How to register a company in South Korea as a foreigner

Most guides to Korean company formation read like the operating manual of a nuclear submarine. They are thorough, accurate and of almost no use to someone who simply wants to sell software, cosmetics or consulting to Korean customers. This one follows the order in which things actually happen, tells you which decisions matter and which can wait, and points to the provision of Korean law that sits behind each step — so you, your accountant or your lawyer can check it rather than take our word for it.

The good news first. A foreigner can own all of a Korean company, run it from abroad and never set foot in a Korean courthouse. Korea has been open to foreign ownership in almost every sector since the late 1990s, and the Foreign Investment Promotion Act now treats foreign investors as guests worth keeping: it guarantees the right to send dividends and invested capital home and offers a formal registration that banks and immigration officers recognise at a glance.

The less good news is a matter of temperament rather than law. Korean institutions like documents that agree with one another, and they notice when they don’t. The court registry compares your articles with your minutes; the tax office compares your lease with your registry extract; the bank compares all of them with your passport. Most of the work in a Korean company formation is making sure those documents tell the same story.

The legal framework in one page

Five statutes do almost all the work. You do not need to read them, but it helps to know which one answers which question — and every step below links to the relevant provision on the official National Law Information Center (law.go.kr).

The core statutes. The Immigration Act adds the visa rules if the founder intends to live in Korea.

A note on language. Korean law is written in Korean, and only the Korean text is authoritative. The Korea Legislation Research Institute publishes English translations, which are excellent for orientation but carry no legal force. Where this guide gives a Korean term in brackets, it is the word you will see on the actual forms.

Three decisions before anything else

Before a single document is drafted, three choices need to be made. Each of them changes the paperwork, the price and the timeline, so it pays to settle them first and in this order.

1. Which legal form

Korean law offers several company forms, but a foreign founder realistically chooses between four structures. For nine out of ten the answer is a stock company (주식회사, Jusik Hoesa). It is what banks, landlords, customers and immigration officers expect to see; it has freely transferable shares, so investors and buyers understand it; and it is the standard vehicle for a foreign investment company and the D-8 investor visa.

The limited company (유한회사, Yuhan Hoesa) is owned by members rather than shareholders and suits small owner-run businesses that will never raise outside money. A branch office (외국회사 지점) is your existing foreign company registered in Korea under Article 614 of the Commercial Act: no new company, but the parent is liable for everything the branch does. A liaison office (연락사무소) supports the parent with research, sourcing and quality control and may not earn income in Korea at all.

The rest of this guide assumes a Jusik Hoesa, because that is what most readers will form. Where a branch or liaison office works differently, we say so.

2. How much capital — and whether you want foreign investment status

Korea abolished its statutory minimum capital for stock companies in 2009. A Jusik Hoesa can be incorporated with KRW 1 million, and many service companies are. Capital is not a fee: it is the first money in the company’s bank account and remains available to the business.

The number that matters is KRW 100 million. Under Article 2 of the Foreign Investment Promotion Act and Article 2 of its Enforcement Decree, an investment counts as foreign direct investment when a foreign investor puts in at least KRW 100 million and acquires at least 10% of the voting shares (or obtains comparable management influence). Only then can the company be registered as a foreign-invested company (외국인투자기업) — and only that status opens the D-8 investor visa.

3. Where the head office will be

Every company needs a head office (본점) on the registry. The choice has two consequences that founders often discover too late.

The first is tax. Under Article 28(2) of the Local Tax Act, registration tax on incorporation is charged at three times the normal rate when the head office is inside the overcrowding control region (과밀억제권역) of the Seoul metropolitan area. For a company with KRW 1 million of capital this is noise; for a foreign investment company with KRW 100 million or more it is real money.

The second is the visa. A registration-only address is usually enough to incorporate and obtain a tax ID. For the D-8, immigration expects independent premises where the business is actually conducted. Choose the address that works for the plan you will have in a year, not just for the filing next week.

The process, step by step

Step 1 — Structure and trade name

The company name (trade name (상호, sangho)) is registered in Korean. Article 29 of the Commercial Registration Act prevents the registration of a trade name identical to another company’s for the same type of business in the same city or county, so the first job is a search of the court registry. Foreign words are written phonetically in Hangul; the English name can be used alongside the Korean one in contracts, on invoices and on the website, and can be recorded in the articles.

