Procedure for Incorporation Registration

The Commercial Act recognizes the following types of companies:

(1) general partnerships

(2) limited partnerships

(3) stock companies

(4) limited companies

(5) limited liability companies.

However, because the majority of the companies in Korea are the stock companies, the procedure is focused on establishing a stock company.

 

Since the procedure is complicated, it is recommended to consult a lawyer or legal executives.

Procedure for Incorporation Registration

1. Method of incorporation

 

 

(1) Incorporation through subscription: The promoter gets only a part of the stocks issued at the time of incorporation and provides the rest for subscription.

(2) Incorporation through promotion: The promoter gets all the stocks issued at that time of incorporation.

2. Procedure for Incorporation

JULY 7, 2023

3. Incorporation registration

 

A. Registration period

(1) Incorporation through subscription: In two weeks from the end of the inauguration meeting

(2) Incorporation through promotion: In two weeks from the end of inspection of the incorporation process.

 

B. Matters to be determined before registration

(1) Organization of promoters

○ A stock company requires one or more promoters.

○ A promoter refers to the person who has signed or affixed his or her own seal on the articles of incorporation (Article 289 of the Commercial Act). Foreigners, including those not living in Korea, are also eligible to become promoters.

○ Promoters need to subscribe for shares in writing (at least one week), thereby they become the shareholders of the newly established business (Article 293 of the Commercial Act).

 

(2) Confirmation if the same company name has already been registered

○ When establishing a corporation, it is recommended to check if the name of the company about to be used has already been registered by another business. Registered company names can be found on the website of the Supreme Court

C. Documents required for registration of incorporation

(1) List of required documents (Documents to be prepared by the applicant)

1. Application form for registration of incorporation

2. Articles of incorporation (notarized by a public notary & notarization is exempted when a company with the capital of less than KRW 1 billion is incorporated by promotion)

3. Documents certifying subscription to shares

4. Stock subscription agreement form (applicable only to the incorporation through subscription)

5. Written agreement form on matters regarding issuance of shares

6. Written agreement form on reduction of the notice period for convoction of the general inaugural meeting

7. Minutes of the general inaugural meetings (notarized by a public notary & notarization is exempted when a company with the capital of less than KRW 1 billion is incorporated by promotion)

8. Minutes of board of the directors (notarized by a public notary & notarization is exempted when a company with the capital of less than KRW 1 billion is incorporated by promotion)

9. Securities subscription deposit certificate (can be replaced with a balance certificate for the company with the capital of less than KRW 1 billion incorporated by promotion)

10. Inspection report by a director, an auditor, or an audit committee

11. Certificate of pertinent property delivery (applicable only to in-kind contribution of property)

12. Report of a public notary on details of particulars of the abnormal incorporation

13. Written statement by a certified appraiser

14. A certified copy of inspector’s report

15. Certificate of foreign investment notification

16. Certificate of Inauguration Approval

① Korean citizens: a certificate of the seal with the seal stamped on it and a copy of resident registration

② Foreigners: the notarized original certificates of the signature and the address, and a copy of passport

17. Certificate of seal impression registration

18. Translation of the required documents (when documents such as the certificate of inauguration approval for a director are in a foreign language)

19. Certificate of tax payment for registration from the district office that has jurisdiction over the district where the headquarter is located

20. Supreme Court Revenue Stamp

21. A Power of attorney (where an agent submits the application)

22. Seal of each director and promoter (including foreigners)

23. Corporate Seal

24. Application form to issue a corporate seal card (after incorporation registration)

* Documents 11, 12, 13 and 14 are necessary only when there are particulars of abnormal incorporation such as in-kind contribution of property.

Change in the Rules for Reviewing Foreign Public Documents

Following the enforcement of the Commercial Registration Act amended on November 21, 2014, the rules for examining foreign public documents for incorporation registration / registration of change in incorporation matters have been changed.

 

● Changes in the process to examine foreign public documents

▣ Rules for examining foreign public documents

(2) Documents required by an investor living outside Korea

○ The documents required differ depending on whether the investor is an individual or a corporation. Investors from Japan or Taiwan can prepare the same documents as the ones that Korean national or Korean corporations prepare.

