FAQ) Korean Business: Director, Shareholder, Secretary | Pearson & Partners Korea

Director

Managing Director (????) vs. Director (????)

In South Korea, there are no resident director requirements. Any individual can serve as the sole director and shareholder of a company.

The managing director is the highest-ranking management position in a company, with directors working under their supervision. Large companies typically have several directors, such as the director of planning, director of personnel, or director of finance, who report directly to the managing director. These directors implement strategies and goals set by the managing director for their respective departments. The managing director has the authority to dismiss and replace directors as needed.

Representative (???)

Foreign investors often find the role of Representative Director in Korean companies confusing.

The Representative Director is the highest position in a stock company under Korean law and is often likened to a CEO. However, unlike a CEO, who is hired under an employment contract and operates under the supervision of the board of directors (BoD), the Representative Director is elected from among the directors to represent the company and conduct all business affairs. According to the Commercial Act of Korea (art. 209, art. 389, 2020), the Representative Director has greater discretion in corporate management compared to a CEO, as they are a voting member of the BoD and typically serve as its chairperson.

Foreign investors should consider this distinction when incorporating or investing in Korean companies. A non-resident foreigner can become the Representative Director, or they may appoint a local individual to the position. It is crucial to establish mutual trust and ensure a shared understanding of the company's direction among all involved parties.

Shareholder

Individual Shareholder

At least one shareholder must be appointed, and 100% foreign ownership is allowed. Individual shareholders invest their own money in a company, gaining equity and often voting rights proportional to their shareholding. Typically, an individual shareholder will be the representative of their shares and appoint themselves as the company's director.

Corporate Shareholder

A corporate shareholder is a business entity, such as another limited company, a limited liability partnership, or a non-profit organization, that owns shares in a limited company. Corporate shareholders have the same rights as individual shareholders, including limited liability for the company's debts and the responsibility to pay for their shares when required.

Having a corporate shareholder, especially an external investor, can be beneficial for new companies. The stability and expertise of an established business can enhance brand value and make it easier to secure favorable terms from suppliers and manufacturers.

Secretary

While appointing a company secretary is not mandatory, it is recommended for foreign investors to have one to assist with company representation and administrative tasks.

• Is it possible to appoint two representative directors for a Korean corporation? It is possible to appoint two representative directors, but for efficient future management, it is recommended to have only one of them. When making resolutions at the board meeting for registration changes, the consent of both representative directors is required, resulting in doubled administrative costs such as notarization and apostille. Therefore, the recommendation is for a single representative director to ensure smoother operations and reduce administrative expenses.
• Are there different documents required when serving as a representative director of a stock corporation compared to serving as a director? When registering as a Representative Director instead of a Director during company establishment, additional address verification documents are required. Korean nationals need to provide a copy of their resident registration certificate. Foreign nationals must submit notarized documents (such as utility bills, bank statements, mobile phone bills, or driver's licenses) with an apostille to verify their address.

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