PROCEDURES OF REPORTING ON FOREIGN INVESTMENT IN KOREA

1. Introduction to Foreign Investment Reporting in Korea

When considering doing business in Korea, understanding foreign investment reporting in Korea is crucial. Under the Foreign Investment Promotion Act, any non-Korean individual or entity must report planned capital contributions and stock acquisitions to the Minister of Trade, Industry and Energy. In this guide, we will walk you through the full process of foreign investment reporting in Korea, so you remain fully compliant and avoid penalties.

2. Legal Basis: The Foreign Investment Promotion Act

The cornerstone of foreign investment reporting in Korea is the Foreign Investment Promotion Act. This legislation ensures transparency and regulatory oversight by requiring foreign investors to submit a report before making any capital investment, stock acquisition, or other forms of foreign investment in Korea. The government then issues a certificate of completion, confirming that the report has been accepted.

3. Step-by-Step Guide on Reporting Foreign Investment in Korea

3.1 Scope and Timing of Reporting

A key rule in foreign investment reporting in Korea is that the report must be submitted in advance. That means before any investment is made. Investors cannot inject capital into a Korean business or purchase shares before receiving approval. This rule applies whether you’re contributing money, acquiring shares, or investing through convertible bonds.

3.2 Exceptions to Advance Reporting

There are limited exceptions where a report can be submitted within 60 days after acquisition. These exceptions in foreign investment reporting in Korea include:

• Acquiring existing stocks in a listed corporation (excluding public enterprise or restricted entities).

• Receiving stocks through internal capitalization reserves or revaluation reserves.

• Acquiring shares after a merger, stock swap, transfer, or spinoff, using existing holdings.

• Obtaining shares by purchase, inheritance, gift, or testamentary gift.

• Using proceeds from existing Korean stocks to acquire new ones.

• Converting convertible bonds, exchangeable bonds, or stock depositary receipts into equity.

These exceptions simplify the process for foreign investors, while still ensuring full compliance with foreign investment reporting in Korea.

4. Who Must Report and What to Prepare

4.1 Definition of Foreigners

In the context of foreign investment reporting in Korea, “foreigner” means any non-Korean individual, corporation, partnership, or other entity that invests in Korea. If you meet this definition, you must report.

4.2 What Must Be Reported

Any form of foreign investment you make must be documented in your report:

• Capital payments to establish or increase the equity in a Korean enterprise.

• Acquisition of stocks or equity, whether newly issued or through conversion of securities.

• Transfers via gift, inheritance, or capital re-allocation.

• Use of financial instruments that may later convert into equity.

5. How the Reporting Process Works

5.1 Pre-Investment Notification

The central part of foreign investment reporting in Korea is filing before any investment is executed—unless within the scarce 60-day exception.

5.2 Submitting a Foreign Investment Report

Foreign investors must complete a formal foreign investment report, providing details such as:

• Identity of the investor (name, nationality, corporate status)

• Investment amount and method (capital payment, stock purchase, convertible bond, etc.)

• Target company information

• Transaction method and conditions

5.3 Issuance of Certificate of Completion

Once your foreign investment report in Korea is received, the Ministry of Trade, Industry and Energy will promptly issue a Certificate of Completion. This certificate confirms that the investment report has been accepted and the investment may proceed legally.

6. Benefits of Proper Foreign Investment Reporting in Korea

• Legality and Security: With a certified investment report, your capital and stock holdings are fully recognized under Korean law.

• Access to Incentives: Proper reporting opens the door to tax benefits and other incentives under the Foreign Investment Promotion Act.

• No Penalties: Failure to report or late submission may lead to fines or administrative actions.

• Confidence in Transaction: Investors, banks, and partners may demand proof of compliance—which the Certificate of Completion provides.

7. Common Mistakes in Foreign Investment Reporting in Korea

Even experienced investors can make errors during foreign investment reporting in Korea:

• Assuming the notification requirement only applies to new enterprises.

• Overlooking the 60-day post-investment exception limits.

• Failing to include clear details on convertible instruments.

• Forgetting to report mergers, stock swaps, or spinoffs.

• Missing the deadline and risking fines or delays.

By following this guide closely, you can avoid these pitfalls and ensure accurate reporting.

8. Frequently Asked Questions (FAQs)

Q1: Can reporting be done electronically?
Yes, foreign investment reports in Korea may be submitted electronically via the official system managed by the Ministry.

Q2: Is there a fee?
No, there is generally no fee to file, but processing takes time, so plan ahead.

Q3: What happens if I miss the deadline?
You may face administrative sanctions or disqualification from incentives.

Q4: Does the process differ between listed and unlisted companies?
Yes—listed companies often qualify for the 60-day reporting exception.

9. Conclusion: Key Takeaways on Foreign Investment Reporting in Korea

Navigating foreign investment reporting in Korea doesn’t have to be daunting. You either report before investing or—when eligible—within 60 days after receiving shares or convertible instruments. With accurate documentation and awareness of exceptions, any foreigner can comply smoothly with the Foreign Investment Promotion Act.

By conducting thorough preparation and securing a valid Certificate of Completion, investors can safeguard their interests, benefit from incentives, and minimize compliance risks. Whether you’re just entering the Korean market or expanding your investments, following the correct procedures for foreign investment reporting in Korea is fundamental to long-term success.

10. 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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