Invest KOREA

A trade name in English cannot be registered. However, it is possible to use a Korean trade name and put an English trade name in parentheses. ◎ Only Korean characters and Arabic numerals are allowed in filling out the application form or other documents related to the registration for incorporation.

Article 29 of the Commercial Registration Act (Unregistrable Trade Names) prescribes “No trade name same as a trade name registered by another merchant for the same type of business shall be registered in the same Special Metropolitan City, Metropolitan City, Special Self-governing City, Si (including an administrative Si) or Gun (excluding a Gun within the jurisdiction of a Metropolitan City).” ◎ Therefore, when selecting a trade name, a foreign-invested company should check whether the selected trade name already exists at the Registrar of Supreme Court Internet Register Office at (http:/www.iros.go.kr).

◎ A foreign-invested company (a local corporation) – An investment of at least KRW 100 million per foreign investor is required to establish a foreign- invested company under the Foreign Investment Promotion Act and the Commercial Act. ◎ A branch office or liaison office of a foreign company – A branch office: When engaging in a business that generates profits in Korea, it is classified as a “branch office” under the Foreign Exchange Transactions Act. Because a branch office is a foreign corporation, it is not recognized as foreign direct investment. – A liaison office: A liaison office is different from a branch office in that it does not carry out business that generates profits in Korea, but instead undertakes “non-sales” activities such as liaison work, market research, research and development activities. Unlike a branch office, a liaison office is assigned a serial number equivalent to a business registration number by a competent tax office without a registration process in Korea. ◎ Therefore, when selecting a trade name, a foreign-invested company should check whether the selected trade name already exists at the Registrar of Supreme Court Internet Register Office at (http:/www.iros.go.kr).

◎ Differences in terms of nature of business (1) An individual business: An individual engages in business under his/her name and has full ownership of the business as well as unlimited liability for business debts. (2) A corporation: A corporation is an entity completely different from individuals, and its operation is run by the representative director under the name of the corporation. A corporation limits its liability and guarantee to the amount of its assets and the representative director, directors and shareholders that are the members of the corporation are not liable to its debts. ◎ Differences in terms of establishment procedures (1) An individual business: An individual business can carry out business after notifying foreign investment and receiving a certificate of business registration from the competent tax office, without additional procedures. (2) A corporation: A corporation is required to undergo incorporation procedures (incorporation registration, business registration) and the process may take around two more weeks due to document preparations and procedural matters for registration.

If the investment cannot be notified under the Foreign Investment Promotion Act because the amount of investment is less than KRW 100 million, a notification of acquisition of stocks by a non-resident should be filed to a foreign exchange bank pursuant to Article 7-32 of the Foreign Exchange Transactions Regulations.

There are four types of corporations - limited partnership company, partnership company, stock company and limited liability company – that can be established under the Commercial Act of Korea. As a stock company represents an absolute majority, the process of establishing a stock company is explained below (the “Act” refers to the Commercial Act). < Process of Establishing a Stock Company >