Are you considering setting up a corporation in South Korea? This article will provide you with a concise overview of the procedures and documents required for this process. From registering your business name to obtaining necessary permits and licenses, we will guide you through each step to ensure a smooth and successful establishment of your corporation in South Korea. Whether you are a seasoned entrepreneur or a first-time business owner, this article will serve as a helpful resource on your path to establishing a presence in the vibrant South Korean market.
Reserving a Company Name
Choose a Unique Name
When reserving a company name, it is crucial to choose a unique and distinguishable name that is not already registered by another company. Ensure that the name is relevant to the nature of your business and reflects the brand image you wish to portray.
Check Availability
Before proceeding with the name reservation, it is important to check its availability. The Korean Intellectual Property Office’s website provides a free online search tool to check if the desired name is already registered or being used by another company. This step is necessary to avoid potential conflicts or legal issues in the future.
Apply for Name Reservation
Once you have confirmed the availability of your chosen name, you can proceed to apply for name reservation. This can be done through the online portal of the Korean Intellectual Property Office or by submitting the application form in person. The application requires basic information about your company and the desired name.
Pay fee
Upon successful submission of the name reservation application, a fee must be paid. The fee amount may vary depending on the type of company you are establishing. It is important to ensure that the payment is made promptly to avoid any delays in the name reservation process. Once the fee is paid, the name reservation certificate will be issued.
Preparing the Articles of Incorporation
Determine the Type of Corporation
Before drafting the Articles of Incorporation, it is essential to determine the type of corporation you wish to establish in South Korea. The options include a limited liability company (LLC), a joint stock company (JSC), or a limited partnership (LP). The choice depends on your business goals, ownership structure, and legal requirements.
Draft the Articles of Incorporation
The Articles of Incorporation represent the legal foundation of your corporation. It should include important details such as the company’s name, purpose, address, capital, shareholders’ rights and obligations, and the management structure. It is advisable to seek legal assistance to ensure that all necessary clauses are properly included.
Include Required Information
In addition to the basic information mentioned above, the Articles of Incorporation should also include the names and addresses of the initial directors and shareholders. It should clearly state their roles and responsibilities within the company. Furthermore, it is important to include provisions regarding the distribution of profits, decision-making processes, and other key aspects of corporate governance.
Obtain the Seal Certificate
Obtaining a seal certificate is a mandatory step in the incorporation process. Each company in South Korea is required to have an official corporate seal called ‘Dojang.’ The seal certificate issued by a certified seal manufacturer confirms the authenticity of the seal, which will be used in various official documents and contracts.
Appointing Directors and Shareholders
Determine the Number of Directors and Shareholders
The number of directors and shareholders should be determined based on the company’s needs and legal requirements. It is important to comply with the minimum requirements set by South Korean law, which may vary depending on the type of corporation being established.
Elect the Directors and Shareholders
Once the number of directors and shareholders is determined, you need to elect them. This is typically done during the initial general meeting of shareholders. Each director and shareholder should be formally appointed by passing a resolution, and the minutes of the meeting should be properly documented.
Prepare Director and Shareholder Resolutions
Following the appointment, it is important to prepare director and shareholder resolutions. These resolutions outline the decisions made during the meeting and serve as official documentation of the corporate governance structure. The resolutions should be signed by the directors and shareholders, as well as properly notarized.
Obtain the Seal Certificate for Directors
Similar to the corporate seal certificate, each director should have their own personal seal, called an ‘Injeong’. The seal certificate for directors is obtained from a certified seal manufacturer and serves as proof of the director’s authority to act on behalf of the company.
Preparing Required Documents
Business Registration Application Form
The business registration application form is an essential document required for the incorporation process. It includes information such as the company’s name, address, purpose, capital, shareholders, directors, and other relevant details. The application form can be obtained from the local district office or downloaded from their official website.
