Below is a brief account of the procedures and requirements for incorporating a company (“jushik hoesa” in Korean language) by a foreign investor in Korea.

1. REPORT ON FOREIGN INVESTMENT

Prior to the establishment of the company (the “Company”), the foreign investor which will officially invest foreign capital in the Company must submit to a designated foreign exchange bank in Korea a Report on Foreign Investment under the Foreign Investment Promotion Act (FIPA).

In order to prepare the Report on Foreign Investment, the following information is required:

1. Information on the foreign investor

- Trade name

* Jurisdiction of incorporation
* Address of head office

2. Information on the Company

* Proposed equity capital of the Company (please note that the minimum amount of share capital of a joint venture company is KRW 50 million (approximately USD 50,000))
* The amount of the total foreign investment of capital in the Company (the minimum amount of foreign capital to be invested in a joint venture company is KRW 50 million)
* A detailed and comprehensive list of all conceivable businesses in which the Company might be involved.
* Proposed corporate name of the Company

3. Power of Attorney

* The foreign investors must appoint a local law office to prepare the Report of Foreign Investment and to establish and register the Company.
* The executed original power of attorney must be notarized in the home country of the foreign investor and forwarded by courier to the local law office.

2. COMPANY ESTABLISHMENT

When the designated foreign exchange bank accepts the Report on Foreign Investment, the Company may be established.

To establish the Company, the following procedures will be taken.

1. Preparation of the Company’s articles of incorporation.

The authorized capital of the Company must be determined for inclusion in the articles. In this regard it should be noted that under Korean law, the authorized capital may be up to 4 times the amount of the share capital at the time of the incorporation of a company.

Each share subscribed is to have an assigned par value. The minimum par value is KRW 100 per share.

2. At least 1 founder is required under Korean incorporation procedures.

There is no provision in Korean legislation that prevents or restricts that a company is established by foreigners.

c) The necessary capital to be invested in the Company will be deposited in a foreign exchange bank in Korea in preparation for subscription.

It is suggested that foreign investor remit an amount sufficient to allow for possible currency fluctuations until the date of payment into the Company, the said remittance to be accompanied boy the below instruction:

“[The attorney] from the law office of [*] is hereby authorized to withdraw the whole or any part of the remitted amount of [*] USD sufficient to purchase [*] Korean Won and to deposit such amount stated in Korean Won in your bank, the deposited amount to constitute the initial investment in [the Company], pursuant to the foreign investment report to the government of Korea. Any remaining amount of [USD] not converted into Korean Won shall be returned to the following account of the remitter: [*].”

d) Pay the subscription amount into the Company’s account in a Korean bank.

e) Holding of statutory general meeting. At the statutory general meeting, directors and the statutory auditor shall be appointed.

By law, the Company must have 3 or more directors and 1 statutory auditor, provided that the Company may have one or two directors if and so long as its capital amount is less than KRW 500 Million (approximately USD 500,000.00).

For the purpose of registrations of the Company, the local law office must be provided with information on the name, nationality, date of birth, and copy of passport of each foreign directors and the statutory auditor.

One or more of the directors must be appointed as “Representative Director(s)”. This/these person(s) is/are authorized by Korean law and the articles of incorporation to represent the Company. In the event that more than one director is appointed Representative Director, the articles of incorporation must stipulate whether the directors are to act jointly or individually in representing the Company.

Each foreign Representative Director, director, and statutory auditor must sign and have a Letter of Acceptance notarized, according to which they accept their respective offices.

f) Registration of the official seal (chop) of the Representative Director. A foreign Representative Director must complete, sign and have notarized a Report on Seal Impression, in which document personal data of each individual Representative Director/director are stated.

-Control over the seal and its use is of importance in Korea because, under Korean law, a document executed in the name of the Representative Director and by use of the registered seal may be assumed as a document that is validly and effectively executed by the Company, thereby having a binding effect over the Company. If the Company wants to deny the legal effect of such document, it must prove that the seal was used without due authorization and the counter-party acted with bad faith with knowledge of such unauthorized use of the seal.

g) When the aforementioned documents have been completed, the Company will be registered. After the registration, the Company will also receive a business ID from the local fax office.

The incorporation can be completed upon court registration of the Company. The tax office registration requires a copy of a lease agreement evidencing the Company’s actual presence in Korea.

If you require legal assistance in connection with incorporating a company, please contact Mr. Hoon Lee (hoonlee@sigonglaw.com), a foreign attorney with Sigong Law P.C. Please note that a certain fee arrangement will be required before we are able to provide the required assistance.