Jusik Hoesa or Yuhan Hoesa: which Korean company should you choose?

Korean company law, codified in the Commercial Act, offers five forms of company. Two of them — the general partnership (합명회사) and the limited partnership (합자회사) — expose at least some partners to unlimited liability and are of no interest to a foreign founder. The other three all limit the owners’ liability to what they have put in. They are the stock company (주식회사, Jusik Hoesa), the limited company (유한회사, Yuhan Hoesa) and the limited liability company (유한책임회사, Yuhan Chaegim Hoesa).

On paper they are close cousins. In practice they send different signals to everyone who reads your corporate registry extract (법인등기부등본) — and in Korea, people read it. A landlord reads it before signing a lease, a bank before opening an account, a large customer before adding you as a supplier, an immigration officer before issuing a visa. This guide compares the three forms on what actually matters to a foreign owner, provision by provision.

The three forms at a glance

Key differences under the Commercial Act. The detail follows below.

The Jusik Hoesa: the company everyone recognises

The stock company is regulated in Part III, Chapter IV of the Commercial Act, beginning at Article 288, and it is by a wide margin the most common form of Korean corporation. Its defining feature is the share: a standardised, transferable unit of ownership. Under Article 335 shares are freely transferable, although the articles may require the board’s approval for a transfer — a useful lock for a founder who wants to control who comes in.

Management

A stock company is run by directors (이사, isa) and represented by a representative director (대표이사). Article 383(1) requires at least three directors, but a company with capital below KRW 1 billion may have one or two; in that case there is no board, and the powers of the board are exercised by the director or the shareholders’ meeting. Directors serve for no more than three years under Article 383(2), and re-appointment must be registered. Under Article 409(4) the same small companies may dispense with a statutory auditor (감사, gamsa).

These small-company exceptions are what make the Jusik Hoesa practical for a single foreign founder: one shareholder, one director, no board, no auditor — and, under Article 292, articles that take effect without a Korean notary.

Raising money

The stock company is built to take investors. It can issue new shares under Article 416, create different classes of shares, grant stock options and issue bonds under Article 469, including convertible bonds. Korean venture capital invests almost exclusively in this form, and a sale of the business is usually a sale of shares.

In Korea, people read your corporate registry extract. Choose the form you want them to read.

The Yuhan Hoesa: lighter governance, fewer formalities

The limited company is regulated from Article 543 of the Commercial Act. Its owners are members (사원, sawon) holding equity interests (지분, jibun) rather than shareholders holding shares. Historically it was a closed form, with a cap of fifty members and strict limits on transfers; the 2011 amendments to the Commercial Act removed the cap and, under Article 556, made interests transferable unless the articles restrict it.

Management

A Yuhan Hoesa needs one or more directors (이사) under Article 561, with no statutory board and no statutory maximum term. An auditor is optional under Article 568. Members decide at a general meeting of members (사원총회), and many decisions can be taken in writing. For an owner-managed business, that is noticeably less ceremony than a stock company with a board.

What it cannot do

The Yuhan Hoesa is not designed to raise capital from outsiders. It does not issue shares, and it is generally understood that it cannot issue bonds or offer interests to the public. That is irrelevant for a consultancy funded by its owner — and decisive for a start-up that hopes to raise a seed round in Seoul.

The audit question

For years one attraction of the Yuhan Hoesa for large foreign subsidiaries was that it escaped external audit and disclosure. That changed with the revised Act on External Audit of Stock Companies, etc., which since 2019 brings limited companies above the statutory size thresholds into external audit and public disclosure much as stock companies are. For a small company below the thresholds, neither form is audited; for a large one, the old advantage has largely gone.

Decisions and meetings in practice

For a single foreign owner, governance is mostly paperwork: the decisions that the law reserves to shareholders or members still have to be taken and minuted, even when there is only one person in the room. The difference between the forms shows up in how much paperwork that is.

