TITLE : FAQ on FDI in Korea 2023 (Q1~Q5)
페이지 정보
본문
■ FAQ on FDI in Korea 2023
Q1 What is Foreign Direct Investment?
A1 According to the Foreign Investment Promotion Act, foreign investment refers to the following:
1) Where a foreigner acquires the stocks or sharesof a domestic company or corporation (recognized where the amount ofinvestment is KRW 100 million or more and the foreign investment ratiois 10% or more);
2) Where the overseas company of a foreign-investedcompany (foreign investor), etc. lends long-term loans of five years of longerto foreign-invested company;
3) Where a foreigner contributes to a non-profitcorporation in the field of science and technology (KRW 50 million or moreand accounting for 10% or more of the total contribution amount); or
4) Wherea foreign-invested company re-invests unappropriated earned surplus in theestablishment or expansion of a factory without transferring them to capital
* In this book, Foreign Direct Investment (FDI) shall be considered foreigninvestment pursuant to the Foreign Investment Promotion Act
< Definition of Terms >
Term | Definition |
Foreigner | 1) An individual with foreign nationality; 2) A corporation establishedin accordance with a foreign law; 3) An agency that conducts foreigneconomic cooperation affairs on behalf of a foreign government; 4) Aninternational organization that deals with affairs concerning developmentfinance (e.g., IBRD, IFC, ADB); 5) An international organization that dealswith affairs concerning foreign investment, whether for itself or others(Article 2 (1) 1 of the Foreign Investment Promotion Act and Acrticle 2 (1)of the Enforcement Decree of the Act) |
Foreigninvestor | • A foreigner who holds stocks, etc. or has contributed (Article 2 (1) 5of the Foreign Investment promotion Act) |
Object ofinvestment | Any object in which a foreign investor invests in order to hold stocks, etc.,and which is any of the following (Article 2 (1) 8 of the Foreign InvestmentPromotion Act, Article 2 (10), (11), (12) of the Enforcement Decree of the Act |
Object ofinvestment | - A means of international payment as defined under the ForeignExchange Transactions Act or a means of domestic paymentincurred by the exchange of such a means of international payment - Capital goods - Proceeds from the stocks, etc. acquired under the ForeignInvestment Promotion Act - Any rights used in the industrial activities among copyrightsregistered under the Copyright Act and the layout design rightsdefined under the Act on the Layout-Designs of SemiconductorIntegrated Circuits - Where a foreigner closes his/her own branch company or officein Korea and converts the branch company or office into anotherdomestic corporation, or where a domestic corporation, the stocks ofwhich are held by a foreigner, is dissolved, the residual property to bedistributed to the foreigner upon liquidation of such branch company,office or corporation - The amount of redemption of loans referred to in subparagraph 4(b)of Article 2 of the Foreign Investment Promotion Act or of otherloans from foreign countries - Stocks of foreign companies listed on foreign securities markets - Stocks owned by foreigners under the Foreign Investment PromotionAct or the Foreign Exchange Transactions Act - Domestic real estate owned by a foreigner (a certificate of report oncapital transactions according to Article 18 of the Foreign ExchangeTransactions Act should be attached) - Proceeds from the sale of stocks and real estate of a Koreancorporation or a company held by a foreigner |
Q2 Can a Korean national with permanent residency of a foreign country be considered a foreign investor under the Foreign Investment Promotion Act?
A2 When applying the Foreign Investment Promotion Act, theprovisions of the Act concerning foreigners shall apply toindividuals prescribed by Presidential Decree among Koreannationals permanently residing in a foreign country.
•“Individuals prescribed by Presidential Decree” among Korean nationalspermanently residing in a foreign country means a person who falls underany of the following categories (Article 2 (2) of the Foreign InvestmentPromotion Act and Article 3 of the Enforcement Decree of the Act):
- A person who has acquired permanent residency in the country wherehe/she resides in
- A person who has acquired a resident permit for four years or longer ina country without a permanent residency system
- A person who has resided for four years or longer and acquired a residentpermit for one or more year(s) in a country without a permanent residencysystem which only grants a resident permit for less than four years.
