Cancellation of Foreign-Invested Company Registration

The registration of a foreign-invested company and its authorizations must be revoked or canceled when the foreign-invested company closes its business or where the foreign investor has transferred all of the stocks to a national (or company) of the Republic of Korea or ceases to hold any of the stocks previously held due to capital reduction

※ Related law : Article 21 of the Foreign Investment Promotion Act, Article 28 of the Enforcement Decree of the Act

Cancellation of Foreign-Invested Company Registration

Application form (Attached form 17 of the Enforcement Rules of the Foreign Investment Promotion Act : Application form for foreign-invested company registration)

Document certifying business closure, certificate of incorporation registration(liquidation completed) Required documents

• Where stocks have been acquired by merger, etc. (acquisition of stocks by merger, capital increase without consideration, etc.)

• Where the shareholdings or investment ratio of a foreign investor changes due to stock transfer or capital reduction by a foreign investor

• Where the shareholdings or investment ratio of a foreign investor changes due to capital increase by a national of the Republic of Korea

• Where there are changes to the company name or title of a foreign-invested company or the nationality of a foreign investor

• Where there are changes to notified details such as the foreign investment amount, foreign investment ratio, or the address of a foreign-invested company

※ Related law : Article 5 (2) 2-6 of the Foreign Investment Promotion Act

In Detail

However, the change of information can be notified after the investment notification, if necessary

Q1. It is said that 0.4 percent of the paid-in capital shall be paid as registration license tax for foreign-invested company establishment, although the payable tax amount triples to 1.2 percent when the head office is located in a Seoul Metropolitan overpopulation control area.

Are there any ways to avoid heavy taxation?

According to Article 28 (2) of the Local Tax Act, a company whose type of business makes it unavoidable to establish facilities in a large city may pay 0.4 percent of the paid-in capital as registration license tax. The applicable business types are specified in Article 26 (1) of Enforcement Decree of the Local Tax Act.

Q2. In the case of FDI, does the foreign investor have to register with the Financial Supervisory Service?

An application containing the foreign investor registration including personal information should be filed to the Governor of Financial Supervisory Service in advance in a manner prescribed by the Governor of Financial Supervisory Service when the investor intends to acquire or dispose of existing stocks or stocks to be listed for the first time. Foreign investor registration is not required where an investor seeks to acquire or dispose of stocks related to FDI, except in cases where stocks are acquired in a stock market.

Q3. My company has a foreign-invested company registration certificate issued by KOTRA. For the sake of convenience, is it possible to register a change in the foreign-invested company registration at a bank and not at KOTRA?

It is possible to change the foreign-invested company management institution, which is referred to as a change in the delegated agency. The application form is form No. 2 (Application for Change of Delegated Agency) attached to the Rules of Business Process on Foreign Investment.

(Download www.investkorea.org → Resources → Library → Forms) Q4. Is there any penalty clause if a company fails to comply with its FDI notification details?

FDI notifications are not legally binding. If there is a change in the investment plan, a change of contents may be reported (including withdrawal of the notification).

Q5. When a foreigner acquires stocks issued by a domestic company and the value of the stocks is less than KRW 100 million, must the investment be notified?

Where the investment amount falls short of KRW 100 million and therefore FDI cannot be notified according to the Foreign Investment Promotion Act, a non-resident’s securities acquisition report should be made under the Foreign Exchange Transactions Act (Article 7-32 of the Foreign Exchange Transactions Regulations).

Q6. A foreign-invested company should pay registration license tax, etc. before registering incorporation. However, the funds deposited in a bank for incorporation purpose cannot be withdrawn before incorporation registration. What can I do?

There is a system in place which allows the company to utilize additional funds for establishment from the parent company and then pay it back.

Q7. Is it possible to convert long-term loans to stocks or equity by a foreign investor who notified a long-term loan FDI and holds the bond?

Previously, due to the Commercial Act stating "Shareholders are not able to counter the company by offsetting payment"., it was only possible to prepare loans and make stock payments through repayment procedures, or to convert investments into spot investments only with the approval of the court. However, as Article 334 of the Commercial Act, which banned the countervailing of shareholders, was eliminated, it is now possible to convert long-term loans directly to equity capital without court approval.

Q8. Is it possible to make an FDI notification online?

Online notification is currently not available, but KOTRA overseas FDI network provides FDI notification service for convenience. A list of KOTRA overseas network is provided on the Invest KOREA website (www.investkorea.org

→ Resources → IK Introduction → Introduction of Invest KOREA).

Q9. It is said that if a company name has already been registered by another company in Korea, it is not possible to register the name as a foreign-invested company. Is this true? Article 29 of the Commercial Registration Act regulates that a company name which is identical to a company name registered by another company for the same type of business cannot be registered in the same Special Metropolitan City, Metropolitan City, Special Self-governing City, City (including an administrative city; hereinafter the same shall apply) or county (excluding a country within the jurisdiction of a Metropolitan City; hereinafter the same shall apply).

Q10. Does the office lease contract need to be attached when registering the incorporation of a foreign-invested company?

Although the contract does not need to be attached, a confirmed address is needed. The contract should, however, be submitted when registering for a business license after the registration of incorporation is completed.

In principle, a foreigner should obtain a visa in advance in order to enter the Republic of Korea. Unauthorized entry and departure is not permitted even for a person who obtained a visa or is eligible for no visa entry, which means every person must go through the immigration declaration process at the border, airport and seaport, and entry may prohibited because of a failure to meet any of the requirements therein. In addition, a foreigner who intends to stay in Korea for more than 90 days should file for alien registration at the immigration office in the jurisdiction of the place of residence or regional immigration service.