Setting up a corporate entity in South Korea involves several steps and can be complex. If you are setting up a Korean venture between multiple parties or corporations make sure you have a carefully and custom-drafted Korean shareholder agreement, bylaws, articles of incorporation, employment agreements, employment rules, vendor agreements and you have the basic systems and processes in place to help ensure working shareholder and employee compliance. Even if you are the, only, shareholder in the company make sure to have all your ducks in order so you can have a soft landing in Korea. Please note the following post details the basics of setting up a business in Korea. If you have any questions, please schedule a call or check out our law firm at IPG Legal.
Starting Up a Corporation in South Korea
- Choose a Legal Entity: The first step is to choose the legal entity that best suits your business needs. The most common types of entities in South Korea are Limited Liability Companies (LLCs) and Joint Stock Companies (JSCs). Some factors to consider when choosing the legal entity include the level of liability protection, the number of shareholders, the level of management control, and the tax implications. Consult with an attorney in Korea.
- Register your Trademark/Service Mark: Once you have chosen the legal entity, the next step is to protect your trademark or service. You can do this by filing an application with the Korean Intellectual Property Office (KIPO). The name must be unique and not identical or similar to the name of any other existing company. For more information on registering a trademark or service mark in Korea please see: Registering & Enforcing your Trademark and Service Marks in Korea.
- Prepare the Articles of Incorporation: The Articles of Incorporation is a legal document that outlines the company’s purpose, management structure, shareholder rights, and other essential information. It must be drafted in Korean and signed by all the founders. Don’t use a template for this. Also, in many cases, it is recommended to, also, have a shareholder agreement. Shareholder agreements are private documents that govern the relationship between shareholders. For more information on Shareholder Agreements in Korea please see: Korean Joint Venture & Shareholder Agreement Basics in Korea
- Register the Business: Once the Articles of Incorporation (and other agreements are prepared), the next step is to register the business with the Korean Commercial Registry (Court Registry). This involves submitting the Articles of Incorporation, the company seal registration certificate, the company registration application, and other required documents to the registry.
- Create & Register your Company Seal: Have a company seal made and register the company seal. Keep the seal in a safe place. In some cases, it is advisable to have customary seals for use by some employees of the company.
- Obtain Special Business Licenses and Permits: Depending on the nature of your business, you may need to obtain various licenses and permits from the relevant Korean government agencies. For example, if you are opening a restaurant, you will need to obtain a food service permit from the local health department. In certain regulated industries, you shall need to file with certain national government offices.
- Register for Taxes/Business License: Register for various taxes with the National Tax Service, including corporate income tax, value-added tax (VAT), and local taxes. You will also need to obtain a tax identification number and registration of your company at the tax office.
- Register for Social Insurance: Register for Social Insurance (Four Major Insurances) with the National Pension Service, the Health Insurance Corporation, and the Employment Insurance Corporation. This includes health insurance, pension, and unemployment insurance.
- Open a Bank Account: Open a bank account in South Korea for your business transactions. You will need to provide your company registration documents and identification to open the account. If you are forming a foreign-capital invested company the process, also, requires the transfer of capitalization from a foreign account to a Korean account and registration of the capital remittance.
- Lease Office Space: Finally, you will need to lease office space for your business operations. You can lease office space through a real estate agent or directly from a landlord.
It is essential to note that the process of setting up a corporate entity in South Korea can be complex and time-consuming. It is advisable to seek the assistance of a local lawyer and an accounting firm to guide you through the process and ensure compliance with all legal and regulatory requirements. We set up numerous corporations and structure joint venture agreements for companies entering the Korean market.
You may schedule an initial free consultation with an Attorney at: Schedule a Call with an Attorney in Korea to discuss establishing or expanding your business into Korea.
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