Set Up a Company in Korea: Subsidiary, Branch or Liaison Office

Every Korea entry starts with one decision — the legal form your presence takes. A foreign-invested subsidiary, a Korea branch office and a liaison office are created under different laws, may do different things, and open different visa routes for the people you send. KOCATION is operated by VISION Administrative Office, a licensed administrative agency (행정사) handling the entity registration and the assignment visas that follow through one point of intake.

Three Legal Forms for a Foreign Company in Korea

A foreign company can be present in Korea in one of three registered forms. Each is created under a different statute and carries different limits on what the Korean office may actually do.

Choosing Between a Subsidiary, a Branch and a Liaison Office

Three tests decide it. First, what the Korean office will actually do: if it will contract with Korean customers, invoice them and recognise revenue here, it has to be a subsidiary or a branch. Second, liability and capital: a subsidiary confines Korean liability to the Korean entity but requires capital to be remitted into it, while a branch avoids that capitalisation and leaves the head office directly exposed. Third, people: the visa route open to your assignees follows the entity you register, so the entity decision and the assignment plan belong in the same conversation rather than in sequence.

Set Up a Company in Korea: Subsidiary Registration Step by Step

A subsidiary follows the foreign direct investment route under the Foreign Investment Promotion Act, and the order matters more than the paperwork: each step produces the document the next step consumes.

1. 1

   1. Fix the investment structure before anything is filed

   Under the Enforcement Decree of the Foreign Investment Promotion Act, foreign investment means an investment of KRW 100 million or more where the foreign investor holds at least 10 percent of the total voting shares or total equity investment, or holds shares while dispatching or appointing an executive to the company. Who invests, how much and for what share therefore decides whether the result qualifies at all.

2. 2

   2. File the foreign investment notification

   The Act requires notification in advance of the investment. Receiving it and issuing the certificate of notification is entrusted to KOTRA and to the heads of foreign exchange banks, so it is filed at an Invest Korea office or the designated bank, not at a ministry counter.

3. 3

   3. Remit the investment funds through the notified channel

   The funds must arrive through the channel that was notified. The certificate of foreign exchange purchase and the remittance confirmation produced here are the same documents that later evidence the investment in the foreign-invested company registration and in a D-8 visa application.

4. 4

   4. Register the incorporation at the competent court registry

   Under the Commercial Act a company comes into existence upon registration of incorporation at the location of its head office. The articles of association, the directors and representative director, and the capital structure are settled here.

5. 5

   5. Obtain business registration from the district tax office

   The business registration certificate is what banks, landlords, clients and the immigration office all ask for. Until it exists the company is registered but not operational.

6. 6

   6. Register the company as a foreign-invested company

   The Act requires registration once payment of the object of investment or the acquisition of the shares is complete. The certificate is what opens the D-8 route for the people you send, and it is also what has to be amended when the shareholding or trade name later changes.

7. 7

   7. Open the corporate account and start the assignment work

   With those three documents the entity can hold a bank account, employ people and act as the inviting party for an assignment visa application. This is the handover point to the assignment stage.

Korea Branch Office and Liaison Office Setup Step by Step

Both are established through the same notification route and are distinguished by what they may do. The Foreign Exchange Transactions Regulations divide a non-resident's domestic establishments into a branch, which conducts revenue-generating business in Korea, and an office, which performs only non-business functions such as liaison, market research and R&D.

1. 1

   1. Decide which of the two the Korean activity actually requires

   A functional test, not a naming choice. If the Korean establishment will invoice or contract with customers, it must be notified as a branch. If it will only support the head office, a liaison office is correct — and the notified scope is what it is afterwards permitted to do.

2. 2

   2. File the establishment notification with the designated foreign exchange bank

   A non-resident establishing a domestic branch or office notifies the head of the designated foreign exchange bank. Certain businesses go to the Minister of Economy and Finance instead: non-banking financial business such as lending, arrangement and brokerage of overseas finance, card business and instalment finance; securities and insurance-related business; and business not permitted under other statutes such as the Foreign Investment Promotion Act.

3. 3

   3. Attach the evidence the Regulations require

   Filed with documents evidencing the name, location and main business of the foreign head office; a copy of any permit another statute requires for the establishment; and a statement of the content and scope of the business to be conducted in Korea. That last document is drafted, not collected, and it defines the scope you are later held to.

4. 4

   4. Branch only: register the business office in the commercial register

   A foreign company doing business in Korea must appoint a representative in Korea and either establish a business office here or have a representative domiciled here. Where a business office is established, the Commercial Act requires registration at its location within three weeks of the establishment date. A foreign company may not carry on continuous transactions before that registration, and whoever transacts in breach of it is jointly liable with the company.

5. 5

   5. Business registration, or a unique number for a liaison office

   A branch obtains business registration from the district tax office. A liaison office, which makes no taxable supply, is instead issued a unique number — the number it uses to withhold on salaries and to be identified in filings.

6. 6

   6. Bring in the operating funds through the designated bank

   Operating funds from the foreign head office must be introduced through the designated foreign exchange bank. That record of funds actually brought in is what a D-7 application later relies on to show the establishment is genuinely operating.

Documents Your Head Office Will Need to Prepare

Korean registries and banks require certified evidence of the foreign head office and of the person acting for it. Foreign public documents must be legalised before a Korean authority will accept them — an apostille where the issuing country is party to the Hague Apostille Convention, consular legalisation where it is not — and a Korean translation is required. This is the step most often underestimated, so we confirm the exact list against the registry and the bank before your head office starts collecting anything.

How Long a Korea Entry Takes: Fixed Periods and Review Periods

Most Korea entry timelines mix two kinds of duration. Some periods are fixed by statute and are the same for everyone; others are review periods at a registry, tax office, bank or immigration office, and those are not fixed by law.

We do not publish estimated processing days for the second kind — they vary by office, sector and case, and a number that is wrong for your entry is worse than none. The table gives the part of the schedule that is knowable in advance, and what each period blocks.

What the Registered Establishment Owes Afterwards

Registration creates continuing duties, and most of them fall on the Korean entity rather than the head office that made the decision. A foreign-invested company must file an amended registration when the foreign investment ratio, the trade name or other prescribed particulars change, when shares acquired by the foreign investor are transferred, or when the shareholding falls through a capital reduction. Registration must be cancelled where the foreign investor transfers all of its shares to a Korean national or entity.

A branch has its own set. Net profit is remitted abroad through the designated foreign exchange bank, and where it reaches 100 percent or more of the operating funds brought in, or exceeds KRW 100 million, an audit certificate from a certified public accountant accompanies the application. On closure, a closure report goes to the authority that received the establishment notification, and remitting the proceeds of disposing of domestic assets requires a tax clearance certificate from the competent district tax office.

On the people side, a company employing a foreign national with a status of stay permitting employment must report to the competent immigration office within 15 days of dismissal, retirement or death, of losing contact with the employee, or of a change to a material term of the employment contract. HR teams usually discover this duty only after missing it.

Korea Market Entry — Frequently Asked Questions