SOUTH KOREA Law and Practice Contributed by: Dongwook Kang, Chris Kim, Seung-Wan Chae and Jongwoo Kim, Bae, Kim & Lee LLC
General Requirements The applicant prepares the application and support - ing documents and will normally need to have a pre- filing consultation with the FSS reviewing officer. With respect to the time required for a GPF manager reg - istration, the FSC must process the application and complete the registration within two months of the applicant filing a full application package, excluding the time taken by the applicant to supplement the application when required by the regulator. In an IPF manager registration, the FSC must process the appli - cation and complete the registration within one month after accepting the completed application package, excluding the time taken by the applicant to supple - ment the application when required by the regulator. Both GPF managers and IPF managers have the duty to manage the fund assets with the due care of a pru - dent manager. In addition, GPF managers are required to faithfully perform their duties to protect investors’ interests. 3.4 Tax Regime for Managers Fund managers are generally established as corpora - tions in South Korea. Management/advisory vehicles that are established or tax-resident in South Korea are subject to corporate income tax on any form of profit-related returns, including carried interest and management fees. The current corporate income tax rates are as follows: • 9% on the first KRW200 million of taxable income; • 19% on taxable income over KRW200 million up to KRW20 billion; • 21% on taxable income over KRW20 billion up to KRW300 billion; and • 24% on taxable income over KRW300 billion. In addition, the local surtax is taxed in addition to cor - porate income tax, at progressive tax rates ranging from 0.9% to 2.4% on the taxable income. According to the South Korean government’s pro - posed tax revision, which is expected to take effect in 2026, the tax rate will increase by 1% across all brackets.
company engaged in fund (collective invest - ment scheme) management business. • Minimum shareholders’ equity – KRW1 billion (approximately USD860,000). • Personnel – at least three full-time investment professionals. • Facilities – the applicant must have office space and physical facilities, including security equipment and computer equipment sufficient for conducting a hedge fund management business. • Officers – officers of the applicant (including directors and the statutory auditor) must meet the requirements under Article 5 of the Financial Com - panies Corporate Governance Act – essentially, they should not have been subject to any criminal or other sanctions in the past five years. • Major shareholders – major shareholders, includ - ing the largest shareholder and significant share - holders with a 10% or more shareholding in the applicant, must meet certain standards of financial soundness and social credibility. • Financial stability and social reputation – must be financially sound and socially reputable. • Prevention of conflicts of interest – the applicant must have a system in place to prevent conflicts of interest. IPF Manager Registration The requirements are as follows. • Local presence – no specific requirements. Howev - er, as a matter of policy, the regulator requires the IPF manager to be a local corporate entity in South Korea. Most commonly, local IPF managers are established as a joint stock company or a limited liability company. • Minimum shareholders’ equity – KRW100 million (approximately USD86,000). • Personnel – at least two full-time investment pro - fessionals. • Facilities – not required. • Officers – same as for a GPF manager. • Major shareholders – not required. • Financial stability and social reputation – same as for a GPF manager. • Prevention of conflicts of interest – same as for a GPF manager.
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