In a Jusik Hoesa

The general meeting of shareholders (주주총회, juju chonghoe) approves the annual accounts, appoints directors and amends the articles. Notice normally goes out two weeks in advance under Article 363 of the Commercial Act, but a company with capital below KRW 1 billion may shorten the notice to ten days and, with the consent of all shareholders, hold the meeting in writing. For a sole shareholder, that means a signed written resolution rather than a meeting.

Where there is a board, it handles management decisions such as issuing new shares or approving significant transactions. Where there is a single director, the Act shifts those powers to the director or the shareholders’ meeting, so the paperwork shrinks further.

In a Yuhan Hoesa

Members decide at a general meeting of members, but the Act is more relaxed about form: resolutions in writing are common, and there is no board to convene. For an owner-run business with one member, the annual cycle is a written approval of the accounts and little else.

In a Yuhan Chaegim Hoesa

Almost everything is what the articles say it is. That is the point of the form — and also its risk: articles written in haste leave gaps that Korean default rules then fill in ways the partners did not expect.

What your counterparties will see

The form is printed at the top of everything. Korean company names carry it: a stock company is “주식회사 ○○” or “○○ 주식회사”, conventionally rendered in English as “○○ Co., Ltd.”; a limited company is “유한회사 ○○”, often “○○ Ltd.” or “○○ LLC” in English; a limited liability company is “유한책임회사 ○○”. Your counterparties read the form before they read anything else.

The registry extract adds detail. For a Jusik Hoesa it shows the number of authorised and issued shares, par value, capital, directors and their terms, and the representative director. For a Yuhan Hoesa it shows capital, directors and the representative. Large Korean customers and banks are used to the first; the second prompts the occasional question, and a Yuhan Chaegim Hoesa almost always does.

The Yuhan Chaegim Hoesa: a partnership with limited liability

The newest form, introduced by the 2011 amendments and in force since 2012, is regulated in Articles 287-2 to 287-45 of the Commercial Act. It was modelled on the US limited liability company: members enjoy limited liability, but the internal relationship between them is governed largely by the articles, as in a partnership.

The company is run by managing persons (업무집행자, eommu jiphaengja) designated in the articles — members or outsiders. Transfers of interests need the consent of the other members by default under Article 287-8, which suits partners who want to choose each other. The form remains rare in practice, and foreign founders who choose it usually do so for a specific reason: a joint venture between a few partners, or a professional firm.

Tax: no difference

All three are corporations for Korean tax purposes. They pay corporate tax under the Corporate Tax Act at the same progressive rates — from 2026, 10% on the first KRW 200 million of taxable income, 20%, 22% and 25% above, plus local income tax of 10% of the tax. They charge VAT at the same 10%, withhold the same taxes on salaries and dividends, and pay the same registration licence tax (등록면허세) on incorporation under Article 28 of the Local Tax Act, tripled inside the Seoul overcrowding control region.

If someone recommends one form over another for tax reasons alone, ask which tax. For a foreign owner, the questions that actually move the tax bill — the treaty rate on dividends, home-country rules on foreign companies — do not depend on the Korean form.

Foreign investment status and the D-8

The Foreign Investment Promotion Act applies to investments in Korean corporations generally, so any of the three forms can, in principle, become a foreign-invested company (외국인투자기업) when a foreign investor puts in at least KRW 100 million and acquires 10% or more of the voting rights.

In practice the Jusik Hoesa is the vehicle immigration sees every day for the D-8-1 investor visa, and its share register makes the 10% test straightforward to evidence. A Yuhan Hoesa can work; expect to explain the structure. A Yuhan Chaegim Hoesa is unusual enough in visa applications that we would not recommend it for a founder whose main goal is to live in Korea.

Cost of setting up and running each form

At incorporation, the state’s share is identical: registration licence tax on capital under Article 28 of the Local Tax Act, local education tax on top, and court fees. Professional fees differ a little. A Jusik Hoesa for a single founder is the most standardised filing in Korea and therefore the most predictable; a Yuhan Hoesa is similar; a Yuhan Chaegim Hoesa takes longer because its articles have to be written rather than adapted.

