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Types of Business Entities Established by Foreign Nationals

There are four ways for foreign nationals to engage in business activities in Korea: (1) establishing a local corporation; (2) opening a private business; (3) opening a branch; and (4) opening a liaison office. The first two types are mainly governed by the Foreign Investment Promotion Act, and the other two are regulated by the Foreign Exchange Transactions Act. Among the four types of business entities, a liaison office shall not engage in business activities that generate profit in Korea.

Type of Business Governing Law Note Investment Capital
Local Corporation Foreign investment Promotion Act Foreign Invested
Private Business Foreign Exchange
Transactions Act

Domestic Branch of a
Foreign Company



Differences between Foreign invested company (including local corporation and private business) and branch

Type of Business Foreign Invested Company

Domestic Branch of a Foreign Company

Governing law Foreign Investment Promotion Act Foreign Exchange Transactions Act
Corporation type Domestic corporation Foreign corporation
Identity Foreign investors and foreign invested companies are separate entities (independent accounting & settlement) The head office and the branches are of a single entity (consolidated accounting & settlement)
Min.(Max.) Investment Amount Min.: KRW 100million
Max.: No limitation
No limitation

Delegated agency to process
notifications and grant permits

Invest KOREA, KOTRA’s overseas KBCs (Korea Business Center), head office and branches of foreign exchange bank in Korea (NOTIFICATION ONLY) Branches of foreign exchange banks in Korea (Notification), Ministry of Strategy and Finance (Business Permit for financial business, etc.)


Differences between local corporation and private business


Type of Business Local Corporation

Private Business

Appropriate scale 1. Convenient financing
2. Complicated incorporation procedures
3. The decision-making process takes time.
4. Liability is limited to the invested capital.
5. Ownership and management can be separated.
1. The owner of the business takes all profits made.
2. Simple business establishment procedure
3. Fast decision-making process
4. The owner holds unlimited liability.
5. Limited financing capacities
Registration Registration required Registration not required
Minimum number of promoters 1 or more Owner of the business
Investment amount No less than KRW 100 million



* Foreign corporations cannot be registered as private businesses in Korea.