How to Set Up a Foreign-Invested Company in Korea | Inpyeong
Key takeaways
A foreign-invested company (FIC)—formally a “foreign-invested enterprise” under Korean law—is a Korean company in which a foreign investor holds shares. To qualify, the investment must be at least KRW 100 million per investor, plus either a 10%+ shareholding or the appointment of an officer. Setting one up takes four steps: (1) foreign investment notification, (2) remittance of funds, (3) incorporation and business registration, and (4) registration as a foreign-invested enterprise.
As foreign investment into Korea continues to grow, one question I’m asked again and again is a deceptively simple one: what exactly is a “foreign-invested company,” and what does it take to set one up in Korea? This guide walks through both, under the current Foreign Investment Promotion Act.
At Law Office Inpyeong, our foreign attorneys—working in English, Spanish, and Chinese—team up with our Korean attorneys to advise clients in real time on foreign exchange filings and the establishment of foreign-invested companies (FICs).
What is a foreign-invested company (FIC) in Korea?
A foreign-invested company is a Korean company in which a foreign national or foreign corporation holds shares or an equity interest—so that foreign investment has been made into that company. While “foreign-invested company” or “FIC” is the common label, the precise statutory term under Korean law is foreign-invested enterprise (외국인투자기업).
What qualifies as “foreign investment” under Korean law?
Foreign investment is defined in Article 2(2) of the Enforcement Decree of the Foreign Investment Promotion Act, and two conditions must both be met:
- Monetary threshold: the investment must be at least KRW 100 million per investor; and
- One of two prongs: the investor must either (1) hold at least 10% of the total voting shares (or total capital contribution) of the Korean company, or (2) hold less than 10% but also dispatch or appoint an officer—a director, representative director, or auditor—to that company.
Meet the monetary threshold and one of these two prongs, and you have foreign investment in the eyes of Korean law.
How do you establish a foreign-invested company in Korea?
Where the investment takes the form of subscribing for newly issued shares, incorporation runs through four steps.
Step 1 — Foreign investment notification. Before investing, the foreign investor files an advance notification with the Minister of Trade and Industry (산업통상부장관) under Article 5(1) of the Act. In practice, you don’t do this at the Ministry itself: the function is delegated to foreign exchange banks and to KOTRA (Invest Korea), and that is where the filing is accepted. A certificate of notification is then issued without delay (Article 5(4)).
Step 2 — Remitting the investment funds. In line with the notification, the investor wires the funds from abroad into Korea through a foreign exchange bank, thereby paying in the subject matter of the contribution (출자목적물)—that is, the capital being invested.
Step 3 — Incorporation and business registration. The company is then incorporated under the Commercial Act. This step is identical to setting up an ordinary domestic Korean company. The company also completes its business registration with the competent tax office.
Step 4 — Registration as a foreign-invested enterprise. Once the contribution has been paid in (or the shares acquired), the foreign investor or the company must register as a foreign-invested enterprise (Article 21(1) of the Act). If certain requirements—such as the investment amount—are met, this registration can be made in advance, before payment or acquisition is complete (Article 21(2)). If anything changes later—the foreign investment ratio, the company name, and so on—a registration of amendment is required (Article 21(3)).
The four steps at a glance
| Step | Action | Legal basis |
|---|---|---|
| 1 | Foreign investment notification (via bank or KOTRA) | Act, Art. 5(1), 5(4) |
| 2 | Remit investment funds through a foreign exchange bank | Act, Art. 5 |
| 3 | Incorporation (Commercial Act) + business registration | Commercial Act |
| 4 | Register as a foreign-invested enterprise | Act, Art. 21 |
Note: The advance-notification route above applies to subscribing for newly issued shares. For certain other transactions—such as acquiring existing shares of a listed company—the law instead allows notification within 60 days after the shares are acquired (Article 5(2)).
How is a foreign representative director’s address registered?
A recurring question when establishing or amending an FIC is how to register a representative director who is a foreign national. The governing authority is Commercial Registration Precedent No. 1-154, which provides that where the representative director is a foreign national holding alien registration (외국인등록) in Korea, the registration application must attach a certified copy of the alien registration record (외국인등록표등본) as proof of address, and the registered address must be the domestic place of residence shown on that record (April 8, 1999, Registration 3402-379, Reply to Inquiry).
In plain terms: if your incoming representative director already lives in Korea and holds alien registration, you register the Korean residential address on file—not an overseas address—and prove it with the alien registration record. This is exactly the kind of detail where a cross-border matter can stall if it isn’t anticipated early, and where having both Korean and foreign counsel at the same table makes a real difference.
Frequently asked questions
What is the minimum investment to set up a foreign-invested company in Korea?
At least KRW 100 million per investor, combined with either a 10%+ shareholding or the appointment of an officer to the Korean company.
Is a foreign-invested company the same as an ordinary Korean company?
The incorporation step is identical under the Commercial Act. The difference is the additional foreign-investment notification and the registration as a foreign-invested enterprise.
Who receives the foreign investment notification?
Legally, the Minister of Trade and Industry; in practice, the filing is accepted by a foreign exchange bank or by KOTRA (Invest Korea).
Can a foreigner be the representative director of a Korean company?
Yes. If the director holds alien registration in Korea, the Korean place of residence on the alien registration record is used as the registered address.
Do I need to register changes after incorporation?
Yes. Changes such as the foreign investment ratio or the company name require a registration of amendment under Article 21(3).
About the author
This article was written by Andrew Baek, Senior Foreign Attorney at Law Office Inpyeong (Attorney-at-Law, New York; J.D., The George Washington University Law School). His practice focuses on foreign direct investment, foreign exchange filings, and cross-border transactions, advising foreign investors and companies on Korean law.
This column provides general legal information and does not constitute legal advice on any specific matter. For advice on your particular situation, please consult an attorney at Law Office Inpyeong.
< Inquiries on Foreign Investment, Investment Agreements, Foreign Exchange Filings, and FIC Establishment (consultations available in English, Spanish, and Chinese) >