In the running years the difference is mostly in the number of registrations. Every change to registered matters — a director appointed or re-appointed, a new address, a capital increase — is a filing with a small fixed tax and court fee. The Jusik Hoesa’s three-year director term guarantees at least one such filing every three years; the Yuhan Hoesa has no statutory maximum term, so a stable owner-managed company may go years without touching the registry.

Getting out: sale and dissolution

Exits are where the forms diverge most. Selling a Jusik Hoesa is usually a share sale: the buyer acquires the shares, the share register is updated, and — if the board approval clause is in the articles — the board consents. The company itself does not change, its contracts and licences continue, and the registry shows only new directors if the buyer appoints them.

Selling a Yuhan Hoesa is a transfer of equity interests, which works but is less familiar to buyers and their lawyers; a Yuhan Chaegim Hoesa needs the other members’ consent unless the articles say otherwise. Closing any of the three follows the same path: a resolution to dissolve, appointment of a liquidator (청산인, cheongsanin), creditor notices, final tax returns and registration of completion of liquidation — typically several months.

Decide in four questions

Behind the quiz is a simple logic. Investors, a future sale or the D-8 point to the Jusik Hoesa. A business that will stay with its owner and values fewer formalities points to the Yuhan Hoesa. A few partners who want to write their own deal point to the Yuhan Chaegim Hoesa.

Three founders, three choices

The SaaS founder who will raise money

A founder from the Netherlands builds a B2B software product for Korean manufacturers and expects to raise a seed round from a Korean fund within eighteen months. Jusik Hoesa, without hesitation: the fund will invest through new shares, may want preferred shares and will insist on a stock option pool. Starting as anything else would mean converting under deadline pressure.

The consultant who works alone

A German engineer advises Korean shipyards and wants a Korean entity to contract and invoice. No investors, no visa, no staff. A Yuhan Hoesa does the job with less ceremony. A Jusik Hoesa with one director would also be fine and slightly easier at the bank; either is defensible.

The three partners

Two Korean-speaking designers and a French brand owner want a shared studio with profit shares that do not follow capital contributions. A Yuhan Chaegim Hoesa lets them write exactly that into the articles. If they later want outside investors, they will convert.

Choose the form you will end up with, not the one that is easiest this month.

Switching later

Korean law allows a change of form. A stock company may become a limited company by unanimous shareholder resolution under Article 604, and a limited company may become a stock company under Article 607, which requires a qualified resolution of the members and the approval of the court. Both involve new articles, creditor protection steps and registration.

The process works, but it is a project, not a form. If you can see the need coming — investors, a sale, a visa — start with the form you will end up with.

What about a branch?

For a foreign company rather than a founder, there is a fourth option outside the three corporate forms: registering the foreign company itself as a branch (외국회사 지점) under Article 614 of the Commercial Act. A branch has no shareholders, members or board in Korea; it has a Korean representative and the parent stands behind all its obligations. It is the right choice when the parent wants to trade in Korea under its own name and is comfortable with that liability. It is the wrong choice when the group wants to ring-fence Korea or bring in local partners — then the comparison above applies, and the answer is usually a Jusik Hoesa subsidiary. Our branch or subsidiary guide covers that choice in detail.

Mistakes we see

1. Choosing on tax. The forms are taxed identically; the choice is governance and signalling.
2. A Yuhan Hoesa for a fundraising start-up. It works until the term sheet arrives.
3. Three directors because ‘a company has a board’. Below KRW 1 billion of capital one director is enough, and every extra director is another term to renew and register.
4. Forgetting the term. A Jusik Hoesa director’s term ends after at most three years; the re-appointment must be registered within two weeks under Article 183 as applied by Article 317(4).
5. Copying a foreign template. Articles drafted from a US or UK model often contain clauses Korean law does not recognise and miss ones it requires under Article 289.

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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