Certificate of Incorporation
The certificate of incorporation is a legal document issued by the government authorities, confirming the successful registration of the company. It includes important details such as the company’s name, registration number, date of incorporation, and other relevant information. This certificate serves as proof of the company’s existence and is often required for various business transactions.
Copy of the Articles of Incorporation
A copy of the Articles of Incorporation, which were previously drafted and notarized, should be included in the required documents. This copy serves as official proof of the company’s internal governance structure and outlines the rights and responsibilities of shareholders, directors, and other relevant parties.
Copy of the Company Register Certificate
The company register certificate is an official document issued by the relevant government authority, confirming the company’s registration and providing information about its directors, shareholders, capital, and other essential details. This certificate should be obtained prior to the official commencement of business activities.
Opening a Bank Account
Choose a Bank
When opening a bank account for your corporation in South Korea, it is important to choose a reputable bank that offers suitable services for your business needs. Consider factors such as the bank’s fees, accessibility, online banking facilities, and additional services that may be required.
Prepare Required Documents
To open a corporate bank account, certain documents are typically required. These include the company’s Certificate of Incorporation, Articles of Incorporation, identification documents of directors and shareholders, as well as any additional documents specified by the chosen bank. It is advisable to contact the bank in advance to confirm the specific requirements.
Submit the Application for Account Opening
Once all the required documents are prepared, they should be submitted to the chosen bank along with an application for account opening. The bank will review the documents and process the application accordingly. It is important to accurately complete the application form and provide any additional information or details requested.
Receive Bank Account Certificate
Upon successful review and approval, the bank will issue a bank account certificate confirming the opening of the corporate bank account. This certificate is an official document that includes the account number, the company’s name, and the bank’s contact information. It is important to keep this document in a safe place, as it will be required for various financial transactions and business operations.
Registering for Tax
Obtain a Business Registration Number
A business registration number, also known as a company registration number, is required for tax purposes in South Korea. This number is issued by the local tax office upon the successful registration of your company. To obtain the business registration number, you must submit the necessary documents to the local tax office and complete the registration process.
Register for Value Added Tax (VAT)
If your company is engaged in taxable transactions, it is mandatory to register for Value Added Tax (VAT). VAT is a consumption tax imposed on the supply of goods and services in South Korea. To register for VAT, you need to submit the required documents to the National Tax Service and complete the registration process.
Register for Corporate Tax
All corporations in South Korea are subject to corporate tax. To register for corporate tax, you must submit the necessary documents to the local tax office and complete the registration process. It is important to understand the relevant tax regulations and fulfill your tax obligations accordingly.
Register for Withholding Tax
If your company is making payments to employees or contractors, it may be required to withhold taxes from these payments and remit them to the tax authorities. To register for withholding tax, you need to submit the required documents to the local tax office and complete the registration process. Compliance with withholding tax obligations is necessary to avoid penalties or legal issues.
Obtaining Business Certifications
Determine the Required Certifications
Depending on the nature of your business, you may be required to obtain certain certifications or licenses to legally operate in South Korea. These certifications can vary based on industry, business activities, and other factors. Research the specific requirements for your business and identify the certifications that you need to obtain.
Prepare Application Documents
To apply for business certifications, you need to prepare the required documents and supporting materials. This may include business plans, financial statements, safety certifications, health permits, or any other relevant documentation specified by the certification authorities. Ensure that your application is complete and accurately reflects your business activities.
Apply for Certifications
Submit the completed application documents to the relevant certification authorities or agencies. The application process may involve review, inspections, interviews, or additional requirements depending on the certifications being pursued. Be prepared to cooperate and provide any additional information or clarifications requested by the authorities.
Receive the Certifications
Once the application process is completed and all necessary requirements are met, the certification authorities will issue the desired certifications. These certifications demonstrate compliance with applicable regulations and standards, and are important for building trust with customers, partners, and other stakeholders. Safely store the issued certifications, as they may be required for future audits or business transactions.