Certificate of Inauguration Acceptance

-  All individuals that are registered as directors

· Korean / Japanese / Taiwanese citizens: a seal on the document

· Other countries’ citizens:  the notarized certificate with a signature

Certificate of seal impression Certified copy of resident registration

- Documents are attached with the certificate of inauguration approval or the power of attorney

· Korea / Japan / Taiwanese Citizen: Resident Registration Certificate, Seal impression certificate

· Other countries’ citizens: the original certificates of the address and signature notarized in the country of resdence

Power of attorney

- For all investors / directors recorded on documents

· Korea / Japan / Taiwan citizens: a seal on the document.

· Other countries’ citizens: the notarized power of attorney with a signature

Copy of passport

- All foreigners

Documents to be Prepared by Corporate Investors

Certification of inauguration acceptance

-  All individuals that are registered as directors

· Korean / Japanese / Taiwanese citizens: a seal on the document

· Other countries’ citizens:  the notarized certificate with a signature

Certificate of personal seal impression Certified copy of resident registration

- Documents are attached with the certificate of inauguration approval or the power of attorney

· Korea / Japan / Taiwanese Citizen: Resident Registration Certificate, Seal impression certificate

· Other countries’ citizens: the original certificates of the address and signature notarized in the country of resdence

Certified copy of corporation registration Corporate power of attorney

- Korean / Japanese corporations: the power of attorney with a corporate seal, attached with a copy of certificate of corporate seal impression and a certified copy of corporation registration

- Other countries’ corporations: a notarized power of attorney with a proxy signature of the director of the foreign-invested company to delegate the signing rights to the representative director of the company about to be established in Korea. A notarized certificate of corporation should be attached along with.

Power of attorney

- For all investors / directors recorded on documents

· Korea / Japan / Taiwan citizens: a seal on the document.

· Other countries’ citizens: the notarized power of attorney with a signature

Copy of passport

- All foreigners

∣ Tips (both individual investors and corporate investors) |

 

∙ Proof of the certificate of inauguration approval

A document certifying that each executive (director, representative director and auditor) of the upcoming local corporation agree on his or her position (including the address of the local corporation, the position of the executive, and his or her seal or signature).

 

∙ Signature certificate

A document certifying that the power of attorney or the certificate of inauguration approval is genuine (the signature of the document is the same as the one on the passport).

 

∙ Address certificate

A document certifying that the address stated on the documents such as the certificate of approval is genuine (applicable only to the representative director)

 

 ∙ Foreigners (excluding Japanese / Taiwanese) must get the documents (the power of attorney, the certificate of inauguration approval, the signature certificate and the address certificate) notarized from a government agency or a notary office in their countries. Those accepted their positions in the local corporation in Korea should receive notarization in their own countries. However, the foreign resident in Korea can receive the notarization from a law firm in Korea (applicable to the registered foreigners and the foreigners who have the permanent residency in Korea). 

 

∙ Power of attorney

A document certifying that a foreign investor or a director delegates the establishment rights of the business to the applicant (a representative director or legal proxy) for the incorporation registration. The document includes the names of the mandator and the trustee, the statement of the entrusted authority, and a seal or a signature. However, when notarizing the minutes of the general inaugural meeting and the minutes of the board of the directors, one copy of the following documents are additionally required: the power of attorney to notarize the minutes and the certificate of seal or signature.

 

∙ All the shareholders and directors named on the documents need to prepare seals and the seals of the upcoming local corporation.

 

∙ The list of promoters does not have to be the same as the list of directors. The directors of the upcoming local corporation can have any nationality. 

 

∙ Translation

Documents in a foreign language should be attached with the translated documents (The Commercial Registration Processing Rules, Article 2, Paragraph 3). Translated documents should include the translator’s name, address and signature. There is no specific qualification requirement for the translator.

4. Simplification  of Business Opening Procedure and Special Provisions for Small Business

Entities

The amendment of the Commercial Act being effective May 28, 2009 simplified the business opening procedures. Companies with the capital of less than KRW 1 billion about to be incorporated through promotion are exempted from notarization of the articles of inauguration and have a simplified procedure to convene the general meeting of shareholders. Also, after the amendment, the electronic voting system has been introduced at the shareholders’ meeting for convenience of business activities.

A. Major revisions

 

(1) Exemption of the notarization of the articles of incorporation for the small companies incorporated through promotion (Article 292 of the Commercial Act).

