Can a foreigner own 100% of a business in South Korea?

The idea that you need a Korean partner to do business in Korea is a generation out of date. It was true once: until the late 1990s, foreign investment was tightly managed, many sectors were closed and joint ventures with Korean groups were the normal way in. The 1997–98 financial crisis changed that. The Foreign Investment Promotion Act, enacted in 1998, turned the system around — from ‘prohibited unless permitted’ to ‘permitted unless restricted’ — and the list of restrictions has shrunk steadily since.

Today a foreigner who wants to sell software, distribute cosmetics, run a consultancy, trade machinery or open a restaurant in Korea can own the whole company, appoint himself or herself as the only director and run it from abroad. This guide explains the legal basis for that, the short list of exceptions, the practical limits that are not legal ones, and how to set it up.

The legal starting point: free unless restricted

Article 4 of the Foreign Investment Promotion Act states the principle: foreigners may carry out foreign investment in Korea freely, without restriction, except as provided by law. The same article lists the grounds on which investment can be restricted — national security and public order, public health and the environment, morals and customs, and cases where Korean law restricts the activity — and delegates the detail to the Enforcement Decree.

The operative list sits in the Regulations on Foreign Investment and Technology Introduction (외국인투자 및 기술도입에 관한 규정), issued under Article 5 of the Enforcement Decree. It divides restricted activities into two groups, using the Korean Standard Industrial Classification: activities closed to foreign investment altogether, and activities open only up to a limit or under conditions. Everything not on those lists is open, including to 100% foreign ownership.

Korea moved from ‘prohibited unless permitted’ to ‘permitted unless restricted’ — and the list of restrictions keeps getting shorter.

Where the limits are

Restrictions cluster in sectors that every country treats as sensitive. The headline cases are these.

Closed sectors

Public administration, diplomacy, defence administration and similar state functions are closed by definition. So are a few activities with strategic weight, such as terrestrial broadcasting under the Broadcasting Act and nuclear power generation.

Capped sectors

• Telecommunications. Under Article 8 of the Telecommunications Business Act, foreign shareholding in facilities-based telecom operators is capped at 49%. Service-based telecoms and most internet businesses are open.
• Broadcasting and news media. The Broadcasting Act and the press laws cap foreign holdings in cable and satellite broadcasters, general programming and news channels, and newspapers, at levels that vary by medium.
• Air transport. Korean airlines must remain under Korean control: under the aviation laws, including the Aviation Business Act, foreigners may not hold half or more of a domestic or international air carrier.
• Shipping, energy and utilities. Parts of coastal shipping, power generation and transmission and gas supply carry caps or conditions.
• Agriculture and fisheries. A handful of primary activities — certain grain farming, cattle raising, coastal and inland fishing — are restricted.

Approval sectors

Defence-related manufacturing and some technologies with security implications are not closed but require government approval for foreign investment, typically from the Ministry of Trade, Industry and Energy after consultation with the relevant ministries. Acquisitions of Korean companies holding national core technologies are subject to separate review.

How to check your own activity

The restriction lists are organised by the Korean Standard Industrial Classification (한국표준산업분류, KSIC), the same coding system the tax office uses for the business type and items on a business registration certificate. Checking an activity is therefore a matter of translation: describe what the company will actually do, find the matching KSIC codes, and compare them with the lists.

Three practical points help. First, think about every activity, not just the main one: a software company that will also resell telecom capacity, or a trading company that will also run a small fishing operation, may touch a restricted code. Second, check the sector licences at the same time, because they often bite earlier than ownership caps. Third, record the result: the activity codes chosen at registration follow the company into its tax filings, bank onboarding and, if relevant, the visa file.

When a Korean partner does make sense

That a Korean partner is not legally required does not mean one is never useful. Three situations justify sharing ownership on purpose.

The first is a restricted sector: in facilities-based telecoms, air transport or broadcasting, a Korean majority is the only legal way in. The second is distribution: a Korean company that already sells to the customers you want may be worth more as a shareholder than as a supplier, because it has a reason to push your product. The third is licences and relationships: in regulated fields, a partner who already holds the licences or the relationships with public buyers can shorten the road by years.

