TITLE : FAQ on FDI in Korea 2023 (Q31~Q35)
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■ FAQ on FDI in Korea 2023 (Q31~Q35)
FDI Notification&Registration
Q31 A foreign investment in the form of a long-term loan is not recorded as the amount of foreign investment on a certificate of registration of foreign-invested company. What is the reason?
A31 A foreign investment in the form of a long-term loan is recognizedas foreign investment under Article 2 (1) 4 (b) of the ForeignInvestment Promotion Act. But, because it does not constitutea foreign investment in the form of equity investment which isrecorded on the certificate of registration of a foreign-investedcompany (Articles 2 (1) 4 (a), 2 (1) 4 (c), and 2 (1) 4 (e) of the sameAct), it is not recorded as the amount of foreign investment on thecertificate of registration.
- Also, under Article 21 (1) of the Foreign Investment Promotion Act,foreign investments eligible for registration of a foreign-investedcompany are limited to the following: where a foreign investor hascompleted payment for the object of investment (new shares); where aforeign investor has completed the acquisition of stocks, etc. (existingshares); or where a foreign investor has completed contribution to a nonprofit organization.
Q32 Is it possible to notify foreign investment online or in foreign countries?
A32 Currently, notification of foreign investment cannot be filed online.In principle, foreign investment cannot be notified in countriesoutside of Korea, either.
- However, a foreign investment notification can be filed in certaincountries where the Korea Trade-Investment Promotion Agency (KOTRA)operates overseas FDI offices to render support to foreign investors.
KOTRA’s 36 Overseas FDI Offices (As of September 2022)
Region | Overseas FDI Offices (Cities) |
North America(9) | - US(7): New York, Silicon Valley, LA, Chicago, Dallas, Detroit, Washington - Canada(2): Toronto, Vancouver |
Europe(13) | - Germany(3): Frankfurt, Hamburg, Munich - UK(London), France(Paris), Sweden(Stockholm), Denmark(Copenhagen),Spain(Madrid), Netherlands(Amsterdam), Belgium(Brussels),Italy(Milan), Switzerland(Zurich), Austria(Vienna) |
Southeast Asia· Oceania(3) | - Singapore(Singapore) - Australia(2): Sydney, Melbourne |
Japan(4) | - Japan(4): Tokyo, Osaka, Fukuoka, Nagoya |
China(6) | - Hong Kong, Shanghai, Beijing, Qingdao, Guangzhou - Taiwan(Taipei) |
Middle East(1) | UAE(Dubai) |
Q33 Is it mandatory for a foreigner to file for registration as a foreign-invested company after completing an investment?
A33 In accordance with Article 21 (1) of the Foreign InvestmentPromotion Act, a “foreigner” is required to file for registration asa foreign-invested company within 60 days (30 days in case ofcontributions) from the occurrence of the following events: wherehe/she has completed payment for the object of investment(new stocks); where he/she has completed the acquisition ofstocks, etc. (existing stocks); where he/she has completed his/hercontributions to a non-profit organization.
- In accordance with Article 21 (2) of the same Act, when a foreignermaking an investment meets the requirements for foreign investment,he/she may file for registration as a foreign-invested company even prior to completing the acquisition of stocks or payment for the object ofinvestment (partial registration).
Q34 Are there any disadvantages when a foreign investor fails to register as a foreign-invested company?
A34 A foreign investor who fails to register as a foreign-investedcompany cannot prove that his/her foreign investment hasbeen completed. As a result, matters such as visa applicationsfor a stay in Korea or the transfer of dividends or proceeds fromthe sale of stocks to foreign countries cannot be processed.
- Therefore, all foreigners who have completed a foreign investment(including partial execution of investment satisfying the requirements forforeign investment under the Foreign Investment Promotion Act) shouldapply for registration (registration of alteration) as a foreign-investedcompany within 60 days from the occurrence of relevant events*, asprescribed by Article 21 of the Foreign Investment Promotion Act.
* Occurrence of relevant events: The completion of payment for the objectof investment, the completion of acquisition of stocks, etc. (settlementof payments), or the completion of contributions
- In addition, a delay or other disadvantages may be experienced in casesrequiring a certificate of the registration of a foreign-invested company(when renting an office or a facility in a foreign investment zone orapplying for exemption from the mandatory bond purchase under theHousing Act or the Urban Railroad Act)
Q35 When a certificate of registration of a foreign- invested company is lost, can it be reissued?
A35 The Foreign Investment Promotion Act does not specifywhether or not a certificate of registration of a foreign-investedcompany can be reissued when it is lost or damaged.
- However, as Article 21 (6) of the Foreign Investment Promotion Actprescribes that the certificate of registration of foreign-invested companyshall not be transferred to any other third person or be used unjustly,there is no problem with reissuance of the certificate. Therefore, it canbe reissued when an application for reissuance is filed with a delegatedagency, together with a statement detailing the cause of loss.