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Minimum capital requirements for setting up a corporation in Korea


I would like to explain some concepts necessary to understand the 'capital stock' of a corporation before revealing the minimum capital. These concepts include face value stock, non-face value stock, face value, and issue price.


To assist your understanding, let's start with some basic concepts.


1. **Face Value Stock:

This refers to stocks that have a face value. In Korea, the face value of a stock is at least 100 KRW per share according to the Commercial Law, and face value stocks must be issued at a uniform price.


2. **Non-face Value Stock:

These are stocks that do not have a face value and only the number of shares is recorded. Non-face value stocks can be issued even when the market price of the company's stock is below the face value, which makes it easy to raise funds. However, there is also a disadvantage in determining the issue price fairly.


3. **Face Value:

This refers to the amount stated on the surface of the securities. The monetary value of cash or assets invested at the time of stock issuance is directly reflected. However, once the company starts operating and time passes, a market price is formed and it becomes a meaningless number.


4. **Issue Price:

This is the price per share that the stock subscriber must pay to the company at the time of stock issuance. The issue price is determined by the articles of incorporation at the time of company establishment, and at the time of new stock issuance, it is determined by the decision of the board of directors. Typically, the issue price of new shares should be more than the face value.


When a corporation issues face value stocks, the corporation's capital stock refers to the total face value of issued stocks (price per face value stock X total number of issued stocks). If a corporation issues non-face value stocks, capital stock means a total amount of money that is at least half of the stock issue price and is accounted for as capital by the board of directors or general meeting of shareholders.


Before 2009, Korean law required a minimum capital of 50 million KRW to establish a corporation. However, since February 2009, there are no longer any restrictions related to minimum capital in Korean law. However, since the minimum face value amount is set at 100 KRW, you can say that the minimum capital when issuing face value stocks is 100 KRW (practically, it's recommended to set it at least 1 million KRW due to difficulties in issuing a business registration certificate in Tax Office).


When establishing a company, not only capital but also the number of authorized shares must be determined. The number of authorized shares is marked as 'total number of shares to be issued' on the corporate registry certificate. This means that after establishing a company, the board can freely issue stocks within the range of the number of authorized shares without going through the procedure of amending the articles of incorporation at a general meeting of shareholders.


I hope my knowledge and experience will help you a little in running a company.

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**FAQs:**


**Q1: What is face value stock in Korea?

A: Face value stock refers to stocks that have a face value. In Korea, the face value of a stock is at least 100 KRW per share according to the Commercial Law, and face value stocks must be issued at a uniform price.


**Q2: What is non-face value stock in Korea?

A: Non-face value stock refers to stocks that do not have a face value and only the number of shares is recorded. They can be issued even when the market price of the company's stock is below the face value.


**Q3: What is the minimum capital requirement for setting up a corporation in Korea?

A: Since February 2009, there are no longer any restrictions related to minimum capital in Korean law. However, since the minimum face value amount is set at 100 KRW, you can say that the minimum capital when issuing face value stocks is 100 KRW.


**Q4: What is the significance of authorized shares in Korea?

A: The number of authorized shares is marked as 'total number of shares to be issued' on the corporate registry certificate. This means that after establishing a company, the board can freely issue stocks within the range of the number of authorized shares without going through the procedure of amending the articles of incorporation at a general meeting of shareholders.


**Keywords: Face Value Stock, Non-Face Value Stock, Face Value, Issue Price, Corporation Capital Stock, Minimum Capital Requirement, Authorized Shares, Corporate Registry Certificate, Korean Commercial Law, Stock Issuance


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