Company Registration in South Korea in 2023-24
In modern global economics, APAC, Asia- Pacific is the most labor-intensive and cost-efficient region of the world. Post industrialization of ‘91, this area has seen a drastic change or upliftment in the sectors of IT, modern science, manpower technologies, and what not. South Korea, post its independence have not only gained its reputation as a tech giant but have been presenting great examples to the business world as well.
The South Korean economy strengthened itself by allowing big-budget industrial projects and strongly holding them and named them Chaebol.
Opportunities in South Korea come in a vast array of areas, such as education and energy, which is why you can expect numerous foreign businesses within the country that have already made a name for themselves and operating businesses.
Almost any person or company abroad can open a company or register a company in South Korea. Based on the nature of the activity and the applicable rules and regulations, many firm and business structures may be established.
In this article, we will be going to discuss more in brief about the process of company registration in South Korea and the various documents required for South Korea Company Registration. So, without any additional wait, let’s jump into it.
Procedure for South Korean Company Registration
Down below we’ve described the procedure for company registration in South Korea:
Step 1:- Choose a company name and have it approved by the Korean Intellectual Property Office.
Step 2:- Prepare and file the necessary documents, including the articles of incorporation and the registration of business licenses, with the relevant government agencies.
Step 3:- Obtain any necessary licenses or permits, such as those related to business operations or taxes.
Step 4:- Register for social security and other mandatory benefits for employees.
Step 5:- Create a corporate bank account and put the necessary money in the bank.
Documents Required for Company Registration in South Korea
The documents required for company registration in South Korea include:
- A business registration application form
- A seal registration application form
- Articles of incorporation or partnership agreement
- Identity documents of the company’s directors and shareholders
- Proof of business address
- A copy of the firm’s tax registration certificate
- Other documents as required by the relevant government agencies
Types of Business Entities For Company Registration in South Korea
In South Korea, several types of business entities can be established while company registration in South Korea, including:
Sole Proprietorship
This is a company possessed and operated by a single individual. It is the simplest form of business entity and requires minimal formalities to set up.
Limited Liability Company (Yuhan Hoesa)
Limited Liability Company (Yuhan Hoesa) is the most sought-after type of business that is available in South Korea. It is a tightly-held company with up to 50 shareholders. They are not responsible for any obligations or debts which the company may incur and their liability is limited to the amount of their capital.
This is a minimum requirement of two shareholders and directors from all nationalities, no minimum-paid-up capital for a South Korean LLC, and an address for a registered office that is legal.
Joint Stock Company (Chusik Hoesa)
A Joint Stock Company (Chusik Hoesa) is the most commonly used firm structure to operate a business in South Korea and a prominent firm structure for foreign investors looking to set up affiliates in South Korea. It is a type of firm structure that authorizes the public issue of shares.
In the case of a Joint Stock Company, the stockholders are not liable to the company, which is determined by their capital investment. Furthermore, the stock can be transferred without restriction, subject to approval from the director’s board. So, it’s mandatory to have at least a yearly general shareholders meeting every year.
Partnerships
In a general partnership, each member has full responsibility, making them all equally responsible for the company’s debts. The ability to transfer ownership in this type of corporate entity is constrained because it requires the approval of all members at once.
Branch Office
If you’re looking to expand your reach into South Korean markets, foreign entrepreneurs can establish branches of foreign businesses located in South Korea. Since a branch office functions as an expansion of the company’s parent, it can only conduct business activities that are comparable to those in the parent firm.
Thus, the parent company is completely responsible for any costs that are incurred through branch offices. South Korean branch office. Furthermore, there is no restriction on the amount of investment or ownership.
Representative Office
Many foreign business owners start with representative offices. They are called liaison offices because of their simple registration requirements. Representative offices are designed for investors from outside the country who do not plan to do business with South Korea.
Representative offices are not permitted to conduct commercial operations or generate income within South Korea, such as selling services or goods. They can engage in non-commercial tasks like market research or R&D.
It is worth noting that all businesses must register with the relevant government authorities and comply with various regulations, including tax and labor laws.
Eligibility for South Korea Company Registration
To be eligible for company registration in South Korea, the following requirements must be met:
- A firm is required to have at least one director who is a resident of South Korea.
- The firm should possess at least one shareholder.
- The firm must possess a registered office address in South Korea.
- The firm must have at least KRW 1,000,000 ( approximately $900 USD) in capital, with at least 20% of it paid up.
- The company must have a unique name that is not already in practice by another firm in South Korea.
- The company’s articles of incorporation must be filed with the related government agency, such as the Ministry of Justice or the local district office.
Various Tax Structures for South Korea Company Registration
If you register a company in South Korea then the following tax structure must be followed:
- Corporate Income Tax: The corporate income tax rate in South Korea is now at 22%.
- Value Added Tax (VAT): The VAT rate in South Korea is currently at 10%.
- Withholding Tax: South Korea has a withholding tax on specific kinds of income, such as dividends, interest, and royalties. The withholding tax rate varies depending on the kind of income.
- Local Income Tax: Local governments in South Korea also collect a local income tax, which is typically a small percentage of the corporate income tax.
- Other Taxes: Depending on the nature of the business, a company may also be subject to other taxes such as property tax, vehicle tax, and taxes on certain types of goods and services.
Cost to Register a Company in South Korea
The cost to register a company in South Korea can vary depending on the type of business entity and the specific requirements of the registration process. Fees may include application fees, registration fees, and taxes.
Eventually, the South Korea company registration cost relies on the type of firm structure that you opt for and the general cost varies and typically ranges from $1,000 to $5,000.
Why register a company in South Korea?
There are several reasons why a company may choose to register a company in South Korea:
- South Korea has a strong and technologically advanced economy, making it an attractive market for businesses in industries, such as technology, manufacturing, and consumer goods.
- The country also has a highly educated workforce, which can provide a skilled labor pool for companies looking to expand.
- South Korea is also a strategic location for companies looking to do business in other parts of Asia, as it serves as a hub for transportation and trade in the region.
- The South Korean government also provides various incentives and support for foreign companies looking to establish operations in the country, such as tax benefits and funding for research and development.
- The country has a good reputation for Intellectual property protection and legal framework.
Advantages of South Korea Company Registration
South Korea company registration offers the following benefits:
- Access to the Korean market and its large consumer base
- Strong infrastructure and support for businesses
- A well-educated and skilled workforce
- Access to government support and funding for R&D and innovation
- Access to a large and advanced market
- Strong intellectual property protection
Conclusion
While you might think that registering a company in South Korea is a complex process that requires compliance with various regulations and the submission of various documents. However, the country offers several benefits for foreign companies looking to establish operations, such as access to a large market, a well-developed infrastructure, and a skilled workforce.
It is advisable to seek help from local professionals from Odint Consultancy to guide you through the process of company registration in South Korea.
FAQ’s
It generally requires between 1 to 2 weeks to register a company in South Korea.
Yes, foreigners can register a company in South Korea, but the company must have at least one director who is a resident of South Korea.
Yes, the firm should have a registered office in South Korea.
The company should possess at least 1 shareholder.
No, it is not necessary to have a South Korean national as a director or shareholder when registering a company in South Korea.
In general, there are no restrictions on foreign ownership of companies in South Korea, but certain industries such as national security, media, and telecommunications are restricted to a certain extent.
