Information on Direct Investments

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Outline and Foreign Direct Investment Notifications

Procedures for the establishment of a foreign investment company are primarily comprised of foreign investment notifications, the registration of a joint stock company or an individual taxpayer and the registration of the foreign investment company. The certificates to be issued upon registration of the foreign investment company shall include the documents required to be submitted when remitting investment returns out of the country and when applying for long-stay visas for investors (D-8). The procedures for the registration of the plant require location selection, acquisition of the building permits following the obtaining of approval for plant establishment or execution of the occupancy agreement and registration of the plant.

Foreign Investment Procedures
Procedures applied to all types of businesses
1. Foreign investment reports: Invest Korea (a foreign investment attraction agency/ Foreign exchange banks
2. Remittance of invested funds: Foreign exchange banks / Invest Korea
3. Corporation and business operator registration: Court Registry Office / Invest Korea
4. Foreign-invested company registration: Invest Korea / Foreign exchange banks
Procedures Applied to Manufacturing Industries
1. Site Selections: Invest Korea / Cities or Provinces
2. Factory Establishment Approval (separate sites) / Signing the Site Occupation Contracts (pre-planned sites): Cities, Counties, Provinces / Korea Industrial Complex Corporation (KICOX)
3. Construction Permits: Cities, Counties, Provinces
4. Factory Registration: Cities, Counties, Provinces

* Foreign investments comprise three types of stock investments, including the acquisition of new shares and existing shares and acquisition of stock through mergers and long-term loans. Procedures for foreign investments vary accordingly.

Acquisition of New Shares

In the case that a foreign national desires to invest in Korea through acquisition of shares newly issued by an enterprise managed by a juridical person (including one being incorporated) or a citizen of Korea, this foreign national shall notify a branch or a head office of a foreign exchange bank or a branch of the designated foreign bank in Korea or Invest Korea in advance.
New shares may be acquired by incorporating a new juridical person or by participating in capital increases by a public offering of an existing Korean company or a foreign investment company.
The person who shall communicate as set forth above shall be the foreign investor themself or a representative with the relevant power of attorney, and the documents to be submitted at the time of notification shall include no less than the notification form of the foreign investment through acquisition of new shares, the certificate of nationality of the foreign investor and documents relating to investment in kind in the case that investments in kind are required. In the case of a representative, the power of attorney establishing the right of representation is required. In the case that the foregoing notifier desires to make changes in the business name, name, nationality, amount of foreign investments or the ratio of the foreign investments (the ratio of the shares owned by the foreign investors to the total number of shares issued and outstanding in the company), investment methods, businesses to be managed, assignor of shares, provider of loans, amount of loans or terms of loans, such a person shall file notifications. Notifications of such changes shall be made by filling out notification forms, incorporating the relevant changes therein with the relevant organization with which the original notification form was filed.

Acquisition of Existing Shares

In the case that a foreign national invests in Korea through the acquisition of shares newly issued by an enterprise managed by a juridical person or a citizen of Korea, this foreign national shall communicate with a branch or a head office of a foreign exchange bank or a branch of the designated foreign bank in Korea or Invest Korea. However, in the case that the foreign national desiring to invest in Korea through the acquisition of existing shares of a company is engaged in the defense industry, this foreign national shall obtain prior approval thereof from the Minister of Industry and Prime Resources Ministry. In the case of the acquisition of newly issued shares, when the foreign national desires to make changes in the amount of foreign investment, or a foreign investment ratio, the said person shall communicate such changes or obtain approval for such changes. A person who has acquired existing shares in violation of the provision for authorization shall not be eligible to exercise the voting rights of the existing shares, and the Minister of Industry and Prime Resources may order such a person to transfer such wrongfully acquired shares.

Acquisition of Shares through a Merger

In the case that a foreign national makes a foreign investment through the acquisition of shares by a following merger, this foreign national shall notify the branch or the head office of the local foreign exchange bank, the branch of the designated foreign bank which controls the relevant enterprise or Invest Korea thereof. Acquisition of shares by merger, as opposed to the acquisition of new or existing shares, need not be communicated in advance, but shall be communicated within 30 days of acquisition of the shares. This issue is in consideration of the difficulties involved in making prior notifications before the amount of the foreign investment is introduced into Korea. The person who notifies the organization receiving such notifications and documents to be submitted do not greatly differ from the case of the acquisition of new or existing shares.

Details of Merger Require Notification
Acquisition of shares issued upon the capitalization of reserves, revaluation reserve and other statutory reserves of the relevant foreign investment company
- Acquisition of shares of juridical persons surviving or newly incorporated after merger, comprehensive exchanges or a transfer of shares or a corporate separation by means of shares owned at the time of merger of the foreign investment company into another enterprise, a comprehensive exchange or a transfer of shares or corporate separation
- Acquisition of shares of registered foreign investment companies by purchases, successions and bequests or donations
- Acquisition of shares due to investments of profits accrued from shares acquired pursuant to the relevant laws
- Conversions, under-writing or exchanges of convertible bonds, exchangeable bonds or depository receipts into shares.

Foreign Investments made in the Form of Long-Term Loans

When the overseas parent company of the foreign investment company or another enterprise having certain transactions with the foregoing parent company desires to make foreign investments in the relevant foreign investment company in the form of a five-year or longer-term loan, such company shall notify in advance the branch and the head office of the foreign exchange bank in Korea or the branch of the designated foreign bank in Korea or Invest Korea. The person who communicates and the organization that receives such communication are the same, as in the case of other forms of acquisition of shares, but the documents to be submitted shall be the loan agreement and other documents related thereto. In the case that such a person desires to change such matters as may be allowed by presidential decree, the person shall file notification of the changes.

Division in Charge : Investment&Attraction Division

Contact : +82-62-613-4071~4074

Consultation of investment attractions for those speaking English: yoonmink@korea.kr