Korea. However, additional requirements may apply such as registration for social security if the foreign business decides to hire employees. For this and for obtaining a tax code, you can rely on our accountants in Korea.
Documents required for setting up a representative office in Korea
Just like when opening a company in Korea, the registration procedure of a liaison office relies on the submission of a set of documents from the parent company. These are:
- proof of the legal address under the form of a lease or rental agreement;
- information about the objectives of the parent company;
- the foreign entity’s bylaws and/or Articles of Association and the Certificate of Incorporation;
- details of the shareholders and directors of the parent firm (copies of their passports);
- date of the incorporation of the Korean representative office;
- information about the appointed local agent (the person must be a Korean resident).
It is useful to know that the parent company can dispatch an employee from its headquarters for whom a Korean residence permit and work visa can be obtained with the help of our lawyers.
Why open a liaison office in South Korea
When seeking to establish a long-term presence in South Korea, foreign businesses frequently start with representative offices. These business forms offer a platform for the foreign investor to carry out tasks such as, but not limited to:
- market research;
- customer service;
Public relations activities are also permitted through this legal form. A representative office, however, is not allowed to engage in sales operations. This implies that it is unable to execute contracts, accept payment, or generate invoices and tax receipts.
Korean representative offices can also arrange business visits from corporate headquarters which makes the procedure for obtaining visitor visas much simpler.
Economic facts about South Korea
One of the reasons foreign companies seek to test Korea’s business market is its rising economy. According to recent information, its economy is slowly but securely ascending, as the number of registered businesses is on the rise, and so are employment levels. Here are some highlights on these subjects:
- in 2021, there were approximately 7.06 million active companies in South Korea, up from 6.82 million in 2020;
- the number of employees in May 2023 was 28.512 million, according to data here;
- also, the unemployment rate decreased from 2.6% in April to 2.5% in May of 2023.
If you want to open a liaison office in Korea and need assistance, please contact our local team!