Business entities in South Korea

Business entities in South Korea

South Korea different business entity setup requirements A South Korea business setup can be an interesting option for multinationals wishing to tap into the dynamism of the North Asian markets, but unwilling to face procedural difficulties they would likely encounter in other major economies like Japan and China. The most commonly incorporated entity in South Korea is the limited liability company, but our Clients willing to raise funds will prefer to setup a joint stock company. Alternatively, our Clients may also choose to open either a branch office or a representative office to carry out their activities in the country.

Limited Liability Company (Yuhan Hoesa)

  1. This is the most commonly entity used for starting a business in South Korea. As always, the company is an entity, separate from owners who, consequently, enjoy limited liability;
  2. A South Korean LLC must appoint i) a minimum of one director and one shareholder and ii) a minimum used share capital of US$10,000 while setting up a company in South Korea. A South Korean LLC can be incorporated within 2 weeks.

Branch Office

A Branch office, despite having its own management team, bank account and capital resources, will operate within the confines defined by the parent company. This South Korea business setup is allowed to invoice local customers, sign local sales contracts, and receive income from its customers.

Representative Office (RO)

While a South Korean representative office is 100% foreign owned and controlled, it is not permitted to make direct sales within the country. Such an office will only engage in activities such as i) promoting business of the parent company and ii) market research.

General Partnership (Hapmyong Hoesa)

In a general partnership, all partners will have unlimited liability. Each partner is jointly liable for debts incurred by the entity. Transfer of ownership in this kind of company is limited, as unanimous consent of all members is required before this can be achieved.

Limited Liability Partnership (Hapja Hoesa)

In a limited partnership, members can choose to either have limited or unlimited liability. While, the liability of the limited members will be limited to the amount of their capital investment, they cannot make any business decisions on behalf of the partnership. All day-to-day business responsibilities will be handled by partners with unlimited liability.

Joint Stock Company (Chusik Hoesa)

Stockholders in a joint stock company have liabilities limited to the extent of their capital investment in the company. Stocks are freely transferrable, though this can be subject to approval of the board of directors. These companies are required to hold shareholder meetings at least annually to discuss financial statements and dividends.

Detail
LLC
Branch Office
Rep Office
Total company set up costsUS$9,953US$11,703US$9,793
Subsequent annual costs (excl accounting and tax fee)US$3,510US$1,560US$1,560
How long to set the company up?2 weeks2 weeks2 weeks
How long to open company bank account?2 weeks2 weeks2 weeks
Issued share capital requiredUSD10,000NoNo
Allowed to sign sales contracts with South Korean ClientsYesYesNo
Allowed to invoice South Korean ClientsYesYesNo
Corporate tax payable in South Korea22%22%22%
Corporate bank accountSCB or HSBCSCB or HSBCSCB or HSBC
Can rent office premises in South KoreaYesYesYes
Allowed to import raw materials?YesYesNo
Allowed to export goods?YesYesNo
Can the entity hire expatriate staff?YesYesYes
Do you need to visit South Korea?NoNoNo
Resident director required?NoNoNo
Resident shareholder required?NoNoNo
Minimum number of directors111
Minimum number of shareholders111
South Korean resident company secretaryYesYesYes
Tax registration certificate requiredYesYesYes
Individual shareholders allowedYesYesYes
Corporate shareholders allowedYesYesYes
Public register of shareholders and directorsYesYesYes
How long to get work permit approved6 weeks6 weeks6 weeks
Statutory audit requiredYesYesYes
Annual tax return to be submittedYesYesYes
Access to South Korean double tax treatiesYesYesYes
Draft invoice

Contact us

For additional information on our business setup services in South Korea, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Ishani Shrestha, directly: