In South Korea, Foreign Direct Investment (FDI) requires an investment by non-Koreans of at least KRW 100 million.
Types of FDI include the acquisition of stocks of domestic companies, long-term loans (minimum of five years) from parent companies outside of South Korea, and investments in non-profit corporations in the fields of science & technology.
And from 2020, cases in which a foreign company uses unappropriated earned surpluses to build new or additional factories are also considered FDI. Objects of investment to acquire stocks or shares include foreign currency, capital goods, proceeds from acquired stocks, etc., and industrial property rights.
FDI in Korea refers to an investment of no less than KRW 100 million made by a foreigner. To be recognized as such, at least 10% of the voting stocks issued by a domestic corporation or business should be foreign owned, or at least 10% of the total investment amount should be made by foreign investors. Alternatively, non-Koreans may acquire less than 10% of stocks issued by a domestic corporation or business or invest less than 10% of the total investment amount, but they need to dispatch or appoint an executive member who holds authority to participate in major decision-making and management processes of that corporation or company.
- Foreigner: An individual with foreign nationality, a corporation established in accordance with foreign law, or an international economic cooperative organization as prescribed by [Korean] Presidential Decree.
- Foreign investor: A foreigner who holds stocks or similar financial instruments or has contributed as prescribed under the Foreign Investment Promotion Act.
If you have more questions regarding Korea Foreign Direct Investment (FDI), please get in touch today with the professionals at Korean Tax Expert to better understand your business options in the Republic of Korea.