Entity set up
South Korea
Joint-stock company (Jusik Hoesa)
- Unlimited number of shareholders.
- Generally no personal liability of the shareholders outside of their financial contribution in the form of purchased shares.
- Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends.
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Typical charter documents include: AOI; share certificates; and shareholders' registry.
- Board of directors decides important matters related to daily operations and the representative director or executive officer has authority to make decisions binding the company.
- Shareholders purchase shares in the company, either common or preferred.
An external audit is required for:
- Publicly listed companies, or companies that will be publicly listed within that fiscal year or the following fiscal year.
- Joint-stock companies with total assets or annual sales revenue of at least KRW50 billion or that satisfy two or more of the below conditions as of the immediately preceding fiscal year:
- Total assets of at least KRW12 billion
- Total debt of at least KRW7 billion
- Total annual sales revenue of at least KRW10 billion
- At least 100 employees
Limited company (Yuhan Hoesa)
- Unlimited number of members allowed.
- Generally no personal liability of the members outside of their financial contribution in the form of purchased units.
- Taxed on its earnings at a corporate level and members are taxed on any distributed dividends.
- Typical charter documents include: AOI, and members' registry.
- Directors decide important matters related to daily operations and director (in case a limited company has 1 director) or representative director who is elected at the general meeting of members (in case a limited company has two or more directors) has authority to bind the company.
- Members purchase units in the company, but only 1 class of units is allowed.
- An external audit is required for limited companies with total assets or annual sales revenue of at least KRW50 billion, or limited companies that meet three or more of the following thresholds.
- Total assets of at least KRW12 billion
- Total debt of at least KRW7 billion
- Total annual sales revenue of at least KRW10 billion
- At least 100 employees
- At least 50 members
- Companies that changed their corporate structure from a joint-stock company to a limited company after November 1, 2019 are subject to the external audit conditions that are applicable to joint-stock companies for five years after registering their change of corporate structure.
Branch
A foreign company intending to directly engage in business in Korea may appoint a representative in Korea and establish a branch in Korea with the following conditions:
- Not a separate and distinct entity; unlike other separate and distinct entities, legal liabilities extend to the foreign company (head office)
- Taxed on its domestic source income in Korea at a branch level; must file tax returns with tax office within three months after the end of each fiscal year.
- Establishment process: report to foreign exchange bank; court registration; business registration is required
- Representative in Korea has authority to bind the branch; identity of the representative in Korea is publicly disclosed.
- Net income can be remitted abroad from Korea after closing of accounts for each fiscal year; however, funds remitted to a branch as operating funds cannot be repatriated abroad from Korea until liquidation of the branch is completed.
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