Registering with the Korean Social Security System
Determine the Applicable Social Security Subsystems
The Korean Social Security System includes various subsystems, such as the National Pension Scheme, the National Health Insurance Scheme, and the Employment Insurance Scheme. Determine which subsystems are applicable to your company based on factors such as the number of employees, their employment status, and other relevant criteria.
Prepare Required Documents
To register with the Korean Social Security System, you need to prepare the necessary documents. This may include the company’s registration certificate, identification documents of directors and employees, employment contracts, and any other documentation specified by the relevant subsystem authorities. Ensure that your documentation is accurate and up to date.
Submit Application to the National Pension Corporation
Once the required documents are prepared, submit the application for registration to the National Pension Corporation. The application will be reviewed by the authorities, and any additional information or clarifications may be requested during the process. Cooperate with the authorities and promptly provide any requested information to ensure a smooth registration process.
Receive Confirmation of Registration
Upon successful review and approval of the application, the National Pension Corporation will issue a confirmation of registration. This document confirms your company’s registration with the Korean Social Security System and provides important details such as the company’s registration number, effective date of registration, and contact information. Keep this document in a safe place, as it may be required for future reference or audits.
Registering with the Korea Workers’ Compensation & Welfare Service
Determine the Applicable Insurance Programs
The Korea Workers’ Compensation & Welfare Service administers various insurance programs, such as work injury compensation, occupational disease compensation, and employment insurance. Determine which insurance programs are applicable to your company based on factors such as the number of employees and their employment status.
Submit Registration Application to the Korea Workers’ Compensation & Welfare Service
To register with the Korea Workers’ Compensation & Welfare Service, you need to submit the registration application and the required documents. These documents may include the company’s registration certificate, identification documents of directors and employees, employment contracts, and any additional documents specified by the relevant insurance programs. Ensure that all documentation is complete and accurate.
Obtain the Insurance Policies
Once the registration application is processed and approved, the Korea Workers’ Compensation & Welfare Service will issue the required insurance policies. These policies provide coverage for work-related injuries, occupational diseases, and other applicable insurance benefits. Familiarize yourself with the terms and conditions of the insurance policies and ensure proper implementation within your company.
Receive the Certificate of Insurance
The Korea Workers’ Compensation & Welfare Service will issue a certificate of insurance confirming your company’s registration and participation in the relevant insurance programs. This certificate should be kept in a safe place and made available for reference or audits as required. Compliance with the insurance programs is essential to protect the well-being and rights of your employees.
Conducting Initial Business Activities
Obtain Business Licenses and Permits
Depending on the nature of your business, you may be required to obtain specific licenses or permits to legally operate in South Korea. These licenses and permits can vary based on industry, location, business activities, and other factors. Research the specific requirements for your business, prepare the necessary documentation, and apply for the appropriate licenses and permits.
Register Employees with the Labor Ministry
As an employer, it is important to register your employees with the South Korean Ministry of Employment and Labor. This registration includes details such as their names, positions, employment contracts, and other relevant information. Compliance with labor regulations and proper employee registration is crucial to ensure a fair and legally compliant working environment.
Open a Corporate Bank Account
After obtaining the necessary certificates, licenses, and permits, it is important to open a corporate bank account. This account will be used for various financial transactions, salary payments, and other corporate activities. Choose a reputable bank, prepare the required documents, and follow the account opening process outlined by the chosen bank.
Setup an Accounting System
Implementing an effective accounting system is essential for managing your company’s financial records and ensuring compliance with tax regulations. Consider engaging a professional accountant or accounting firm to assist in setting up the accounting system and provide guidance on tax compliance, financial reporting, and other accounting-related matters.
In conclusion, setting up a corporation in South Korea involves several important steps and requires careful attention to legal and regulatory requirements. By following the outlined procedures and obtaining the necessary certifications, licenses, and permits, you can establish a solid foundation for your business. Remember to comply with ongoing obligations, such as tax filings, social security contributions, and maintaining proper corporate governance, to ensure a successful and legally compliant operation.