Overseas investment notification

The first and most important step in overseasinvestment is to make a notification to financial authorities. Companies shouldreport to their main bank, foreign exchange bank but when financialinstitutions make investments in finance and insurance business they report tothe ministry of finance and economy. Individuals who make a direct investmentin off-shore institutions should report to the Bank of Korea. In case offinancial institutions investing in foreign insurance business it should bereported to the Ministry of Finance and investments in overseas financialproducts by residents should be reported to the Bank of Korea.

(1) The object of overseas investmentnotification

① New investment: Theobject of overseas investment notification includes both the case of making anew investment and borrowing funds for investment.

An investment in which stocks or investmentequities acquired to take part in the management of a juristic personestablished under foreign statutes (including juristic persons in the course ofincorporation; hereinafter referred to as "foreign juristic person")account for not less than 10/100 of the total number of stocks issued or thetotal amount of equity investment made by the relevant foreign juristic person(referring to the total ratio of stocks or investment equities where stock orinvestment equities are jointly acquired; hereafter in this paragraph referredto as "investment ratio")

②Changes in investment: where there is a change in investment amount, type ofbusiness, ratio of investment, ways of investment it should be reported to thefinancial institutions.

③ Liquidation report: liquidation and remaining asset withdrawal isalso subject to notification.

④ Loan investment: loan investment, where the loan is collectednotification is required. Repayment period for the loan should be longer than ayear.

(2) Investment code

Where a foreign investment notification isfiled a code is designated for the investment by the financial institution.With this code foreign investors should report to tax authorities for theiroverseas investment during income and corporate tax return filing period.

There are many cases in which notification for investmentdid not properly completed. It not only causes penalty taxes from the financialsupervisory service but bring problems to overseas transactions.