Setting Up a Foreign-Invested Company (외국인투자기업) in Korea: What You Must Do First

1. ·Art. 2①: A 'foreigner' includes foreign nationals, corporations established under foreign law, and designated international economic cooperation organizations. A 'foreign-invested company' (외국인투자기업) means a company or non-profit corporation in which a foreign investor has made an equity contribution (Art. 2①-6).
2. ·Art. 4①②: Foreign investment in Korea is generally liberalized — foreigners may conduct foreign investment activities without restriction, except in cases involving national security/public order, public health/environment, or violation of Korean law (Art. 4②).
3. ·Art. 5①: In principle, a foreigner must file a foreign investment declaration with the Minister of MOTIE BEFORE making the investment, in the manner prescribed by MOTIE ordinance (Art. 5①).
4. ·Art. 5②: Exceptionally, if acquiring existing shares of a listed company (excluding public-interest corporations and companies with share-acquisition restrictions under individual laws), or in certain reinvestment situations, the declaration may be filed within 60 days after acquisition (Art. 5②).
5. ·Art. 3①②③: The foreign investor's profits from shares, proceeds from share sales, and principal/interest/fees from loan agreements are guaranteed for overseas remittance. Foreign investors and foreign-invested companies are generally entitled to the same treatment as Korean nationals/companies, including applicable tax reduction/exemption provisions (Art. 3①②③).

1. ·The investor must qualify as a 'foreigner' under Art. 2①-1 (foreign national, foreign corporation, or designated international organization).
2. ·The investment method must fall within the categories defined in Art. 2①-4 of the Act.
3. ·Investment must not fall into a restricted industry category under Art. 4② (national security, public health/environment, or violation of Korean law).
4. ·A foreign investment declaration must be filed before investing, or within 60 days in the specific cases listed in Art. 5②.

1. 1Step 1: Confirm your investor identity — check whether you qualify as a 'foreigner' under Art. 2①-1 (individual, corporation, or international organization).
2. 2Step 2: Verify the industry — check with MOTIE or Invest Korea whether your target business sector is restricted under Art. 4②③ (restricted sectors are set by Presidential Decree).
3. 3Step 3: File the Foreign Investment Declaration (외국인투자 신고) with the Minister of MOTIE before making the investment, following the procedure set by MOTIE ordinance (Art. 5①). Use Invest Korea (www.investkorea.org) or a designated foreign exchange bank for filing.
4. 4Step 4: Proceed with capital contribution / share acquisition after (or in applicable cases within 60 days before/after) the declaration is accepted.
5. 5Step 5: Complete company registration (법인 등기) at the competent court registry, and register with the relevant tax authority.
6. 6Step 6: Be aware that every 3 years, the government may conduct an employment survey (고용 실태조사) of foreign-invested companies covering employment status, wage conditions, and workforce demand changes (Art. 4-3①②). Cooperation may be required.
7. 7Step 7 (optional): If seeking to lease state/public property for your business, you may apply for preferential lease under Art. 13 via the relevant government body.

Ministry of Trade, Industry and Energy (MOTIE / 산업통상자원부); Invest Korea (KOTRA); local foreign investment zones may also accept filings

1. ·Investing (transferring funds or acquiring shares) BEFORE filing the declaration — the law requires prior declaration in most cases (Art. 5①). Filing after the fact may cause legal complications.
2. ·Assuming all industries are open — certain sectors are restricted by Presidential Decree under Art. 4②③. Always verify your target industry first.
3. ·Overlooking the 60-day post-acquisition filing window — this exception applies only to specific situations (e.g., listed company existing shares). Do not assume it applies to all investments (Art. 5②).
4. ·Confusing equal treatment with automatic exemption from all Korean regulations — Art. 3② guarantees equal treatment, but all Korean laws still apply to foreign-invested companies.
5. ·Failing to cooperate with the government's triennial employment survey (고용 실태조사) under Art. 4-3 — foreign-invested companies may be legally required to provide information.
6. ·Not updating declarations when investment terms change — always consult MOTIE or Invest Korea for amendment procedures.