* An overseas Korean with permanent residency in a foreign country whointends to invest in Korea as a foreigner should be aware that investmentfunds should be brought in from a foreign country in foreign currency andthat the domestic assets (cash, real estate, etc.) held by such individual arenot recognized as an object of investment under the Foreign InvestmentPromotion Act and subsequently denied recognition as foreign investment.
Q3 What is the “object of investment” that is recognized as foreign investment?
A3 The term “object of investment” means any object in which aforeign investor invests in order to possess stocks, etc. pursuantto Article 2 (1) 8 of the Foreign Investment Promotion Act, andwhich falls under any of the following:
- A means of international payment as defined under the Foreign ExchangeTransactions Act or a means of domestic payment incurred by theexchange of such a means of international payment
- Capital goods
- Proceeds from stocks, etc. acquired under the Foreign InvestmentPromotion Act
- Industrial property rights, intellectual property rights prescribed byPresidential Decree, other technologies corresponding thereto, and rightspertaining to the use of such rights or technologies
- Where a foreigner closes his/her own branch or office located in Koreaand converts the branch company or office into another domesticcorporation, or where a domestic corporation, the stocks of which areheld by a foreigner, is dissolved, the residual property to be distributed tothe foreigner upon liquidation of such branch, office, or corporation
- The amount of redemption of loans prescribed by the Foreign Investment Promotion Act or of other loans from foreign countries
- Stocks prescribed by Presidential Decree
1. Stocks of foreign corporations listed or registered on foreign securities markets
2. Stocks held by foreigners under the Foreign Investment Promotion Actor the Foreign Exchange Transactions Act - Real estate located in Korea (required to submit documents certifyingthe transaction pursuant to the Foreign Exchange Transactions Act)
- Other means of domestic payment prescribed by Presidential Decree(Proceeds from the sale of stocks, etc. of a Korean corporation or acompany or of real estate owned by a foreigner pursuant to the ForeignInvestment Promotion Act or the Foreign Exchange Transactions Act)
Q4 When two or more foreigners make a joint investment and the total investment amount is not less than KRW 100 million, can this be recognized as foreign direct investment?
A4 It is not recognized as foreign direct investment. When two ormore foreigners make a joint investment, the amount investedby each person should be not less than KRW 100 million (Article2 (3) of the Enforcement Decree of the Foreign InvestmentPromotion Act)
Q5 Can a foreigner’s contribution to a non-profit corporation in Korea be recognized as foreign direct investm
A5 It can be recognized as foreign direct investment if either of thefollowing conditions are met:
- Where a foreigner contributes at least KRW 50 million, accounting for atleast 10% of the total amount of contributions, to a non-profit corporation(a Korean corporation or a company in the field of science and technology)in order to establish a continuous cooperative relationship with thecorporation pursuant to Article 2 (1) 4 (c) of the Foreign InvestmentPromotion Act, and the corporation meets all of the following requirements:
- It has an independent research facility.
- The number of regular employees as prescribed by Article 11 of theLabor Standards Act who are full-time researchers with a master's degreeor higher in the field of science and technology is five or more.
- The corporation engages in 'research and experimental developmenton natural sciences and engineering' pursuant to the Korean StandardIndustrial Classification (KSIC) prepared and publicly announced bythe Commissioner of Statistics Korea pursuant to Article 22 of theStatistics Act
•Where a foreigner contributes at least KRW 50 million, accountingfor at least 10% of the total amount of contributions, to a non-profitorganization which meets either of the conditions below and theinvestment is recognized by the Foreign Investment Committee asforeign investment in terms of the type and nature of its businessoperation (Article 2 (1) 4 (e) of the Foreign Investment Promotion Act):
- A non-profit organization that has been established with the purposeof promotion, etc. of science, art, medical services, or education, andcontinuously performs projects for developing experts in the relevantfields and for expanding international exchanges
- Local headquarters of an international organization performing internationalcooperation projects between civilians or governments.