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Case Study

Subject
Restricted Category of Business in Korea
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Manager
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Date
2014-08-22
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Restricted Category of Business

Foreign investment is not permitted in restricted categories of business as well in principle. However, when there are standards for permission, foreign investment is partially permitted. The restriction of foreign investment is notified by Regulations on Foreign Investment and Technology Introduction and Consolidated Public Notice for Foreign Investment.

No foreigner shall make an investment in any company concurrently running both a category of business in which foreign investment is not permitted and a category of business in which foreign investment is only partially permitted. And where intending to make an investment in any company running not less than two categories of business in which foreign investment is only partially permitted, a foreigner shall be prohibited from making an investment in the company in excess of the ratio of foreign investment in the category of business in which the ratio of permissible foreign investment is lowest.

Restricted Category of Business  ( the end of 2013 )

Category of Business (KSIC)

Standards for Permission

Growing of cereal crops and other crops for food (01110)

- Growing of rice and barley is prohibited

Farming of beef cattle (01212)

- Permitted where the foreign investment ratio is less than 50%

Inshore and coastal fishing (03112)

Manufacture of other basic inorganic chemicals (20129)

- Permitted with the exception of manufacture and distribution of nuclear fuel

Manufacture of other smelting, refining and alloys of non-ferrous metals (24219)

Nuclear power generation (35111)

- Prohibited

Hydroelectric power generation (35112)
Fire power generation (35113)
Other power generation (35119)

- The sum of power plant facilities purchased by foreigners from Korea Electric Power Corporation (KEPCO) must not surpass 30% of the total domestic power plant facilities

Transmission and distribution of electric power (35120)

- The foreign investment ratio must be less than 50%
- Voting stocks owned by foreign investors < Dominant stocks held by Korean nationals

Disposal of radioactive waste (38240)

- Radioactive waste management business is prohibited under Article 9 of the Radioactive Waste Control Act

Wholesale of meat (46312)

- Permitted where the foreign investment ratio is less than 50%

Coastal water passenger transport (50121)
Coastal water freight transport (50122)

Permitted if each of the following conditions is met :
- Transport of passengers or freight between South and North Korea;
- Joint venture with a shipping company of the Republic of Korea;
- The foreign investment ratio is less than 50%

International air transport (51)
Domestic air transport (51)
Small air transport (51)

- Permitted where the foreign investment ratio is less than 50%

Publishing of newspapers (58121)

- Permitted where the foreign investment ratio is less than 30%

Publishing of magazines and periodicals (58122)

- Permitted where the foreign investment ratio is less than 50%

Radio broadcasting (60100)

Prohibited

Over-the-air broadcasting (60210)

Prohibited

Program distribution (60221)

- Permitted where the foreign investment ratio is 49% or less
(* General programming channel and specialized news channel businesses are prohibited.)
* Program distribution refers to program providing business under the Broadcasting Act

Cable networks (60222)

- CATV broadcasting business is permitted where foreign investment ratio is 49% or less (* CATV relay broadcasting business is prohibited)

Broadcasting via satellite and other broadcasting (60229)

- Permitted where foreign investment ratio is 33% or less
(* Internet multimedia broadcasting business is permitted where the foreign investment ratio is 49% or less)

Wired telecommunications (61210)

- Permitted where the sum of shares (limited to voting shares, including depositary receipt (DR) and other share equivalents and equity interests) held by a foreign government or a foreigner (including fictitious corporation of foreigners) is 49% or less of the total issued shares of the company (Foreigners are not allowed to become a majority shareholder of KT. However, they may invest in KT where they own less than 5% of the total shares.)
* Fictitious corporation of foreigners: a corporation whose largest shareholder is a foreign government or a foreigner (including a specially-related person as referred to in Article 9 (1) 1 of the Financial Investment Services and Capital Markets Act), and not less than 15/100 of the gross number of whose issued stocks are owned by the said foreign government or foreigner.
- Telecommunications resellers business (61282) is permitted
- Supplementary communications business is not restricted

Mobile communications (61220)

Satellite communications (61230)

Other electronic communications (61299)

News agency activities (63910)

- Permitted where the foreign investment ratio is less than 25%

Domestic commercial bank (64121)

- Permission is limited to commercial banks and local banks
(* Specialized banks, and agricultural/fisheries/livestock cooperatives are prohibited.)

 

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