If you do take a partner, treat it as a contract, not a handshake. A shareholders’ agreement should cover board seats, reserved matters, deadlock, transfers, exit and what happens if the partner’s other businesses compete with yours. Under the Commercial Act, much of this can also be written into the articles, which binds future shareholders too. And if the foreign side wants foreign investment status or a D-8, keep at least KRW 100 million and 10% of the voting shares on the foreign side of the register.

A Korean partner should be a choice, not an assumption.

Who can be the owner

Under Article 2 of the FIPA, both a foreign individual and a company incorporated abroad are foreigners for investment purposes, and either can hold all the shares of a Korean company. The Commercial Act adds no nationality condition for shareholders; a stock company (주식회사, Jusik Hoesa) may have a single shareholder.

A foreign individual founder usually holds the shares personally. A group usually holds them through its parent or a regional holding company, which then appears on the share register and the foreign investment registration. The two can be combined — a founder and a fund, a parent and a local manager — as long as each foreign investor’s position is documented.

Korean nationals abroad and dual nationals

The FIPA follows nationality and place of incorporation. Korean nationals living abroad are, in principle, Korean; the Act makes specific provision for nationals permanently resident abroad, who may be treated as foreigners for investment purposes in defined cases. Dual nationals should take advice before structuring the investment, because it affects the notification, the bank’s treatment of the money and any visa.

Who can run the company

Nothing in the Commercial Act requires a director to be Korean or to live in Korea. Under Article 383(1) of the Commercial Act, a stock company with capital of less than KRW 1 billion may have one or two directors instead of three, and under Article 409(4) it may dispense with a statutory auditor. In practice that means one foreign founder, living abroad, can be the only shareholder, the only director and the representative director (대표이사) of a Korean company.

What the law does not require, practice sometimes does. Korean electronic filing, banking and tax services run on Korean digital certificates and phone numbers, and the tax office likes to have someone to call. Many foreign-owned companies therefore appoint a local contact — an accountant, a manager or an agent — without giving away ownership or control.

The law asks nothing of your passport. Practice asks for a Korean phone number.

Branch, subsidiary or liaison office

Owning ‘a business in Korea’ can take three forms. A wholly-owned subsidiary (자회사) is a Korean company — usually a Jusik Hoesa — in which the foreign owner holds all the shares; it is what this guide is mostly about. A branch (외국회사 지점) registered under Article 614 of the Commercial Act is the foreign company itself operating in Korea; ownership is not an issue because there is nothing separate to own, but the parent is liable for everything. A liaison office (연락사무소) is a representative presence that may not earn income in Korea.

All three are available to foreigners in open sectors. The choice is about liability, tax and how the business will grow — not about permission.

Owning is one thing; living there is another

Owning a Korean company does not, by itself, give the owner the right to live or work in Korea. A foreign owner who wants to move needs a status of sojourn (체류자격) under Article 10 of the Immigration Act. For an owner-manager the usual route is the D-8-1 corporate investor visa, which requires the company to be a registered foreign-invested company with at least KRW 100 million invested per foreign investor and at least 10% of the voting shares.

So the decision on ownership and the decision on residence are linked. A founder who might move should structure the investment as foreign investment from the start; see our guides to the KRW 100 million rule and D-8 requirements.

Day to day as a foreign owner

Once the company exists, Korean law treats it as a Korean company, regardless of who owns it. That cuts both ways: no discrimination, but no special allowances either.

Contracts can be in English, and many B2B contracts are; consumers, landlords and many smaller suppliers will expect Korean. Banking runs on Korean digital certificates and one-time passwords tied to Korean phone numbers. Hiring Korean staff brings Korean employment law, payroll withholding and social insurance in full. Public procurement is generally open to foreign-owned Korean companies on the same terms as domestic ones. None of this depends on ownership — but all of it is easier with a Korean-speaking accountant or manager in the loop.

Tax: same rules, one extra lens

A 100% foreign-owned Korean company pays the same corporate tax as any other Korean company under the Corporate Tax Act: from 2026, 10% on the first KRW 200 million of taxable income, 20%, 22% and 25% above, plus local income tax. It charges VAT at 10% and withholds tax on salaries.

The extra lens is international. Transactions between the Korean company and its foreign owner or affiliates — service fees, royalties, loans, sales of goods — must be priced at arm’s length under the Law for the Coordination of International Tax Affairs, which also sets documentation duties for larger groups. Dividends paid to the foreign owner are subject to 22% withholding including local tax, reduced under the applicable tax treaty. A founder who owns the company personally should also check the rules of his or her country of residence on foreign companies and foreign income.

