Branch registration is simpler and easier than the incorporation of a South Korean Limited Company. This is due to the foreign investment filling requirements and share capital requirements for an Limited Company.
An alternative to incorporation of a foreign company is the option of setting up a branch office. There are two types of branch offices that a foreign company may establish in Korea: (a) the regular branch office and (b) the liaison office. The regular branch office is allowed to conduct profit making activities. However, the liaison office may not carry on profit-generating activities but merely undertakes non-profit making functions such as liaison of business affairs, market research and research and development.
A foreign company that intends to carry out business activities in Korea should appoint a representative for its local branch, undergo the branch establishment procedure stipulated by the Foreign Exchange Transactions Act, and receive court registration. Under the Taxation Act, the branch shall be recognised as a permanent establishment. With respect to the tax imposed on the profits generated by the branch, the tax rate applied is equal to that of the branches of domestic companies
An advantage to establishing a branch office is that there is no required capital investment. So, you can establish a Korean branch if you provide the required documents from head office and the branch representative, and the copy of the lease agreement of the office.
Establishment procedure of Korean branch are summarised as follow:
Once the required documents are received, it takes maximum 10 working days to finish the establishment of a branch office.
For foreign companies to do business in Korea, they shall appoint representatives, establish business sites, and must have one of the executives based in Korea. (Commercial Law article 614)
Application form shall be attached with the following files (Commercial Registration Act article 112) (Commercial Registration Act article 112)
All the files shall be certified by consuls of respective nations in Korea or competent offices. The Supreme Court of Korea recognises the document legalised by consuls in Korea. But in some cases, the court does not recognize documents legalised by competent offices in respective countries, and requires the certification of consuls. However, it is just for enhancing authenticity of documents, and is not a requirement.
There are two types of domestic branches: a branch and a liaison office.
A branch undertakes sales activities in Korea to generate profits.
A liaison office does not conduct sales activities, but instead carries out non-sales functions such as business contacts, market research, R&D, etc. Liaison offices can carry out quality control, market surveys, advertisements, and other incidental and supportive roles. However, they are limited in their scope of activities, since they are not allowed to sell products directly, or to stock inventory for sale on behalf of the headquarters.
Establishing and registering a private business subject to the Foreign Investment Promotion Act requires: