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| HOME > Investment Guide > Investment Procedures |
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 Overview
and Notification of Foreign Direct Investment |
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| The procedures for establishment of a foreign-invested
company largely consist of foreign invest-ment notification, corporation
or sole proprietorship registration, and foreign-invested company
registration. The certificate to be issued attesting to foreign-invested
company registration is used as an attachment when filing for overseas
remittance of investment proceeds, extended-stay visa (D-8), etc.
Procedures to register a plant include selection of the location,
approval of establishment of the plant or entry into an occupancy
agreement, obtaining of a building permit, and the final registration
of the plant. |
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Procedures for Foreign Direct Investment |
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<Procedures Applicable
to All Lines of Business> |
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Foreign
investment
notification |
Invest KOREA/
designated foreign
exchange bank |
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Verification
of
payment of the
investment in
cash or kind |
Designated foreign
exchange bank
/Invest KOREA |
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Registration
of
incorporation and
business registration |
Court
/Invest KOREA |
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Foreign-invested
company registration |
Invest KOREA/
designated foreign
exchange bank |
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< Procedures Applicable
to Manufacturing Business> |
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Selection
of location |
Invest KOREA /
applicable municipal office |
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Approval
of establishment
of the plant (individual establishment) or entry into
an occupancy agreement (planned establishment) |
Applicable municipal
office or industrial complex |
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Building
permit |
Applicable municipal
office |
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Registration
of plant |
Applicable municipal
office |
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| Foreign investment can be made through either investment
via stocks in three ways - acquisition of newly issued shares, acquisition
of issued and outstanding shares and merger or consolidation, or investment
via long-term loan. Each type of investment entails a different set
of procedures. |
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| Acquisition
of New Shares |
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Any foreigner who intends to undertake a foreign investment
by acquisition of equity securities newly issued by a Korean corporation
(including those going through incorporation procedures) or a company
operated by a Korean national must file a notification in advance
with any branch of a designated foreign exchange bank or a designated
foreign bank, or Invest KOREA.
Newly issued shares can be acquired in two ways: (i) Establishment
of a new corporation and
(ii) Participation in the capital increase of an existing domestic
company or a foreign-invested company.
The notifying party may be either the foreign investor himself
or any other person having a power of attorney. The documents to
be submitted are a foreign investment notification by acquisition
of new equity securities (or of 'new shares etc.' [sic]) as well
as a certificate of nationality of the foreign pur-chaser and any
other documents related to the investment in kind, if applicable.
If the notifying party is another person acting for and on behalf
of the investor, a power of attorney is required as well.
The notification procedures are identical if there are any changes
in the previous notification state-ment, i.e. the corporate name
or designation or nationality of the foreign investor, the amount
of the foreign investment, foreign investment ratio (the percentage
of the shares to be owned by foreign investors in the equity securities
of the foreign-invested company), means of investment, business
objectives, share transferor, the lender, the amount of the loan,
and the terms and conditions of the loan. The modification must
be filed with the previously notified agency. |
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< Flow Chart of FDI through
Acquisition of Newly-issued Shares > |
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| Acquisition
of Issued and Outstanding Shares |
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Any foreigner who intends to undertake a foreign investment
by acquisition of outstanding shares issued by a Korean corporation
(including those going through incorporation procedures) or a company
operated by a Korean national must file a notification in advance
with any branch of a designated foreign exchange bank or a designated
foreign bank, or Invest KOREA.
Any foreigner who intends to undertake a foreign investment by acquisition
of outstanding shares issued by a corporation operating a defense-industry
business, however, must obtain the approval of the MOCIE in advance.
The notification and approval procedures are identical if there are
any changes in previously approved statement in which notification
was made, i.e. the amount of the foreign investment, foreign investment
ratio, and other details as set forth in the aforementioned case of
new shares.
Any person who has acquired issued and outstanding shares in violation
of the approved terms and conditions may not exercise his/her voting
rights, and the MOCIE may order such person to transfer his/her
holding to another person. |
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| Acquisition
of Shares by Merger or Consolidation |
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Any foreigner who undertakes a foreign investment by
acquisition of shares by merger or consolida-tion must file a notification
with any branch of a designated foreign exchange bank or a designated
foreign bank, or Invest KOREA.
The most distinctive difference between the procedures required for
acquisition of shares by merger or consolidation and those for acquisition
of new or outstanding shares is that the notification must be filed
within 30 days after the acquisition. This preferential treatment
is in the consideration of the fact that it is difficult to file a
notification of any investment by merger or consolidation in advance
before the foreign capital contribution is imported into the country.
The requirements of the notifying party, notified agency, and documents
attached hardly differ, though. |
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Mergers
or Consolidations Requiring Notification |
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- Acquisition of any shares issued due to capital transfer
of any reserve, revaluation reserve, or
any other surpluses of the foreign-invested company under
the provisions of any law |
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- Merger or consolidation of the foreign-invested company
with or into any other company, merger
or consolidation through the shares owned at the time
of any share swap, any transfer of shares
or company-split, or acquisition of the shares in a corporation
surviving or consolidated after
such share swap, transfer of shares or company-split
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- Acquisition by purchase, inheritance, bequest or gift
of shares in a registered foreign-invested
company from a foreign investor |
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- Acquisition of shares by investing the proceeds from
the shares under conditions prescribed by
law |
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- Conversion of, subscription to or exchange of any
convertible bonds, exchangeable bonds,
depositary receipts or any other convertible, subscribable
or exchangeable bonds or securities
into or for equity securities |
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| Foreign
Investment through Long-term Loan |
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If a loan with a maturity of not less than five years
is extended to a foreign- invested company by its overseas holding
company or by a company in a relationship with the said holding company
of a capital investment meeting certain requirements, then the foreign
investor must file a notification in advance with any branch of a
designated foreign exchange bank or a designated foreign bank, or
Invest KOREA.
The requirements of the notifying party and notified agency are identical
to those in other cases of share acquisition but differ in that the
documents to be submitted include loan agreements and other documents
related thereto. Any modification of the amount or terms and conditions
of the loan under the Presidential Decree requires a notification
of modification. |
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