At the same stage the shareholding and management are fixed: who holds how many shares, who is the representative director (대표이사) and whether there will be other directors. Under Article 383(1) of the Commercial Act, a stock company normally needs at least three directors, but a company with capital of less than KRW 1 billion may have one or two. A director’s term may not exceed three years (Article 383(2)), and nothing in the Act requires a director to be Korean or resident in Korea.

Step 2 — The signing pack

The articles of incorporation (정관, jeonggwan) are drafted in Korean with the mandatory contents listed in Article 289 of the Commercial Act: the company’s purposes, trade name, total number of authorised shares, par value, shares issued on incorporation, head office, method of public notice and the names of the promoters (발기인, balgiin). You receive an English version to read; the Korean text is the one that counts.

Normally the articles take effect only after certification by a Korean notary. Article 292 of the Commercial Act makes an exception for companies with capital below KRW 1 billion incorporated by promoters alone: their articles take effect once the promoters sign or affix their seals. That exception is one of the reasons a small Korean company is quicker to form than its reputation suggests.

Alongside the articles, the pack contains a power of attorney for the Korean filing agent, the director’s consent to act, a signature specimen and — for a corporate shareholder — a board resolution approving the investment.

Step 3 — Notary and apostille

Your signatures are notarised in your own country. Korea has been a party to the Hague Apostille Convention since 2007, so documents from other member states need an apostille rather than embassy legalisation; documents from non-member states go through the longer consular route. Certified Korean translations are prepared in Korea.

This is the step whose speed you control least. Some countries issue an apostille over the counter in minutes; others take weeks by post. Corporate certificates should be recent — Korean registries generally expect extracts issued within the last three months — so order them last.

Korean institutions like documents that agree with each other. Most of the work is making sure they do.

Step 4 — Capital

The shares must be paid for before the company can be registered. In a promoter incorporation, the bank or other institution holding the money issues a certificate of payment under Article 318 of the Commercial Act; for companies with capital below KRW 1 billion, a bank balance certificate (잔고증명서) may be used instead, which in practice simplifies the process considerably.

If the company will have foreign investment status, the order matters. The investment is first reported as a foreign investment notification (외국인투자신고) under Article 5 of the Foreign Investment Promotion Act, usually through a Korean foreign exchange bank or Invest KOREA. The money is then wired in foreign currency from the investor’s own account abroad and converted by the bank, which issues a certificate of foreign currency purchase (외화매입증명서). That certificate is the backbone of every later filing: registry, foreign-invested company registration and, eventually, the D-8.

Step 5 — Court registry

A stock company comes into existence only when it is registered at the commercial registry of the district court (등기소) with jurisdiction over its head office — that is the effect of Article 172 of the Commercial Act. The registration under Article 317 records the purposes, trade name, capital, shares, head office, directors and representative director.

Before filing, the company pays registration licence tax (등록면허세) under Article 28 of the Local Tax Act — 0.4% of paid-in capital, with a minimum of KRW 112,500, tripled inside the Seoul overcrowding control region — and local education tax (지방교육세) of 20% of that amount under Article 151. The registry then issues the 13-digit corporate registration number (법인등록번호) and the corporate registry extract (법인등기부등본), and the company’s official seal (corporate seal (법인인감)) is registered so that its imprint can be certified for banks and contracts.

Step 6 — Tax office

The company then registers for tax. Under Article 8 of the VAT Act, a business must apply for business registration (사업자등록, saeopja deungnok) within 20 days of commencing business; in practice we file immediately after incorporation, because the bank and every customer will ask for the number. The tax office issues the business registration certificate (사업자등록증) carrying the 10-digit number in the format 000-00-00000.

A corporation must also report its establishment to the tax office under Article 109 of the Corporate Tax Act; filing the business registration application covers this. For a foreign-invested company, the foreign-invested company registration (외국인투자기업 등록) under Article 21 of the Foreign Investment Promotion Act follows, and the company receives its registration certificate (외국인투자기업 등록증명서).

Step 7 — Bank

Korean banks verify the representative director in person, which is why most founders make one short trip. The bank checks the registry extract, business registration certificate, articles, shareholder register and seal certificate, and asks what the account is for. A one-page description of the business, supported by a first contract or invoice, turns a long interview into a short one.

New corporate accounts start with daily transfer and withdrawal limits. They are a standard anti-fraud measure, not a judgement, and are raised as the company shows real activity.

Step 8 — Operations

From the first quarter the company is a general VAT taxpayer and files returns four times a year. It issues electronic tax invoices (전자세금계산서), which Article 32 of the VAT Act makes compulsory for corporations. It withholds income tax on salaries and pays it by the 10th of the following month under Article 128 of the Income Tax Act, registers employees for the four social insurances, and keeps books in Korean for the annual corporate tax return.

Individual or corporate shareholder?

Either works, and the choice is mostly about where you want profits to land. An individual shareholder receives dividends personally and is taxed in his or her country of residence, with Korean withholding credited under the tax treaty where one exists. A corporate shareholder — a holding company in Europe, Singapore or elsewhere — receives dividends into the group, which can matter for participation exemptions at home.

The paperwork differs. An individual signs a power of attorney and provides a passport copy. A corporate shareholder provides a recent certificate of incorporation, an extract showing its directors and shareholders, and a board resolution approving the investment and appointing someone to sign — all apostilled. Korean banks and the registry will want to see who ultimately owns the corporate shareholder, so be ready to show the chain up to the individuals.

Korean, English and the documents that count

Every filing with the registry and the tax office is in Korean. That does not mean you sign documents you cannot read: the usual practice is a bilingual version or a Korean original with an English convenience translation, and the articles can provide that the English name of the company may be used in international dealings. What you should know is that, if the two versions ever diverge, the Korean text filed with the registry is the one a Korean court will read.

The same applies to contracts with Korean customers. English-language contracts are common in B2B trade and enforceable, but Korean consumers, landlords and many smaller suppliers will expect Korean. Budget for translation of the few documents that matter.

How long it takes

The Korean side moves quickly: one to two weeks from complete documents to business registration certificate. What sets the overall pace is the apostille in your country, the remittance if you need foreign investment status and, if you need it, the visa. Switch the options below to see your own timeline.

What it costs

A standard Jusik Hoesa in Seoul — registration, tax number, registration tax on KRW 1 million of capital, a business address for one year and bank accounts — costs USD 5,400 with us, all in. With more capital, registration tax grows in proportion; foreign investment status and the D-8 add work and are quoted on request. Every line is broken down in our guide to costs.

Branches and liaison offices: what changes

A branch (지점) of a foreign company is not incorporated; the foreign company itself is registered in Korea. Before registration the branch is reported to a foreign exchange bank under the Foreign Exchange Transactions Act, and Article 614 of the Commercial Act requires a representative in Korea and registration of the branch. It receives a business registration certificate and trades like a company.

A liaison office is lighter still: it is reported to a foreign exchange bank and receives a unique number from the tax office, but there is no court registration because it may not earn income in Korea.

Mistakes we see most often

1. Choosing the capital before the plan. Founders register with KRW 1 million, then decide to move to Korea and have to increase capital, notify the investment and pay registration tax again.
2. Money from the wrong account. For foreign investment status the remittance must come from the investor named on the shareholder register. A transfer from a spouse, a friend or a different company breaks the chain.
3. An address that cannot carry a visa. A registration-only address is fine until the D-8 application, when immigration asks for independent premises.
4. Old certificates. Corporate extracts older than about three months are a classic reason for the registry to send documents back.
5. Forgetting the second filing. Changes to registered matters — a new director, a new address, a capital increase — must be registered within two weeks at the head office under Article 317(4) and Article 183 of the Commercial Act. Director re-appointment at the end of a term counts.
6. PDF invoices. Korean customers expect electronic tax invoices. A supplier’s PDF is not one, and without the electronic invoice input VAT cannot be reclaimed.

The first 90 days after registration

• Open the bank account and move the capital into the operating account.
• Set up electronic tax invoicing through the National Tax Service’s Hometax system.
• File the first VAT return at the end of the first quarter — even with zero sales.
• Register employees for national pension, health, employment and industrial accident insurance from their first payday.
• Diarise the director’s term — at most three years — and the two-week deadline for registering changes.
• Keep the remittance file together if you hold foreign investment status: immigration and auditors will ask for it.

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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