The following principal
types of commercial entities are permitted.
Company
There are four classes
of company, outlined as follows:
a. Limited company:
i) Chusik Hoesa- A company incorporated by
three or more promoters, with each shareholder's
liabilities
i) limited to
the amount of contributed capital. This type
of entity is the most commonly used in Korea.
ii) Yuhan Heosa- A company incorporated by
one or more members, with each member's liability
limited
ii) to the amount
of that member's contribution to the company.
b. Unlimited company: i) Hapmyong Hoesa- A company incorporated
jointly by more than two members who bear
jointly and
i) severally
its obligations, if the assets of the company
are insufficient to satisfy fully those obligation;
ii) Hapja Heosa- A company composed of members
with unlimited liability and members with
limited liability.
Partnership
Partnership are
not legally recognized in Korea.
Joint
venture
A joint venture
is generally established as domestically
incorporated company(Chusik Hoesa), whose
shareholders have limited liability for
the obligation of the company.
Branch
A foreign corporation
is allowed to establish a branch in Korea.
The Commercial Code requires that the branch
be registered with the civil court; in addition,
the Foreign Exchange Transaction Act requires
the branch to report its establishment in
Korea and obtain approval from the Foreign
Exchange Bank in advance.
Representative
office
A foreign corporation
is allowed to open a representative office
(which is deemed to be a noncorporate entity)
with limited functions.
Liaison
office
A foreign corporation
can establish a liaison office, which is
not allowed to carry out income-generating
business activities in Korea.
The types of entity
most commonly used by foreign investors
doing business in Korea are companies limited
by shares (i.e., Chusik Hoesa) and branch
offices. Foreign companies wishing only
to have representation in or only to procure
goods from Korea may favor a representative
or liaison office, as these may operate
on a nontaxable basis.
Company