Procedure for Establishing a Branch
MAY 16, 2023
JULY 7, 2023
2. Types of branches
A. Branch offices
Branch offices conduct business activities in Korea to make profit.
B. Liaison Office
The liaison office does not conduct profit-generating business activities, but instead, executes non-sales activities such as business contacts, market research, research and development, etc. Liaison office can conduct quality management, market research, advertisement, and other incidental and supportive roles. However, because there is no direct sale of products or permission to stock inventory for the headquarters, the scope of activities is limited
3. Notice of branch establishment
A. As a general rule, a foreign company must report the establishment of a domestic branch to the head of the designated Foreign Exchange Bank.
B. The branch office and the liaison office should report to the minister of strategy and finance the followings
(1) Financial services other than banking business (fund loan, brokerage arrangements, overseas financial arrangements, cards, installments etc.)
(2) Participation in securities and insurance-related business
(3) Financial services not permitted by the Foreign Investment Promotion Act
C. Documents to be submitted when notifying Foreign Exchange Bank:
(1) A written statement regarding the establishment of a domestic branch of a foreign corporation
(2) Articles of incorporation of the headquarter (notarization is required at the head quarter’s location)
○ In the case of a corporation: the articles of incorporation of the headquarter
○ In the case of a private business: financial statements audited by a certified accountant
(3) A certificate of appointment of a domestic branch manager, a copy of the manager’s passport or the resident registration certificate
(4) A power of attorney entrusting the establishment of a domestic branch (it should be notarized in the country where the headquarter is located)
(5) A copy of company registration certificate or business permit (it should be notarized in the country where the headquarter is located when submitting a copy of the document)
(6) Certificate of Resolution of the Board of Directors (a letter to prove the effectiveness of the resolution of establishing a domestic branch in Korea)
4. branch establishment registration
A. Definitions under Commercial Act
(1) In the Commercial Act, "branches" are referred to as "business establishment" (Article 614
- Article 621 of the Commercial Act). This law states that foreign companies need to be registered when conducting business activities in Korea.
(2) Under the Foreign Exchange Transactions Act, the liaison office is not able to operate business activities to make profits, but instead, performs non-profit operations such as information exchange.
Therefore, only branches are required to complete registration procedures.
B. Registration procedure
(1) Applicant: An application should be made by a representative of the company residing in Korea on behalf of the stated foreign company (Article 23 (3) of the Commercial Act).
(2) Registration Period: in 3 weeks from the establishment of the business office
☞ It is calculated from the day when Korean Foreign Exchange Bank issued a notice of establishment of a domestic branch of a foreign company.
(3) Registration items (Article 614, Paragraph 2, Item 3 of the Commercial Act)
○ The same items should be registered as the same kind of businesses or the most similar businesses are required
○ The relevant laws for incorporation
○ Name and address of the representative in Korea
(4) Matters to be stated on the application form:
○ Company name (in Korean): the type of company (partnership, limited partnership, corporation, limited company, etc.) must be stated.
○ Headquarters: the name of the foreign company and the location of it
○ Business establishment: location of the business office in Korea
○ Objective of registration: registration of business office establishment
○ Reason for registration: Establishment of sales office
○ The names and addresses of the representative director and the representative in Korea
○ Date of company establishment, the reason for business office establishment and the date of business office establishment
○ Date when the required approval (or permission) was acquired
○ Registration Tax Amount
○ Application date
○ Proxy name and address when registered by proxy
○ Jurisdiction Registration Agency
(5) Attached documents:
○ A document certifying the existence of the headquarter (proof of matters regarding establishment)
- Japan: a copy of company registration certificate
- Other countries: a certificate from the municipal office such as Ministry of Foreign Affairs
○ A document certifying qualification as a representative in Korea
· The minutes of the general meeting of shareholders, the resolution of the board of directors or the certificate of appointment
○ A document proving the type of the company or the articles of incorporation
※ The above documents must be certified by the relevant authorities. It can be done by the home country of a foreign company or a consular office in Korea.
○ Foreign residence certificate
○ Certificate of payment of license and registration tax
5. Closure of branch and clearing fund (Article 9-37 of Foreign Exchange
A. Notification of closure
When a person who made a notification of the establishment of a branch pursuant to related laws and regulations wants to close a domestic branch office, he / she should submit the following documents to the person who received the notification of the branch establishment.
○ Documents required:
- Notice for closing domestic branches of foreign companies (Form No. 9-11
- A document confirming closure (issued by the headquarters of the foreign companies)
- A original document of establishment notification of the domestic branch of the foreign corporation
B. Clearing funds
When a person who has notified the closure of a domestic branch of a foreign company wants to collect funds from the liquidation of assets held in Korea, he / she needs to bring an application to the head of the designated Foreign Exchange Bank.
○ Documents required:
- A copy of a notice form for closing domestic branches of foreign companies
- A copy of a clearing report audited by a certified public accountant (when liquidating the liaison office, documents certifying that the funds are obtained after liquidating the domestically owned assets are necessary)
- A certified copy of completion of tax payment (provided by the jurisdictional tax office)
- A copy of the statement of operating capital, retained earnings and other reserves
- A copy of bank balance statement
- A copy of clearing Completion Registration Certificate
C. Limits on recoverable funds
The amount of recoverable funds is not limited as long as it is within the range of residual assets stated on the liquidation report audited by a certified public accountant.