Navigating the Process of Registering a FDI Company in Korea: A Step-by-Step Guide
Foreign direct investment (FDI) in Korea requires a specific procedure. The crux of this procedure is the 'Foreign Investment Promotion Act', a strict regulation that foreign investors must abide by in Korea. I'm not sure why such an investment procedure is necessary, but I think it would be more attractive to foreign investors if we abolish such regulations in the future. Currently, unlike the 1960s and 1970s, many foreign investors are investing in and withdrawing from Korea. I think we should allow more freedom in the inflow and outflow of funds, especially making the Exit Plan of investors completely free.
Background Information: The Foreign Investment Promotion Act is a law that foreign investors must follow if they intend to acquire a stake of 10% or more, or invest over 100 million won in Korea. Violators of this law may be subject to a maximum penalty of 10 million won.
Below, I have summarized the practical procedures for the establishment and registration of foreign investment companies.
1. FDI Approval Application:
The first step for a foreign investor is to apply for 'Foreign Direct Investment Approval' through a foreign exchange bank (a bank designated by the government). This means that you must obtain approval for foreign exchange transactions from the beginning according to the "Foreign Exchange Management Act". In this application, you must fill in basic information such as the investor's name or corporate name, investment amount, and type of business.
2. Issuance of FDI Approval Certificate:
Once the application is approved, the bank issues an FDI approval certificate along with a Remittance Advice. Through this document, the investor can remit capital from overseas to Korea. It should be noted that you must fill in the purpose of remittance in the name of the approved investor according to the above remittance advice and proceed in foreign currency from overseas.
3. Capital Remittance:
In the case of new investors, since there is no bank account in Korea at this stage, the capital is temporarily deposited in the bank's "special deposit account".
4. Corporate Registration:
If you apply for corporate registration and corporate seal registration at the registry office (located under the jurisdiction of the corporate address) under the judiciary, a copy of the corporate registration and a corporate seal card will be issued from the registry office within 2-3 days. Corporate registration must be done after the capital has arrived in Korea.
5. Business Registration:
Once corporate registration is completed, you can apply for business registration at the tax office (nearest tax office) with the necessary documents. At this time, you need a lease agreement for the business address. The lease agreement must be concluded in the name of the lessee.
6. Opening a Corporate Account:
Once the business registration certificate is issued from the tax office, you can open a bank account by designating a transaction bank and prepare OTP and public certificates necessary for internet banking so that you can trade remotely.
Once a corporate account is opened, foreign currency that was parked in a temporary account is transferred to a newly opened account of the corporation.
7. Foreign Investment Company Registration Certificate:
Once up to step 6 is completed, foreign investment company registration is possible, and a registration certificate is issued.
8. D-8 Visa:
Once up to step 7 is completed, investors can apply for an investment visa if necessary.
The funds temporarily deposited in the account serve as a place to keep funds until the account is officially opened after the corporation has completed registration with the court and the business registration certificate is issued from the tax office.
The entire process from FDI approval application to bank account opening generally takes about 2 weeks. After this period, foreign investors can officially start a business in Korea.
To schedule a call with Jz, book a Google Meeting here.
**Q: What is the first thing a foreign investor should do in Korea?
A: A foreign investor must apply for "Foreign Direct Investment Approval" through a bank according to the 'Foreign Investment Promotion Act'.
**Q: What happens when FDI approval is granted?
A: The bank issues an FDI approval certificate along with remittance advice so that the investor can remit capital from overseas to Korea.
**Q: How long does it take for a foreign investor to start a business in Korea?
A: The entire process from FDI approval application to bank account opening generally takes about 2 weeks.