○ Regardless of capital amount and the methods of incorporation, it was required to notarize the articles of incorporation; therefore, unnecessary time and expenses are spent. However, after the amendment, the companies, with the capital of KRW 1 billion, about to be incorporated through promotion are exempted from the notarization of the articles of incorporation when the signatures of the promotors or the names and seals of the promoters are written on the articles of incorporation. Due to the exemption, it is expected to speed up the business opening procedures ending up promoting the investment after all.

 

(2) Simplification of the procedure for convening the general meeting of shareholders (Article 363 of the Commercial Act)

○ In the case of small companies managed like family businesses, the procedure for convening the shareholders meeting would burden the work of the company. In this respect, the procedure for convening the general meeting of shareholders has been simplified. For companies with total capital of less than KRW 1 billion, the notification period of convocation has been shortened to less than 10 days. In addition, if all shareholders agree, the convocation procedure can be omitted and a written decision can made at the general meeting of shareholders. The simplification of the procedure for convening the general meeting of shareholders has saved time and expenses for the small companies.

 

(3) Introduction of Electronic Voting System to General Meeting of Shareholders (Article 368 (4) of the Commercial Act)

○ Due to the advancements in communication technology, shareholders meetings can be held through electronic means However, this form of meeting lacked legislative support. In this respect, the electronic voting system has enabled the shareholders to exercise their voting rights through electronic means without presenting themselves at the general meeting of shareholders

The electronic voting system helps to save expenses such as hosting the general meetings, increasing the efficiency of meetings and promoting the participation of minority shareholders.

 

(4) Exemption from the obligation to appoint corporate auditors (Article 409 Paragraphs 4 to 6 of the Commercial Act)

○ When establishing a company, it was obligatory to appoint an auditor, but it took time and expenses to do so. As a result of the amendment, the appointment of the auditor has become optional for the companies with the total capital of less than KRW 1 billion. If the company chooses not to appoint a corporate auditor, the shareholders' meeting will audit the performance of the directors and monitor the company's financial condition. In addition, if the company raises a lawsuit against the director and vice versa, the company, the director or the interested party will be able to request the court to appoint a representative of the company. By giving a company the authority to whether appoint an auditor, the amendment helped saving time and expenses for the company about to be established.

 

B. Highlights

 

(1) Lifting regulations on the usage of similar company names

○ As a result of the amendment, company names similar to existing ones can be used unless a company operating business in the same business field is already using it.

 

 

(2) Abolition of minimum capital requirement

○ Due to the amendment, the provision that the total capital of the company is required to be KRW 50 million or above has been deleted.

※ However, the minimum capital requirement for the foreign-invested company under the Investment Promotion Act should at least be KRW 100 million or above.

 

 

(3) Special provisions for a stock company incorporated through promotion with the capital of less than KRW 1 billion

○ Exemption from notarization of the articles of incorporation (also applicable to the establishment of private enterprises)

○ Exemption from notarization of the minutes of meeting (The Notary Public Act, Article 66-2)

○ A deposit balance certificate given by a financial institution can replace the securities subscription deposit certificate.

 

 

(4) Special advantages for the stock companies with capital of less than KRW 1 billion

○ Resolutions may be delivered in writing at the general meeting of shareholders.

○ The number of directors may be less than 3 people.

○ The board of director system can be deleted for a company with only two directors.

○ When a company has only two directors, each of them can represent the company. If a representative director has been appointed under the articles of incorporation, he or she will represent the company.

○ Just like a company with one director, a company with two directors can delegate the functions of the board of directors to the shareholders’ general meetings, each director, or a representative director.

○ In a company with two directors, the followings can be decided at the shareholders’ meeting, not at the board of directors: the approval of transfer of regulated shares, withdrawal of stock options, restriction of directors from having more than one position and approving self-dealing, issuance of new shares, convertible bonds (CB) or warrant bonds (BW), transfer of additional paid-in capital, and interim dividends.

○ In a company with two directors, each director or representative director, on behalf of the board of directors has the right to convene a general shareholders’ meeting.

○ Exemption from the obligation to appoint of an auditor

○ The appointment of an auditor is optional but is voluntary. However, once appointed, the auditor should be registered.

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