CONTENTS
- 1. Foreign-Invested Companies | Korea Operates a Legal System Different From the Global Standard
- 2. Foreign-Invested Companies | Compliance With Special Foreign Investment Statutes and Review of Corporate Norms
- - Deciding the Form of Company Establishment and Designing the Governance Structure
- 3. Foreign-Invested Companies | Preemptive Prevention of Labor and Tax Risks
- - Utilizing Tax Reductions and Incentives and Preventing Transfer Pricing Risk
- 4. Foreign-Invested Companies | All the Way to Responding to Fair Trade, Personal Information, and Industry-Specific Licensing Regulations
1. Foreign-Invested Companies | Korea Operates a Legal System Different From the Global Standard
For foreign-invested companies, we will provide advice from the perspective of a global legal partner as well as a Korean one.
Even a business model already proven in the global market will run into unexpected risks if you do not accurately understand Korea's unique legal and regulatory environment.
Korea is an attractive market with a solid IT infrastructure and high purchasing power, but it operates a legal system that differs from the global standard, including the Foreign Investment Promotion Act, the Foreign Exchange Transactions Act, strict labor laws, and its own personal information and fair trade regulations.
For foreign-invested companies planning to enter Korea or already operating a business here, Daeryun provides tailored legal advisory services spanning the entire corporate life cycle—from the company establishment stage to governance structure design, labor management, tax strategy, and responding to licensing and permits.
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2. Foreign-Invested Companies | Compliance With Special Foreign Investment Statutes and Review of Corporate Norms
Unlike ordinary domestic companies, foreign-invested companies are subject to a separate regulatory framework consisting of the Foreign Investment Promotion Act and the Foreign Exchange Transactions Act.
Because a minor procedural error in the early establishment stage can lead to loss of foreign-invested company status, fines for negligence, or, in severe cases, criminal punishment, the assistance of corporate law and foreign investment experts is essential.
We provide legal review related to share acquisition and the valuation of the object of contribution, and, where foreign-invested company registration cancellation or liquidation is necessary, we advise in a direction that reduces risk.
For structurally complex transactions such as set-off processing or payment to a third party, we block violation risk through advice on notifications to foreign exchange banks and the Bank of Korea, and even in the rare event that a violation occurs, we take exclusive charge of the fine-for-negligence and criminal complaint investigation and the response.
Deciding the Form of Company Establishment and Designing the Governance Structure
The choice of the form of entry into Korea is an important factor that determines whether corporate personhood will be recognized, the method of taxation, and the scope of the headquarters' liability.
In particular, in the case of a joint-venture investment, a governance structure design that prevents management-control disputes with the partner company determines the success or failure of the business.
Our firm compares and analyzes the respective advantages, disadvantages, and tax implications of a subsidiary, a branch, a liaison office, and the like, and proposes an entry method suited to the foreign-invested company's business purpose, investment scale, and whether profit generation is involved.
In addition, we advise on the review of SHA poison-pill clauses for defending management control in a joint-venture investment, and on the design of tailored articles of incorporation that can simultaneously satisfy the headquarters' global guidelines and domestic commercial law.
3. Foreign-Invested Companies | Preemptive Prevention of Labor and Tax Risks
From the standpoint of foreign-invested companies, Korean labor law often acts as an unexpected sudden variable.
Because it is stricter than global standards in many respects—such as the stringency of the requirements for dismissing workers, the 52-hour workweek, the obligation to prepare and file rules of employment, and the application of the Serious Accidents Punishment Act—there are not a few cases in which transplanting the overseas headquarters' HR policies as-is escalates into a major labor dispute.
Our firm's corporate specialist attorneys, labor specialist attorneys, and certified labor attorney TF check in advance the preparation of rules of employment and the legality of various labor systems in accordance with domestic labor law.
In addition, we revise and transplant the overseas headquarters' HR and disciplinary rules to conform to domestic labor law standards, and we simultaneously advise on the establishment of a safety and health management system to comply with the Serious Accidents Punishment Act and the Occupational Safety and Health Act.
Utilizing Tax Reductions and Incentives and Preventing Transfer Pricing Risk
Foreign-invested companies must make the fullest use of the tax reduction benefits provided by the government while also managing the transfer pricing taxation risk that can arise in transactions between the overseas headquarters and affiliates.
We advise on the arm's-length pricing principles for service and goods transactions between the overseas headquarters and affiliates, support the preparation of transfer pricing reports, and prepare in advance for tax audits.
Together with in-house experts such as tax attorneys, certified public accountants, and customs specialist advisors holding customs broker qualifications, we provide consulting to enhance corporate profits—including the design of new-growth-engine technology-based local tax and customs duty reduction schemes, site matching, rent reductions, and securing cash support.
In addition, we assist with negotiations and the conclusion of MOUs to optimize incentives by local government, helping the company settle successfully in Korea.
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4. Foreign-Invested Companies | All the Way to Responding to Fair Trade, Personal Information, and Industry-Specific Licensing Regulations
If you fail to grasp in advance the regulatory framework unique to the Korean market, there is also a possibility that a foreign-invested company's actual business model itself will be judged unlawful or that a massive surcharge penalty will be imposed.
Therefore, we check compliance with regulations such as Korean law's distinctive personal information protection processing policy, unfair trade practices under the Fair Trade Act, and platform regulation risks.
In addition, we handle on your behalf the acquisition of licenses and permits needed to enter regulated industries such as food, pharmaceuticals, medical devices, IT, finance, and fintech, and we support applications to the regulatory sandbox and approval of temporary permits and demonstration exceptions when entering new technologies and new industries.
You can also entrust to this advisory program the agency work for securing communication channels with government ministries and regulatory agencies.
Our firm has not only corporate law and company law specialist attorneys, but also numerous foreign-law advisory specialists in the United States, China, Singapore, Russia, and elsewhere, as well as many tax, labor, accounting, and fair trade experts on staff.
Through our operation of a local law firm in the United States and collaboration with global law firms, we cooperate without the barriers of time zones and national borders, and we provide multilingual services in English, Chinese, Japanese, and more to communicate directly with overseas headquarters' management, thereby raising the quality of Korean- and English-language contract drafting and legal opinion advisory work.
We do not stop at pointing out legal limitations; we actively seek out lawful alternatives that can achieve the client's business goals, so if you need a foreign-invested company legal advisory team for successful investment and stable business operation in the Korean market, please inquire with us at any time.
