SOUTH KOREA Law and Practice Contributed by: Hyeon-Deog Cho, Yeong-Ik Jeon, Ji-won Lim and Hakbum Ahn, Kim & Chang
Kim & Chang 39, Sajik-ro 8-gil Jongno-gu
Seoul 03170 South Korea Tel: +82 2 3703 1114 Fax: +82 2 737 9091/9092 Email: lawkim@kimchang.com Web: www.kimchang.com
1. Types of Company, Share Classes and Shareholdings 1.1 Types of Company The Korean Commercial Code (KCC) recognises five types of companies: • joint stock companies ( jusik hoesa in Korean); • limited companies ( yuhan hoesa ); • limited liability companies ( yuhan chaegim hoesa ); • general partnerships ( hapmyeong hoesa ); and • limited partnerships ( hapja hoesa ). The most common entity type is the joint stock com- pany, accounting for about 95% of the companies in Korea as of July 2025. Unless otherwise specified, the scope of review in this guide is limited to joint stock companies. 1.2 Types of Company Used by Foreign Investors When foreign investors establish subsidiaries or joint ventures in Korea, the two most prevalent entity forms have traditionally been joint stock companies and limited companies. Recently, many foreign investors have also been choosing limited liability companies, which are modelled after (and thus comparable to) limited liability companies in the United States. All three types of company limit the equity holders’ liability to the capital amounts they have invested in the relevant company.
When selecting the corporate form, foreign investors typically consider the following. Corporate Formalities More corporate formalities are required for a joint stock company than for a limited company or a lim- ited liability company. For example, only a joint stock company is required to have a board of directors and a statutory auditor (unless its paid-in capital is less than KRW1 billion); this structure is optional for limited companies and limited liability companies. In addi- tion, the shareholders of a joint stock company are generally not permitted to adopt resolutions by writ- ten consent, but instead must adopt resolutions at a general meeting of the shareholders. On the other hand, the members of a limited company or limited liability company may adopt resolutions by unanimous written consent. External Audit of Financial Statements A joint stock company and a limited company must have its financial statements audited by an external auditor and file such audited financial statements with the Financial Services Commission (FSC) of Korea if it has total assets or annual sales of at least KRW50 billion, or if it satisfies at least two of the following criteria: • total assets of at least KRW12 billion; • total liabilities of at least KRW7 billion; • annual sales of at least KRW10 billion; or • 100 employees (all applicable figures as of the end of the previous fiscal year).
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