Pre-Engagement Business Model Understanding
Before commencing our engagement, Fionza Consultants thoroughly comprehends your business model, considering crucial factors such as the nature of business activities, tax obligations, and potential personal liability. Based on these considerations, we recommend the most suitable business entity for your company registration in South Korea.
Limited Liability Company (Yuhan Hoesa)
The Limited Liability Company is a commonly chosen entity structure for foreign investors entering the South Korean business landscape. It’s a closely held company allowing up to 50 shareholders with limited liability, confined to their share capital. Notably, this structure is restricted from securitizing shares and issuing company bonds.
Joint Stock Company (Chusik Hoesa)
Foreign investors often opt for the Joint Stock Company to establish subsidiaries in South Korea. This is the only business entity in South Korea that publicly issues shares. Shareholders enjoy limited liability based on their initial capital investment, and stocks can be freely transferable with board approval. Annual shareholder meetings are mandatory, and a statutory auditor is appointed to oversee management and accounts.
Partnerships, including General (Hapmyeong Hoesa), Limited (Hapja Hoesa), and Limited Liability (Hapja Johap), involve two or more partners sharing profits and losses. General Partnership holds unlimited liability, while Limited Partnership and Limited Liability Partnership feature a mix of unlimited and limited liability. The latter is considered a separate legal entity, exempt from corporate taxes.
A branch office serves as an extension of the parent company, with the parent company assuming full accountability for all liabilities incurred by the South Korea branch. No restrictions on investment or ownership apply, but such entities may not benefit fully from government support or tax incentives.
Ideal for foreign investors not intending to conduct business in South Korea, a representative office is limited to non-commercial activities such as market research and marketing. While not fully exempt from registration and reporting requirements, it is a popular choice for those exploring the market before establishing a full-fledged business in South Korea.