Korea is chosen by many investors as an opportune investment place. It is important before you decide to register your company to choose an appropriate legal form in which to organize your enterprise. Our experts in company registration can explain to you the legal provisions concerning Company Law in this country and guide you in the establishment of your business. We also offer assistance in immigration to Korea through various means.
Korean legal structures
In Korea, there are two main classes of business structures, which are further divided into subclasses. As a foreign investor in this country, you can open either a private enterprise or a corporation. Even if the main characteristics of the legal forms in Korea may be similar to those of other countries worldwide, you might still need the help of our consultants in order to understand the name and the particularities of each legal form.
Corporations, are called in Korean “Hoesa”, and represent a distinct legal entity from its owners, regardless of whether the owner is a natural person or a legal one. The four types of corporations that you may establish in Korea are:
• General Partnership (Hapmyeong Hoesa), for the opening of which, there is no minimum capital requirement. The liability for each partner is unlimited;
• Limited Liability Partnership (Hapja Hoesa), in which owners can limit their liability only if they do not take part in the management of the company;
• Public Limited Company (Chusik Hoesa) in which partners still bear a financial responsibility but only up to the amount they have invested as initial capital in the corporation. You can open a limited liability partnership with only one more partner;
• Private Limited Company (Yuhan Hoesa) has the same characteristics as the public limited company only it does not have shares open to public sale on the stock market.
Please rely on our experts in company formation in Korea for detailed additional information on the legal structures available in this country. It is also possible to apply for immigration to South Korea by starting a company.We can also help you with other services related to the financials of your business.
The general and limited partnerships in Korea
One of the simplest business forms in Korea is the partnership which can take two non-corporate forms:
- that of a general partnership;
- that of a limited one.
Both entities need at least 2 members and the main difference between them resides in the liability of the partners. In a Korean general partnership, all participants will have equal rights and obligations towards the business’ debts. Moreover, their liability will be unlimited, meaning their personal assets will be at risk if anything wrong should happen with the entity.
The Korean limited partnership, on the other hand, must be made of one or more general partners and at least one member with limited liability. The main difference between the two types of members is that the limited one will participate in the business only through capital, thus becoming liable for the business’ debts only for the amount he or she has contributed with. Also, he or she will not be involved in the activities of the enterprise.
Opening a company in Korea through a partnership has both advantages and disadvantages. The lack of specific financial requirements and the simple and fast business creation procedure are its top advantages. However, this type of Korean entity is not suitable for any kind of activity and is mostly employed by professionals, such as doctors, accountants, craftsmen, and dentists.
Feel free to ask for more information on partnerships from our company formation agents in Korea. You can also rely on our immigration lawyers in South Korea for assistance in relocating here.
Obtaining residency in South Korea is not difficult. Depending on your circumstances, you might need to go through several application phases, from temporary employment to long-term residence permit, before you are qualified for an unrestricted stay. However, marriage and investment are also ways through which permanent residency can be acquired.
The public limited liability or joint stock company in South Korea
When it comes to the corporate forms of a business the public limited liability or joint stock company is one of the available ones. Suitable for various types of operations, the Korean joint stock company is usually employed for stock exchange trading activities, as its shares can be freely transferred to the public. There are no special requirements to meet when opening this type of company in Korea, however, it is advisable to discuss with our local specialists how to incorporate it.
It takes about 2 weeks to incorporate such a legal entity in Korea.
We also have a team of accountants in South Korea to cover all the needs of a company. We specialize in providing accounting services for local and international businesses as well as international tax preparation. From small start-ups to high net worth foreign-invested enterprises, we have assisted all different types of foreign businesses over the years.
The private limited liability company in Korea
By far, the most employed type of company in Korea is the private limited liability company. With a minimum number of one shareholder and one director, it can be set up in approximately 2 weeks. When created by local entrepreneurs, there is no minimum share capital these must draft. When established by foreign investors seeking to have sole ownership, at least KRW 100 million or approximately USD 82,000 is required. They must also apply for residence permits if they want to move and stay in Korea.
If you are a foreign entrepreneur and you are interested in business registration in Korea, get in touch with our immigration lawyers in Korea who can assist you.
Legal entities that can be employed by foreign companies in Korea
The subsidiary, the branch, and the liaison office are the main types of companies that can be created by foreign enterprises in Korea. These must comply with the provisions of the Company Act and do not require minimum share capital upon establishment.
For details on the main differences between these business forms, please refer to our company registration advisors in Korea.
Entrepreneurs who have no prior connections to South Korea may find it challenging to launch any type of business in Korea. Without Korean spouses or relatives, many foreign business owners have been forced to rely on local partners. However, those seeking immigration to South Korea can also apply for special visas that enable them to relocate here.
Legal provisions concerning companies in Korea
Foreign investors who intend to open a private business in Korea must be careful not to include in the name of their enterprise the word Hoesa which means corporation. This term can be applied, according to the Company Law in this country only to businesses that belong to one of the four corporation types of legal structures mentioned earlier.
In 1998, the Korean government has issued the Foreign Investment Promotion Act which consists of several provisions which encourage investment in various domains in this country. Moreover the Commercial Act, which entered into force in 1963, has been amended in 2001, in order to adapt the economic legislation to the new demands of the market.
Changing the type of company in Korea
When changing company types in Korea, it will be necessary to close down the existing one and then set up the new legal entity.
To do so, the following procedure is required:
• Make a seal for the company;
• Register the business with the Start-biz and acquit the company formation fees in Korea.
After verifying the business name, uploading the company formation documents and filling the company data, applicants can proceed to acquit the payments for the company registration tax bill in Korea and the registration fee.
These payments are automatically directed to the payment pages where all the payments can be made, and then re-directed to the Start-biz system after they have been effectuated.
Most of the times, it takes around three days to obtain the incorporation form certificate from this system.
During this time, the court registry office researches the documentation and the information submitted by the applicant and the tax office does its due diligence on the company address.
How many companies are running operations in Korea?
According to the most recent statistics gathered by Statista.com, between 2010 and 2021 the number of active businesses increased from 5.15 million to 6.82 million enterprises, as follows:
- in 2017, there were 6.05 million entities active on the Korean market;
- in 2018, their number grew to 6.25 million;
- in 2019, there were 6.53 million businesses in Korea.
Please feel free to contact our specialists in company formation in Korea, to further help you register your business and choose and adequate legal structure.