A look at company types in South Korea

By Simon O’ Connor, 22nd September 2015

South Korea encourages foreign investment directly and indirectly in its economy. In 1998, South Korea enacted the Foreign Investment Promotion Act in order to promote foreign investment in South Korea. It provided foreign investors with many incentives, such as tax relief, cash grants, support of industrial sites, financial support, and so on.

As of 2015, South Korea has FTAs with 52 countries around the world. Korea’s FTA network now connects countries that together account for more than 73% of the global GDP. It is the only Asian country to have FTAs with both European Union (2011) and United States (2012). With the recent trade pact with China, South Korea will be capable of leveraging the strengths of Asia while simultaneously enjoying preferential access to the world’s most developed markets.

In South Korea there are four main types of Corporations used:

• General Partnership (Hapmyeong Hoesa)
• Limited Liability Partnership (Hapja Hoesa)
• Joint Stock Corporation (Chusik Hoesa)
• Limited Liability Corporation (Yuhan Hoesa)

General Partnership (Hampyeong Hoesa)
In a general partnership all members have unlimited liability meaning each partner is equally liable for any debts of the entity. Transfer of ownership in this kind of business entity is limited as unanimous consent of all members is required before this can be accomplished.

Limited Liability Partnership (Hapja Hoesa)
Members consist of those with limited liability and those with unlimited liability. Unlimited members have the power to carry out the affairs of the company while limited members participate on the company only through capital investment and do not have the power to carry out the affairs of the company. Unlimited members are liable for the company’s liabilities and limited members are only liable for amount of capital they have invested in the company.

Joint Stock Corporation (Chusik Hoesa)
Stockholders in a joint stock company have liabilities limited to the extent of their capital investment in the company. Stocks are freely transferrable, though this can be subject to approval of the board of directors. These companies are required to hold shareholder meetings at least annually to discuss financial statements and dividends

Limited Liability Corporation (Yuhan Hoesa)
This is the most common form of business entity used in South Korea. An LLC must assign at least one director and at least one shareholder. A minimum used share capital of €9,000 must be paid when incorporating an LLC in South Korea.

For more information on incorporating a company in South Korea, please do not hesitate to contact us +3531 687 4518 or fill out a contact form on our website and one of our experts will be in touch as soon as possible.