Investment in the stock and bond market in Korea is completely open to foreigners. In order to trade on the stock market, the following procedure must be followed:

– Contract with a permanent agent of a security company;
– Issuance of an individual foreign investor number from the Financial Supervisory
Service;
(needed documents: copy of passport of the individual, company description and
company registration documents [corporate entity] );
– Opening of an account for securities in Korean and foreign currency at a foreign
exchange bank;
– Account at the security company.

Requirements:

– The number of stocks to be listed has to be more than 1 million on the day of listing;
– Continuous business for more than three years after the establishment of the company.
However, if changes have occurred due to M&A, division or a combination of both, the
actual period of business activities will be considered;
– The amount of capital and net assets must on the application day be worth more than
KRW 3 billion and KRW7.5 billion respectively.
– The sales amount of the most recent year has to show at least a 20% increase
compared to the previous year. Or, the most recent business year has to record a
sales amount of at least KRW 5 billion and the average sales amount of the last three
years has to be at least KRW 0 billion.
– The rate of minority shareholders has to be over 30%, or, the rate of public offerings
has to be over 30%.
– For further information please refer to the homepage of the Korea Stock Exchange:
http://www.kse.or.kr

There are no restrictions to list a foreign-invested company on the KOSDAQ. Thus, it is possible to list a company on the KOSDAQQ when meeting the following requirements:

– At least three years have passed since its establishment;
– More than 1 billion KRW capital;
– No restrictions to the transfer of shares in the articles of the association;
– The face value has to be 100 won, 200 won, 500 won, 1000 won, 2,500 won, or 5,000
won;
– No negative equity in the most recent business year;
– The audit report has to be satisfactory for the most recent business year;
– Ordinary profit made;
– Less than 1.5 times of companies in the same industry;
– Further details can be found on the website of the Korea Securities Dealers Association
(www.ksda.or.kr).

The notification process for foreign direct investment has to first be completed at a branch or headquarters of a foreign exchange bank, Invest KOREA or a KOTRA office overseas or in Korea. At the place of notification, the foreign-invested company needs to be registered.

Securities and Exchange Act

• It sets the rules for the purchase of stocks of a company through the stock exchange market, powers of attorney and public offerings;
• According to Art. 190 of the Act, ?in case of a merger between a stock-listed corporation and a stock-unlisted corporation, the approval by a general meeting of stockholders ( ) shall not take effect unless it is made after two months from the date on which the stock-unlisted corporation has registered ( );
• Art. 191 of the Act regarding the appraisal rights of stockholders;
• The determination of the purchase price pursuant to Art. 191 paragraph 3 of the Act.

Monopoly Regulation and Fair Trade Act

• Restriction on combination of enterprises that suppress the competition in a particular business area pursuant to Art. 7, Art. 12 of the Act, and Art. 18 of the Enforcement Decree.

Commercial Act

• Merger of companies pursuant to Art. 174 and Art. 600 of the Act.

Tax Act

• Corporate tax and income tax

– The same reductions and benefits for industry-supporting service businesses as
well as high-technology businesses subject to tax reductions and for businesses
in foreign investment zones.
– Amount of tax reduction: corporate tax or income tax multiplied by the amount of
foreign investment.
– Period and rate of reduction: 100% reduction for seven years from the year when the
initial income has occurred, and 50% for three years thereafter.

• Corporate tax and income tax for dividends

– Amount of tax reduction: total income multiplied by the ratio that is subject to
taxation.
– Period and rate of reduction: same as for corporate tax and income tax of foreign-
invested companies.

• Acquisition tax, registration tax, and property tax for land and building

– Amount of tax reduction: calculated tax amount multiplied by the ratio of foreign
investment.
– Period and rate of reduction: 100% reduction for five years after starting the
business, and 50% reduction for three years thereafter (local governments may
extend the period of reduction up to 15 years or increase the level of reduction).

Foreign Investment Promotion Act (FIPA)

• The foreign-invested company has to be registered and foreign capital can be imported, after the notification of the foreign investment pursuant to the FIPA and the Enforcement Decree.
• If the foreign-invested company has a foreign investment ratio of less than 50% and the foreign investor is not the major
stockholder, then the company is considered a domestic company. In this case, it is possible to acquire stocks from a company, which is in an industry restricted for foreign investors (in the past, a company was considered a foreign company, if the ratio of foreign investment exceeded 10%).
It is possible that the foreign investor acquires old shares of a domestic company (M&A), if the ratio of foreign investment (in a foreign-investment-restricted sector) is very small (less than 1%).

A liaison office cannot conduct profit-making activities, and thus cannot operate the club directly. If the club is operated through a branch, the amount of corporate tax for operating profits as well as the acquisition tax and registration tax for real estate acquisition is the same as for an incorporated company. However, at the time of business registration, the registration tax is 0.4% for a company, whereas for a branch the registration tax is a fixed amount of KRW 23,000.Especially in large cities, the registration tax and acquisition tax when establishing a business and acquiring relevant real estate may be as large as triple the amount than in smaller cities.

Usually 25% withholding tax is applied to profits that are wired overseas. However, the Republic of Korea has established tax agreements with the majority of countries except for Hong Kong and Taiwan. According to the individual agreements the withholding tax rate for the corresponding country is set at 5% – 15%.

The standards for casino facilities are as follows:

– Exclusive business area of more than 330;
– More than one foreign exchange booth;
– Adequate casino computer facilities meeting the requirements set by the Minister of
Culture and Tourism;
– Operating more than four types of casino games as listed in relevant laws by providing
adequate facilities and game tools.

The conditions are basically the same for foreign nationals and Korean nationals.

There is no differentiation between a comprehensive tourist hotel and a general
tourist hotel.