Kore Business Setup & Visa Service

Setting Up Business
Popular Company Types
Other Company Types
Required Documents


Business Incorporation in Korea

If you would like to set up a company or business in Korea, you will need to choose between the most suitable structure for your situation, there are two choices in Korea, a Private Limted Company (Yuhan Hoesa) or a Public Limited Company (Chusik Hoesa) . Whichever structure for your business you choose, it is required by the government to have:


  1. An office address where the company can be registered. Depending on your visa types, or business license, it might also be required to have a dedicated physical office space.

  2. A Korea bank account, in Korea where the capital funds can be deposited.


If you don’t have a bank account in Korea, you will either need to find a business partner who has a bank account in Korea and is willing to receive the capital in his/her personal bank account in Korea, or use our Market Entry Facilitation Service.


Since the law changed in April 2008, it is no longer required to nominate a Representative Director who is resident in Korea. It therefore became technically possible to register a company without having anyone who lives in Korea (provided you can successfully secure a Korean bank account for the initial capital deposit).


However, it is still recommended to nominate a resident Representative Director at least initially, as many Korean banks refuse to open a corporate bank account when the Representative Director is not a resident of Korea (because of the law against terrorism funding and money laundering), unless you are going to apply for the Investor / Business Manager visa to become resident afterwards.



Choosing the Type of Company to Establish in Korea


Public Limited Company (Chusik Hoesa)Private Limited Company (Yuhan Hoesa)
StructureLimited liability company by shareUsed by small and medium sized companies and functions more like a partnership
CredibilityWidely known, the most credible form of company in JapanNewly introduced in 2006 to replace Yugen Kaisha. Still not very well known
GovernanceInvestors / owners (shareholders) and managers of the company (Directors) are separated (a shareholder can become a director at the same time)Owned and managed by partners. Necessary to invest (regardless of the amount) in order to manage the company.
Minimum number of people requiredAt least one shareholder and one Representative Director (can be the same person)At least one partner
Publication of financial statementsNecessaryNot necessary
Directors term of office1 to 10 years with possibility of re-election (which needs to be registered)No fixed term
Profit sharingTied to the investment rate (number of shares held)Possible to decide freely without being bound to the investment rates
AdvantagesEasily recognized or trusted when working with big Korean companies. Possible to appoint directors who don't hold shares.Useful when you have partners who can contribute by providing their knowledge, skills or network without making large financial contribution.
DisadvantagesMore expensive when setting upLess credible

It is possible to change company types after the company is registered.

Which should I choose, Public Limited Company (Chusik Hoesa) or Private Limited Company (Yuhan Hoesa) ?

  • If you have sufficient funds for and will work regularly with Korean companies:

    CH


  • If you budget is limited and the main clients/customers will most likely be individuals or foreign companies:

    YH


  • If you intend to have other investors or to transfer/sell shares in the future: CH

  • If you wish to divide the profit (dividends) with different percentage than the actual investment rate (for having partner(s) who will provide workforce, skills or know-how rather than contributing financially): YH

  • If you are the sole investor/manager of the company and wish to set up a company in the easiest and fastest way: CH




Other Types of Operation for a Foreign Company

Different types of business operation categories for a foreign company in Korea:

Foreign companies that wish to operate business in Korea can choose a type of operation from among three different options :

Representative Office, Branch Office or Subsidiary.



Representative
Office
Branch OfficeSubsidiary
Commercial
activities
NOYESYES
RegistrationNot requiredRequiredRequired
CapitalNoneNoneMinimum ONE KRW (100 million KRW to satisfy Investor D-8 visa   requirements)
Representative-Representative in Korea (resident)At least one Representative Director
Accounting-Aggregated to the parent company's accounting (tax declaration required in Korea)Independent from the parent company
Employing staffPossiblePossiblePossible
Social securityMay be mandatory depending on caseMandatoryMandatory
Obtaining visaPossiblePossiblePossible
Company nameFree to decideSame as the parent companyFree to decide
Opening corporate bank accountImpossiblePossiblePossible

Which structure would be most suitable for your company?

Some indications would be the following:

  • Representative office: If you don't know how the business will grow in the Korea market so simply wish to do a market research so far

  • Representative office: If there will be no sales in Korea. You only wish to send an employee to engage in the PR, advertisement or to contact Korea business partners and do not wish to pay taxes in Korea.

  • Branch office: If you need to have an officially registered legal entity in Korea or a Korea bank account to be able to deal with Korea clients, but do not wish to have a separate capital in Korea.

  • Subsidiary: If you need a Korea company, or prefer to avoid disclosing the information on the parent company (directors, amount of capital, etc.) or to have a separate accounting from the parent company.

  • Subsidiary: If there will be a certain amount of turnover in Korea that would be likely to generate profit locally.

