Korean Corporate Forms under the Korean Commercial Code: Forming a Company in Korea

There are four basic corporate entities under the Korean Commercial Code. The first to forms are the most usual forms for a foreign capital-invested company to form a company in Korea.

1. Chusik Hoesa (Joint Stock Company)
Only form of corporate entity that is allowed to publicly issue shares. An article will be posted on the specifics of forming a Chusik Hoesa in the next couple of weeks.

2. Yuhan Hoesa (Limited Liability Company)
A closely held company that is prohibited from having more than 50 shareholders. In recent years a few foreign companies have chosen the Yuhan Hoesa, however, most foreign companies are advised and will form a Chusik Hoesa. A few companies, recently, have chosen this form because of possible U.S. tax benefits. I will explain the tax benefits in a follow-up article.

3. Hapja Hoesa (Limited Partnership)
One or more partners may have unlimited liability and one or more partner may maintain limited liability. The entity is responsible for corporate taxes. Most foreign companies do not form this type of entity even if entering into a joint venture with a Korean partner.

4. Hapmyung Hoesa (Partnership)
Must be formed by two or more partners and each partner maintains unlimited liability. The entity is responsible for corporate taxes. Most foreign companies do not form this type of entity even if entering into a joint venture with a Korean partner.

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