Frequent Questions Regarding Foreign Investment Corp. (FAQ)
Written Date : 2022.05.01.
Writer : Selim Tax & Acc. Firm
Frequent questions regarding the corp. establishment and its operation process are summarized step by step as follows.
[1] Establishment Stage
Q1. What about the overall procedure for the corp. est. of foreign Investment corp. ?
A. The summarized procedure for the corp. est. of foreign Investment corp. on the foreigner investment promotion law is as follows. If you want to secure the investment protection on the foreigner investment promotion law, the investment volume is more than 0.1bil. KRW and more than 10% (share ratio per one foreign investor) and the procedure is as follows.
(*) Establishment Procedure for Foreign Investment Corporation
① previous consulting for domestic investment ->
(previous consulting for investment industry, capital volume, executives assign,
business site selection, establishment documents, foreigner investment report)
② ‘Power of Attorney’ preparation (in the case that the domestic inve. process is entrusted) ->
③ foreigner inves. report writing (Foreign Exchange Bank, Small Business Administration, Kotra, etc.) ->
④ investment (capital) remittance of foreign currency ->
⑤ est. documents preparation(should be prepared for previous consulting) ->
⑥ progress for corp. registration procedure ->
⑦ after registration, business registration application ->
⑧ issue of foreign inves. corp. registration certificate
Q2. How long it takes for the est. of the corporation ?
A. Most of time for the est. of foreign inves. corp. is spent for previous consulting period and for documents preparation period. Most of the corp. est. documents come from overseas and this is the reason.
. First, because the stockholder is a foreigner or a foreign corp, it takes time for notarizing/apostille the documents which prove the address and etc. of the stockholder in the country.
. Also, when a board member is a foreigner and his documents needs to be arrived from his country with notarization, it takes time.
So, the previous consulting for the est. of foreign inves. corp. is very important.
In the general cases, it takes at least two weeks, as many as 3-4 weeks for the documents preparation.
. When the documents are prepared to some degree, the capital remittance should be prepared. For the capital remittance, it usually takes 2-3 days, so you need to prepare for the remittance at the time when the documents are almost completed.
. After every document is prepared, they should be registered in domestic. This time is similar to the general corp. reg. time and it usually takes 3-4 days.
Q3. What about the investment volume for the legality of the foreign inves. corp. ?
A. The inves. volume which could have investor-protection under the foreign- investment- promotion- law is that the share-ratio of the foreign investor(one person) exceeds 10% and the investment is more than 0.1bil. KRW. In this case, accroding to the law, regisration as a foreign investment corporation is possible. Later on when the investment is collected , to carry-out to the overseas inves. country is secured and when there is any dividend, the remittance is guaranteed freely to the investment country. Also, per 0.1bil. KRW of the foreign investment, one D8 visa (investment visa) is issued.
If the investment is less than 10% (less than 0.1bil. KRW), this is surely possible, but this is not deemed to be the investment under the foreigner investment promotion law. In this case, to reg. as the foreign investment corp. is not possible and needs to do ‘stock acquisition report ’ under the Foreign Exchange Law during the corp. establishment.
Q4.? What about the investment (capital) remittance procedure to domestic ?
A. Regarding the investment remittance from the overseas investment country to domestic, foreign investment report is the first step and the remittance is next. The overall procedure is as follows.
① after previous consulting (regarding investment industry, capital volume, executives assign, business site selection, establishment documents ) ->
② foreigner investment report ->
③ investment remittance from the overseas inves. country
Q5. How to remit the investment ?
A. After writing the foreigner inves. report and reporting to the foreign exchange bank, the bank will guide you the investment-only account per bank. If you remit to the investment-only account, the money will be safely secured as the corp. est. capital until the corp. est. is completed. However, the remittance to a personal account is not allowed in principle and the investment can not be exchanged before the foreigner investment report.
(sample) investment-only account per bank
1) Woori Bank
2) Kookmin Bank
3) Shinhan Bank
Q6. The investment(capital) must be remitted without exception ?
A. cash carry-in is possible
However, when you arrive in Korea, you need to declare that it is the ‘foreigner inves. money’ and need to report as the money for investment to the Korean customs. In this case, you can not exchange the money to KRW before the foreign investment corp. report to the foreign exchange bank.
Q7. If the corp. is the joint corp. with a domestic investor in Korea, this could be admitted as a foreign investment corp. ?
A. If a joint corp., this could be deemed to be a foregin inves. corp.
In this case, joint inves. contract should be written and also needs to satisfy the requirements of the foreigner inves. promotion law. In other words, if the investment of the foreigner investor exceeds 0.1bil. KRW and also exceeds 10%, to register as a foreign inves. corp. is possible under the foreigner inves. promotion law.
Q8. What is the first step that a foreign investor needs to prepare before foreign inves. corp. establishment ?
A. After previous consulting for the establishment, (Power of Attorney) should be prepared first and need to check/prepare the documents which should be prepared at the investment country. The documents could be changed whether the
foreign investor comes to Korea or not, so this should be checked in advance.
(The CEO and other executives are foreigners ? They come to Korea during establishment process ? The documents preparation could be changed accroding to this, so these should be checked in advance. )
Q9. If CEO of the foreign inves. corp. is a foreigner, he has to stay in Korea ?
A. To stay in Korea is not a obligation. If he does not receive the payment (compensation), and if ‘non-compensation confirmation’ is submitted, the health insurance and national pension could be exempted.
Q10. If you purchase the stocks from a existing corp., this could be admitted to be a foreign inves. corp. ?
A. If a foreign investor purchases the stocks from a existing corp., this could be deemed to be a foreign inves. corp. (stock trade method)
You(a foreigner) can purchase the stocks from a existing foreign investor and this could be the type that the foreign investor change. Also, when you purchase the stocks from a general corp., this also could be a foreign inves. corp.
However, in the case that the stocks are traded, the purchasing capital per one foreign investor should exceed 10% and 0.1bil. KRW and this the reg. requirements for the foreign inves. corp. registration under the foreigner inves. promotion law.
Also, in this case, the foreign invest. corp. should be reported before the acceptance of the stocks and the stock accept money should be remitted into Korea with foreign currency.
Q11. When a existing domestic corp. increases the capital and a foreign investor accepts this new stocks, this could be admitted to be a foreign invest. corp.?
A. Yes, this is possible.
However, before remit the investment (capital) which is for the acceptance of the new stocks, foreign invest. report should be processed. Also, if it is the case of entrust, the documents such as Power of Attorney should be prepared in advance.
Q12. The foreign investment corp. must be a corporation ?
A. No. That is not true.
A individual business operator is also possible. However, in the case of a individual business operator, the visa is D-9, not D-8, so the investment amount must be 0.3bil. KRW or more.
FDI InformationIncorporation in KoreaFAQ 
