Main Choices of Company Set Up in Korea
Foreign businesses or persons who are not the residents of South Korea have three main choices in terms of putting together and registering a business or company in South Korea:
1. Local Corporation / FDI Company
This is the registration that defines a local company. However, by investing at least KRW 100M (equivalent to USD 90,000), it will fall into the category of a Foreign Capital Invested Company, or a Foreign Direct Investment Company (FDI). Korean law is beneficial to FDI firms in several ways, as against normal local companies.
An FDI company can be set up as one of the following kinds of business:
· Private Limited Company (‘Yuhan Hoesa’ in Korean) – this company has a configuration that comprises a maximum of 50 shareholders and it is not open to the public. This type of company often known as an LLC.
· Joint Stock Company (‘Chusik Hoesa’ in Korean) – this is a very popularly used corporate structure in Korea, even for FDI companies. Often, the names of companies registered on the lines of this pattern had Corp. / Ltd / Co., Ltd., at the end.
· General Partnership Company – (‘Hapmyung Hoesa’ in Korean) – this is a company structure that requires two or more partners who keep up unlimited liability.
· Limited Liability Company (‘Yuhan Chaekim Hoesa’ in Korean) – this configuration of a company is like a limited liability company (LLC) in the US.
· Limited Liability Partnership – (‘Hapja Johap’ in Korean) – This kind of a business structure resembles a Limited Partnership Company. Its legal entity is bound with its members. This resembles an LLP in the US.
· Limited Partnership Company – (‘Hapja Hoesa’ in Korean) – Different from a General Partnership Company, in this type of company, a few partners may have limited liability.
2. Branch Office
Although the FDI Company is regarded as a domestic corporation, a branch office is regarded as a foreign corporation. In this registration, the foreign headquarter and the Korean branch are one legal entity. A branch office can get into profit-making operations in Korea and is liable to the tax laws and rates that apply to local Korean firms. However, the benefits in terms of tax incentives and government support will be limited compared to local corporations or FDI companies.
3. Liaison Office
Similar to the branch office, this structure of a business can be seen as a foreign corporation. However, it differs from a branch office in the way that it can only get involved in non-sales operations like market research, R&D, advertisement, business development, etc., in favor of the foreign company.
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