Korea Company Setup: Essential Steps for Success

Understanding Korea's Business Landscape

South Korea is undergoing significant reforms in its foreign exchange market—the most substantial since the 1998 financial crisis. Key changes include extending trading hours until 2 AM, aligning with London’s market close, and gradually moving toward 24-hour operations. Additionally, approved overseas financial institutions will gain direct access to Seoul’s forex market, reducing dependence on non-deliverable forward (NDF) markets.

Major banks such as KB Kookmin, Shinhan, Hana, and Woori are expanding their forex teams to prepare for these changes. By registering overseas branches as foreign financial institutions (RFIs), these banks aim to strengthen their global operations in Korean won. Competitive electronic forex trading platforms, like Hana Bank’s Hana FX Trading System, are also expected to increase market stability by expanding supply sources and reducing exchange rate volatility. These reforms create new opportunities for foreign investors looking to establish or expand their presence in South Korea’s evolving forex landscape.

1. Choosing a Business Structure

Selecting the appropriate business structure is crucial, as it affects legal obligations, taxation, and operational flexibility. Common business structures in South Korea include:

Subsidiary

A subsidiary is a separate legal entity, either partially or fully owned by a parent company. It provides autonomy and limited liability, making it a preferred choice for foreign businesses.

Private Company (Yuhan Hoesa - LLC)

A private company (LLC) offers limited liability protection and ease of establishment. Foreign direct investment (FDI) exceeding KRW 100 million classifies the entity as a foreign-invested company under the Foreign Investment Promotion Act while maintaining domestic corporation status under commercial law.

Branch Office

A branch office operates as an extension of a foreign parent company without separate legal identity. It must comply with South Korean regulations and reporting requirements.

Liaison Office

A liaison office conducts market research and promotional activities but cannot engage in revenue-generating business. It falls under the Foreign Exchange Transactions Act.

Choosing the right structure depends on your business goals, industry, and financial strategy. Consulting legal and financial experts ensures compliance and strategic alignment.

2. Naming Your Company

Company names must be written in Korean characters, as English-only names are not permitted. It is essential to verify name availability and ensure compliance through the Korean Intellectual Property Office (KIPO).

3. Setting Up an Escrow Account and Allocating Capital

An escrow account is required to manage financial transactions during incorporation. Depositing the necessary paid-up capital into this account strengthens financial credibility.

4. Preparing and Submitting Internal Documents

Key documents, such as corporate bylaws and resolutions, outline business structure and operations. These are mandatory for company registration.

5. Obtaining a Corporate Registration Certificate

Once the corporate registration certificate is issued, your business gains legal recognition and can commence operations.

6. Receiving a Corporate Seal Card

The corporate seal card is essential for signing official documents and conducting business transactions in South Korea.

7. Registering with the Tax Office

Business registration with the tax office ensures compliance with South Korean tax laws. You will receive a tax identification number required for financial transactions and reporting obligations.

8. Opening a Business Bank Account

A corporate bank account is necessary for managing financial operations. Most banks require a business registration certificate and identification documents. Pearson & Partners offers remote assistance for opening accounts, eliminating the need for in-person visits.

9. Launching Business Operations

After completing these steps, your business is officially ready to operate in South Korea. Maintaining accurate records is critical for regulatory compliance and financial reporting.

Conclusion

Setting up a company in South Korea offers tremendous opportunities in a dynamic and evolving market. Selecting the appropriate business structure, complying with legal requirements, and leveraging recent forex market reforms can position your company for success.

Pearson & Partners specializes in business incorporation, tax accounting, and regulatory compliance, providing expert guidance throughout the setup process. Our team ensures a seamless entry into the South Korean market, helping businesses establish a strong foundation for growth.

For tailored support in company formation and strategic business expansion, contact us.

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