Now let' review the details of these 3 different business operations.

REPRESENTATIVE OFFICE

A Representative Office is a simple fact of having a physical office space located somewhere in Korea, and there isn't any required procedures to register it officially. It is not supposed to engage in commercial activities or generate profits locally. The activities of a representative office are limited to the following fields :

  • Providing information to parent company in overseas,

  • Advertising and publicity,

  • Market research,

  • Basic research and studies,

  • Purchase and storage of assets for parent company.

Since a Representative Office doesn't have any commercial activities, a Representative Office doesn't have capital, and therefore it is not subject to paying corporate tax in Korea.


To be able to set up a company in Korea, it is necessary to gather the require documents and decide the following basic elements :

Required documents for a foreign individual

  • Seal certificate (인감증명서) (issued within 3 months) of each investor and director. If an investor also becomes a director, two certified copies are required. It is possible to get a seal certificate (인감증명서) at a local city hall if you register yourself as a resident in Korea. A seal certificate can be replaced by a signature attestation (notarized signature) certified by the Embassy/Consulate in Korea of your own country or by a notary public of the country if the person lives overseas.


  • Signature (or seal) of each investor and director is required on the Articles of Incorporation and other required documents.

  • One of the investors personal bank account and its passbook (통장) / bank statement for the deposit of capital (new account can be opened or existing account can be used. Postal saving account, Internet banks such as Hana, Citibank, KB Bank, etc. are also accepted)

  • Company seal that needs to be registered at the registry office

Required documents for a foreign company

  • Registry certificate of the parent company issued within 3 months (original or notarized copy if the original can not be sent)

  • Notarized Signature attestation of the parent company's representative. If the parent company's representative will also become a director of the Koreaese subsidiary, 2 notarized copies are required.

  • Seal certificate (인감증명서) (issued within 3 months) of each director (and private investor if there is any). If a private investor also becomes a director, two certified copies are required. It is possible to get a seal certificate at a city hall if you register yourself as a resident in Korea. A seal certificate can be replaced by a signature attestation certified by the Embassy/Consulate in Korea of your own country or by a notary public of the country if the person lives overseas.

  • Signature (or seal) of the Representative of the parent company and each director is required on the Articles of Incorporation and other required documents (the originals need to be sent to Korea).

  • The Representative Director's personal bank account and their passbook (통장) / bank statement to be used for the deposit of capital (new one can be opened or existing account can be used. Postal saving account, Internet banks such as Hana, Citibank, KB bank, etc. are also accepted).

  • Company seal that needs to be registered at the registry office

Details to Be Decided in the Articles of Incorporation

Company Name

The company name can be in alphabet, numbers, or Korean alphabets (or mixture of these). It is possible to choose any name as long as there isn't another company of the same name registered at the same address. Even though it is highly unlikely, it would be wise to check in advance if there are any other companies with the same name elsewhere or whether the trademark is registered, to avoid any problems.

Company Address

The company address will be shown on the registry certificate (which anyone can get), so some companies prefer to choose an address to give a good image . It can also be one of the Investors/Directors home address or a virtual office address to avoid the costs, although a physical office space is required if you wish to obtain an "Investor/Business Manager" visa.

Company's Activities

It is possible to list as many activities as you wish to do, including those that will not be performed immediately. There is no obligation in doing all the activities listed and it is also possible to add or change this list later. If the intended activity requires a business license, it is often necessary to have the corresponding activity mentioned in the articles of incorporation.

Administration

A company needs to appoint at least one Director. An investor/shareholder can become a Director at the same time.
A Representative Director needs to be elected among Directors (if there is only one director, this person automatically becomes the Representative Director). It is also possible to have several Representative Directors.

Corporate Capital

Even if it is technically possible to establish a company with 1 KRW, it is wise to fix a capital that would allow to pay the initial expenses, or to gain credibility according to the nature of your business. It is required to have 100 million KRW capital (of foreign source) to be able to obtain an "Investor/Business Manager" visa.

Fiscal Year

A company is free to decide its fiscal year that needs to be fixed in the Articles of Incorporation. In Korea, many companies choose the fiscal year that ends on the 30th March, but it is also possible to fix the fiscal year that ends in the season when the company or its accountant is not busy.

A company can decide a way of management which is different from what is initially provided by the law by including the corresponding articles :
  • Directors term of function which is supposed to be for 2 years according to the law can be extended up to 10 years.

  • Stock transfer (which can by default be done freely) can require the agreement of the shareholder's assembly.

  • It is possible to issue different types of shares (dividend rate, voting rights, veto...)

  • Publication of the profit and loss statement (which is mandatory and must be done by default in the Official Bulletin ) can be done by publishing in a reputable newspaper or on the company's website.

The existing companies can also change their articles of incorporation in order to benefit from the above dispositions.