Land and property

A foreign-owned company can lease premises like any other company, and can generally buy real estate too. Foreigners — and companies treated as foreign because foreigners hold a controlling stake — must report acquisitions of land under the Act on Report on Real Estate Transactions within the statutory deadline, and acquisitions in certain designated areas, such as military protection zones and some cultural or ecological zones, need prior permission. For most businesses, which lease offices and warehouses, this never arises.

Getting money in and out

A foreign owner’s money moves under the Foreign Exchange Transactions Act. Capital comes in as a reported investment; dividends, sale proceeds and capital reductions go out through a Korean foreign exchange bank. If the investment is registered under the FIPA, Article 3 of the FIPA guarantees the remittance abroad of dividends and investment proceeds. Without registration, the money can still move, under general foreign exchange rules, with somewhat more documentation at the bank.

Selling the business

Full ownership also means full freedom to sell. A foreign owner can sell the shares to a Korean or a foreign buyer. A sale to another foreigner is reported as a transfer of foreign investment; a sale to a Korean buyer ends the foreign investment and is reported as such. If the investment was registered under the FIPA, the sale proceeds can be remitted abroad under the guarantee in Article 3, after any Korean tax on the gain has been dealt with under the applicable treaty. The cleaner the share register and the foreign investment record, the shorter the buyer’s due diligence.

How a foreign owner sets it up

1. Check the sector against the restriction lists and any sector licence.
2. Choose the structure — usually a Jusik Hoesa — and whether it will be a foreign-invested company.
3. Sign at home. Power of attorney, director consent and, for a corporate owner, a board resolution, notarised and apostilled.
4. Put in the capital from the owner’s own account; notify it first if foreign investment status is wanted.
5. Incorporate at the district court registry and register the corporate seal.
6. Register for tax and obtain the business registration certificate.
7. Open the bank account, usually with one visit by the representative director.

Three owners, three structures

The solo founder

A Canadian designer sells a design-software subscription to Korean studios. She forms a Jusik Hoesa with KRW 10 million, holds all the shares, is the only director and runs it from Vancouver with a Korean accountant as local contact.

The group

A German machinery maker sets up a wholly-owned Korean subsidiary with KRW 300 million, registered as a foreign-invested company, and sends a manager on a D-8. The parent appears on the share register; the manager is the representative director.

The restricted sector

A foreign telecoms investor wants a stake in a Korean network operator. Because facilities-based telecoms are capped at 49%, the investment is structured as a minority stake alongside Korean shareholders, with its own regulatory approvals.

Three myths, briefly

‘Foreign companies need a Korean guarantor.’ There is no such requirement for incorporation. Landlords and some suppliers may ask for guarantees or deposits from any new company, Korean or foreign; that is commerce, not law.

‘The representative director must live in Korea.’ The Commercial Act contains no such rule. Banks may prefer to meet the director in person, which is a practical point about the account, not about the company’s validity.

‘Foreign-owned companies are audited more.’ External audit depends on size thresholds under the audit law, which apply equally to Korean-owned and foreign-owned companies. A small foreign-owned company is not audited simply because of its owner; what draws attention is large related-party payments abroad, which is why arm’s-length pricing matters.

Mistakes we see

1. Taking on a Korean ‘partner’ who is not needed, often at the suggestion of an intermediary, and then discovering the partner’s consent is needed for everything.
2. Confusing ownership with licensing — owning the company in an open sector but needing a licence nobody applied for.
3. Holding shares through a nominee, which creates risks under Korean law and undermines the foreign investment record.
4. Assuming ownership brings a visa. It does not, without a registered foreign investment.
5. Ignoring home-country rules on controlled foreign companies and reporting of foreign shareholdings.

Korean terms you will meet

Questions readers ask

About the author

Alexander Baranov

Founder of the BCA Group · cross-border corporate and tax adviser since 2008

Alexander advises foreign founders and groups on company formation, tax structuring and corporate law in more than 40 jurisdictions across Europe, the Gulf, Asia and Latin America. He is the author of nine books on international business and tax and writes regularly for professional finance and tax journals. He works in English, German, Spanish and Russian.

This guide is based on the Korean statutes cited in the text and on our own filings. It is reviewed when the law or official rates change.

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