Foreign investment method
Foreign investment by acquiring stocks or shares- Where a foreigner possesses a stock or stake of the relevant corporation or enterprise as the following foreign investment with an investment of at least KRW 100 million for the purpose of establishing a continuous economic relationship with the corporation or enterprise, such as participating in the management activities of a Korean corporation or enterprise (including a corporation being established), it shall be deemed as a foreign investment (Item A of Subparagraph 4 of Article 2 (1) of the Foreign Investment Promotion Act and the main body of Article 2 (2) of the Enforcement Decree of the Foreign Investment Promotion Act).
1. Where a foreigner owns at least 10% of the total number of stocks with voting rights or the total amount of investment issued by a Korean corporation or enterprise (including a corporation being established in the case of a corporation)
2. Where a foreigner sends or appoints an executive officer (a director, a CEO, an employee with unlimited liability who performs his/her duties, an auditor, or a person equivalent thereto who has the authority to participate in important decision-making in management) to a corporation or enterprise while he/she owns shares, etc. of a Korean corporation or enterprise
· However, after registering as a foreign-invested company, even if the requirements above are not met because of a decrease in capital or partial transfer of stock or stake (hereinafter referred to as “stock, etc.”), it shall be deemed as a foreign investment (proviso to Article 2 (2) of the Enforcement Decree of the Foreign Investment Promotion Act).
※ The term “investment amount” means the amount of acquisition of stocks, etc. (including the acquisition of stocks by foreign investors by transferring earned reserves into capital by a foreign-invested company under the Commercial Act). If two or more foreigners invest together, it means the amount of investment per person. In such cases, even if the amount of foreign investor’s stocks decreases because of the capital reduction without the refund of a foreign-invested company after a foreign investor acquires shares, the amount of investment shall be deemed to be maintained at the time of the acquisition of stocks, etc. (Article 2 (3) of the Enforcement Decree of the Foreign Investment Promotion Act).
Foreign investment through loan- If any of the following persons lend a loan of at least five years (based on the loan period determined at the time of the initial loan contract) to the foreign-invested company, it shall be deemed as a foreign investment (Item B of Subparagraph 4 of Article 2 (1) of the Foreign Investment Promotion Act and Article 2 (4) and (5) of the Enforcement Decree of the Foreign Investment Promotion Act).
1. An overseas parent company of a foreign-invested company
2. Where a foreign-invested company ① owns more than 50% of the total number of shares issued or the total amount invested by an overseas parent company, ② or where an overseas parent company owns at least 50% of the total number of shares issued by a foreign-invested company or the total amount of investment, a company owns at least 10% of the total number of shares issued by an overseas parent company or the total amount of investment, or a company holds at least 50% of the total number of shares issued by an overseas parent company or a company under ①
3. Foreign investors
4. An enterprise in which a foreign investor who owns at least 50% of the total number of shares issued by a foreign-invested company or the total amount invested owns at least 50% of the total number of shares issued or the total amount invested
Foreign investment through contribution- Where a foreigner contributes at least KRW 50 million, which is at least 10% of the total contribution, to a nonprofit corporation that is a Korean corporation (including a corporation being established) in the field of science and technology and meets the following requirements, it shall be deemed as a foreign investment (Item C of Subparagraph 4 of Article 2 (1) of the Foreign Investment Promotion Act and Article 2 (6) of the Enforcement Decree of the Foreign Investment Promotion Act).
1. It shall have independent research facilities.
2. ① There should be at least five people with a bachelor’s degree in the science and technology field with more than three years of research experience or full-time research personnel with a master’s degree or higher in science and technology. ② Natural science and engineering research and development business under the Korean Standard Industrial Classification shall be conducted.
Foreign investment by using earned surplus- Where a foreign-invested company uses retained earnings for any of the following purposes, it shall be deemed as a foreign investment. In such cases, a foreign-invested company shall be deemed as a foreigner under the Foreign Investment Promotion Act, and the amount of foreign investment shall be the amount obtained by multiplying the amount used by the ratio of foreign investment under Article 5 (3) of the Foreign Investment Promotion Act (Item D of Subparagraph 4 of Article 2 (1) of the Foreign Investment Promotion Act and Article 2 (7) of the Enforcement Decree of the Foreign Investment Promotion Act).
1. Where a factory facility (referring to a place of business where a business other than a manufacturing business is operated under the Korean Standard Industrial Classification) or research facility is newly established or expanded
2. In the case of purchasing capital goods or research equipment necessary for the performance of the business of the relevant enterprise
Other methods of foreign investment- Where a foreigner’s contribution to a nonprofit corporation is at least KRW 50 million and at least 10% of the total contribution falls under any of the following subparagraphs, it shall be deemed as a foreign investment. The Foreign Investment Committee under Article 27 of the Foreign Investment Promotion Act recognizes it as a foreign investment (Item E of Subparagraph 4 of Article 2 (1) of the Foreign Investment Promotion Act and Article 2 (8) of the Enforcement Decree of the Foreign Investment Promotion Act).
1. Where a nonprofit corporation established for the purpose of promoting science, arts, medical services, education, etc. continuously conducts projects for fostering professional human resources in the relevant field and expanding international exchanges
2. Where it is the regional headquarters of an international organization performing international cooperation projects between the private sector and the government