o Since capital goods are the object of investment for the incorporation of foreign-invested company, a foreigner should report the foreign investment application to the commissioned institution (bank or KOTRA (IK trade center, etc.)) and get the review/ confirmation from the filed commissioned institution before customs clearance by the competent customs house for the imported goods (capital goods). Meanwhile, the importing goods list reviewed/ confirmed form the commissioned institution shall be constituted to get the import permit regardless of related provisions of the Foreign Trade Law.

O After customs clearance, a foreigner should get the “certificate of contribution like-kind completion form the Commissioner of the Korea Customs Service (an office who IK Customs Service dispatched) with attachment of import declaration certificate (copy) and in this case, notwithstanding provisions of article 299 of the Commercial Act, the certificate of contribution like-kind completion of which the performance of contribution like-kind and the type, quantity, price, etc. were confirmed form the Commissioner of the Korea Customs Service (an office who IK Customs Service dispatched) is constituted as the inspector’s report and so it may be enclosed at the time of submitting documents for incorporation and foreign-invested company registration. 1-

• Reduction of tents on state/public properties available even if the business is not high-tech accompanying business and industry support service business

O In case a foreign-invested company gets lease on the land at the foreign investment district (individual and complex type), rents may be reduced by 100% or 75% if it operates following businesses.

– The business a foreign-invested company operates in the individual-type foreign investment district (100%)

– The business which foreign-invested company operates in the complex-type foreign investment district and gets tax reduction decision with the high-tech accompanying business and industrial support service business with more than $ 1 million foreign investment

* Tax exemption on the business which receives such tax reduction

– manufacturing business which is operated by more than $5 million in the complex-type foreign investment district (75%)

– Business which is determined by the Minister of Knowledge & Economy through deliberation of the Foreign Investment Committee, Project (75%)

• When a foreign-invested company get lease on land in the national industrial complex, regional industrial complex, urban high-tech industry and agro-industrial complex, rents may be reduced by 50%. 

o Designation of foreign Investment district (individual type)

– A mayor/ governor of a province may designate the area which a foreign investor wants after review of the foreign investment committee.

o The criteria of designation for the foreign investment district (independent type)

* Industries defined the Minister of Knowledge & Economy: Logistics business in accordance with 11-4 of Schedule 1 section 2, tax reduction regulations on foreign investment, etc. (Notification 2006-4 of the Ministry of Strategy and Finance) – defined in article 22(2) of foreign investment and technology introduction regulations (classification criteria of industrial support service industry)

o Tax incentives for foreign-invested enterprises occupying in foreign investment districts (individual type)

1. Reduction of national and local taxes is restricted to the foreign investment equity out of total taxable amount.

2. The complex type foreign investment district is applied to 100 reduction for initial 3 years and 50% for subsequent 2 years

IK as a general official counter of Korea for attracting foreign investment is providing One-Stop Service to a foreign investor.

To see it, it is a general and customized close service system which provides professional consulting on tax and tariff reduction procedure, incorporation procedure, site support for factory site selection and purchase, direct and comprehensive processing of license/ permit including the permit on factory establishment, etc.

o Service sectors IK provides

– Investment consulting and system guide including sole investment, joint ventures, M&A, real estate investment

– Filing and processing of investment filing, search of partners and the market survey

– Various administrative processing and comprehensive commissioned processing including license/ permit from the central government and local governments.

– Domestic settlement support such as housing, school, medical insurance, etc. and processing of complaints

– Commissioned handling of new incorporation 

– It means the civil complaint such as license and permit related with the foreign investment are imposed of 7~90 days of processing time depending on he nature and to consider the license and permit is automatically made in case of lapse of such processing periods.

– In case of automatic license/ permit, the issuance of certificate for such license/ permit is compulsory and the refusal of license/ permit should advise the specific reasons of objection. 

Licenses and permits processed directly by IK are 3 legal issues and 11 complaints and are as followings:

– A staff dispatched by Customs Service confirms the completion in kind related with capital goods importation immediately.

– 9 civil complaints including a foreigner’s residence eligibility, admission of reentry and the foreigner registration are immediately processed by a dispatched officer of the Ministry of Justice.

– The registration certificate regarding the business license is issued within 7 days by a dispatched officer of the Customs Service.

o In the following cases, the filing of amendment should be made (amendment items prior to registration of foreign investment company

1) Foreign investment by acquisition of new shares and existing shares by foreign investor

– Change of trade name or title of a foreign investor

– Change of the foreign investment amount, foreign investment ratio, and investment method

– Change of the business to enjoy

– Change of assign such as shares, etc.

– Change of matters specified by the Ordinance of the Ministry of Knowledge & Economy as major items related with other filing information (change of address for foreign-invested enterprises)

2) Foreign investment to a non-profit corporation by contribution

– Change of trade name, title or nationality of a foreign investor

– Change of lender, loan amount and terms and conditions of loan

– Change of matters specified by the Ordinance of the Ministry of Knowledge & Economy as major items related with other filing information (change of address for foreign-invested enterprises)

3) Foreign investment to a non-profit corporation by contribution (enforced in ’07 .10.28)

– Change of trade name, title or nationality of a foreign investor

– Change of contribution amount and terms of such contribution (investment method/type

– Change of matters specified by the Ordinance of the Ministry of Knowledge & Economy as major items related with other filing information (change of address for foreign-invested enterprises)

O The amendment of registration for the foreign-invested company should be made in following cases:

