Foreign investment in Korea is governed by a structured legal framework designed to facilitate transparency, investor protection, and economic development. For businesses and individuals aiming to invest in Korea, understanding the follow-up procedures is critical. This article explores the essential post-investment processes for managing foreign investment in Korea, including company registration, cancellation of registration, and adjustment of records.
Legal Basis:
- Foreign Investment Promotion Act
- Restriction of Special Taxation Act
Summary
1. Registration of a Foreign-Invested Company in Korea
The first crucial step in the follow-up management of foreign investment in Korea is the registration of a foreign-invested company. Once a foreign investor has made an initial capital contribution, they are required to register the company under Korean law. Registration is mandatory in the following cases:
- The foreign investor has completed payment for the object of investment.
- The foreign investor has acquired stocks or shares either by purchasing newly issued stocks from a Korean corporation or acquiring existing shares.
- The foreign investor has made a contribution to a non-profit organization in Korea, particularly in the science and technology sector, to foster a continuous collaborative relationship involving research, facilities, or personnel.
Proper registration ensures that foreign investment in Korea is legally recognized and provides the investor with protection and access to incentives under Korean law.
2. Cancelling the Registration of a Foreign-Invested Company
Under the Foreign Investment Promotion Act, the Ministry of Trade, Industry and Energy has the authority to cancel a registration if certain conditions are met. This process is an essential part of managing foreign investment in Korea, especially when the business ceases operations or when ownership changes.
Cancellation may occur under these circumstances:
- The foreign-invested company has officially reported the closure of its business operations.
- The foreign investor has sold or transferred all their shares to a Korean national or a Korean company, or no longer holds any shares due to a capital reduction.
- The investor falsely registered a company without actually completing the investment.
Cancelling a registration helps maintain the integrity of the legal and economic environment for foreign investment in Korea, ensuring that only active and compliant entities remain in the system.
3. Adjusting the Registration of a Foreign-Invested Company
After registration, it may become necessary to update or adjust the recorded information, especially when there are changes in the investment structure or company details. This step is another vital aspect of the proper management of foreign investment in Korea.
Foreign investors or foreign-invested companies must file for registration of modification in the following situations:
- When changes occur after reporting foreign investment, particularly if new shares are acquired or if the method of investment changes.
- When the object of investment is used or disposed of in a manner not previously reported.
- When the foreign investor sells a portion of their shares or a capital reduction occurs, reducing their ownership.
- When legally significant information changes, such as the foreign investment ratio, the name of the company, or other details as defined by the Ministry of Trade, Industry and Energy.
Accurate record-keeping ensures compliance and helps foreign investors in Korea maintain their rights and obligations under the law.
4. Conclusion: Streamlining Foreign Investment in Korea
Managing foreign investment in Korea involves more than just the initial capital infusion. Investors must understand and comply with post-investment obligations, including registering their company, updating changes, and cancelling registration when necessary.
By following the guidelines laid out in the Foreign Investment Promotion Act and related legislation, foreign investors can protect their investments and benefit from Korea’s dynamic and investor-friendly environment.
Whether you’re entering the Korean market for the first time or expanding existing operations, knowing how to manage foreign investment in Korea is vital for long-term success.
5. About NYLA – Korean Legal Office
■ NYLA – Your Trusted Legal Partner in Korea
At NYLA, we understand that the success of foreign businesses in Korea requires not only a solid business strategy but also reliable legal support. With a team of experienced Korean attorneys and legal professionals, NYLA provides tailored legal services for companies, investors, and individuals operating or planning to establish a presence in Korea.
We support our clients throughout the entire business journey with comprehensive services, including:
- Legal consultation on company establishment, taxation, and immigration;
- Advice on commercial real estate, franchising, and product distribution;
- Support in human resources, marketing, and business strategy.
In addition to legal advisory, NYLA also represents clients in civil litigation cases related to business, labor, marriage, family, and inheritance to ensure their rights and interests are fully protected.
■ Contact NYLA
If you’re a foreign business or individual looking for a reliable legal partner in Korea, NYLA is here to help. We are committed to delivering effective, practical, and personalized legal solutions for every client.
With a proven track record of assisting hundreds of international clients, our team is equipped to help you navigate complex legal challenges—whether it’s commercial disputes, contract issues, or foreign investment guidance.
Don’t let legal matters hold you back. Let NYLA be your trusted guide in the Korean market.
■ Get in touch with NYLA for expert legal support
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