• Where a foreign investor acquires stocks, etc. by transfer to capital from the reserve/ revaluation reserve, etc. of a foreign-invested company
  • Where a foreign investor acquires stocks, etc. of a newly incorporated corporation or a surviving corporation after a merger, the all inclusive stock swap or transfer, or a company division with the stocks he/she is holding at the time of the relevant foreign-invested company’s merger, all-inclusive stock swap or transfer with another company, or a company
  • Where a foreigner has acquired stocks, etc. of a foreign-capital invested company registered in accordance with the provisions of Article 21 by means of purchase, inheritance, testamentary gift, or gift from a foreign investor;
  • Where a foreign investor has acquired stocks, etc. by means of investing the proceeds from the stocks, etc. which were acquired under the laws of Korea; and
  • Where a foreigner has acquired stocks, etc. using convertible bonds, exchangeable bonds, stock depositary receipts, and such other similar ones as may be converted into, available for the acceptance of, or exchanged for stocks, etc.

O Application of registration amendment
– Submission to a follow up agency within 30 days from the date of reason occurrence (an agency which receives a foreign investment application or gives a notice of permit)
– Documents: Application of foreign investment registration (amendment registration), a document which proves the reasons, a certificate of foreign investment business license (original)

o The foreign investment by the long-term loan arise when a private foreign individual provides a loan for more than 5 years (based on the lending period specified at the time of initial loan agreement) to a foreign parent corporation, an applicable foreign investor or a company which has capital investment relationships with a foreign parent company.

o Applicant and a report receipt agency

– Applicant: Direct filing by a foreigner or filing by an agency

– The application receipt agency: Head office or branch of domestic banks, foreign banks’ branches of in Korea, KOTRA (Domestic trade center and 36 international stronghold trade center)

o Documents to be submitted

– An application of foreign investment by the long-term loan

– A copy of document which proves it is from a foreign parent CO or there are investment relationships with a parent company

– A copy of document which proves it is from a foreign investor or there are capital investment relationships with a foreign investor

– A copy of the loan agreement

– Certificate of nationality

o The direct investment by acquisition of exiting shares, etc. is classified into the subject of filing or permission.

o While the acquisition of existing shares is subject to prior filing, but permit of share acquisition for the defense industry company is subject to the permit. However, in case of acquiring existing shares of listed companies or Kosdaq in accordance with the Securities Exchange Act (excluding companies of which share acquisition is restricted due to the nature of for the public corporation in accordance with article 199(2) of the Act or by individual laws), filing should be 30 days after acquisition and major procedures are as followings: made within

• A foreigner files directly or by an agent (with a power of attorney) to a head office/ branch of a domestic bank or KI and KOTRA (including domestic trade center or overseas 36 base trade centers).

– Documents to be submitted

• A copy of foreign investment report by the method of existing shares, etc.
• A document which can confirm the related party relationship between assigns when assigns are plural.
• A certificate of a foreigner’s nationality

– The application receipt agency should issue a certificate of filing on confirming the descriptions, omissions, enclosed, etc.

O In order to acquire the existing shares of defense industry, the permit of the Ministry of Knowledge and Economy should be achieved and the procedures are as followings:

– A foreigner should make an application directly or by an agent with a power of attorney to the Investment Policy Team, Ministry of Knowledge and Economy (TEL: 02-2110-5359).

– Documents to be submitted
• The application of foreign investment permission by acquisition of existing shares, etc.
• A document which can evidence the status of related party between assigns in case of plural assigns
• A certificate of nationality

– The processing period shall be 15 days (15 day extension available if unavoidable) and the Minister of Knowledge & Economy should give a notice after deciding the permission by discussion with the competent minister, the Minister of National Defense.  

O The foreign investment on non-profit corporation by contribution method is

– The contribution to a non-profit corporation which belongs to manpower/ facilities in the science and technology sectors or:

– In addition, the contribution to a non-profit corporation accepted by the foreign investment committee in accordance with article 27 of the Act as a contribution to a non-profit corporation

• The procedure is to submit the report of foreign investment to a head office/ branch of a domestic bank or KOTRA (including domestic trade center or overseas 36 base trade centers).

– Documents to be submitted

• 2 copies of the foreign investment report by the method of either acquisition of new shares or contribution
• A certificate of a foreigner’s nationality
  • In case of contribution to a non-profit corporation in short-term sectors, a document of proving independent research facilities and documents as followings:

① Employment of More than 5 dedicated research staffs with more than 3 years’ research careers with bachelor’s degrees, and with more than master’s degrees in SC sectors.
② Performance of R&D activities which accompany high technologies in accordance with article 16-1(1)2 of Enforcement Decree of the Restriction of Special Taxation Act

• In case of contribution to a non-profit corporation other than the short-term sectors, any document which the foreign investment committee accepts it belongs to following as below.

① Where a non-profit corporation established for academic, artistic, medical, and educational promotion performs the business for expert cultivation, expansion of international exchanges in the applicable area
② Where it is a regional headquarter of international organization which performs private or intergovernmental cooperative projects
– The application receipt agency should issue a certificate of filing on confirming the descriptions, omissions, enclosed, etc.

– In case of a new non-profit corporation, the license/ permit of competent administrative agency should be achieved.

– Accept getting a certificate of foreign currency purchase after getting the foreign currency capital or getting the confirmation of contribution completion in kind after getting the capital goods as like-kind:

– Register a non-profit corporation to a competent court registry through support of judicial scrivener or IK comprehensive administrative office

– The foreign-invested company registration should be made to a filing agency within 30 days from the completion date of contribution object.