SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
Restrictions on external financing for each type of entity are as follows: • stock corporation – not applicable; • limited liability company – not applicable; • CR-REIT – permitted within double (or 10 times, under certain exceptions) the amount of its net assets; • general REIT – permitted within double (or 10 times, under certain exceptions) the amount of its net assets; • RETF – permitted within double the amount of its net assets (with certain exceptions); • RECF – permitted within double the amount of its net assets (with certain exceptions); and • PFV – not applicable. Qualifications for assets invested in by each type of entity are as follows: • stock corporation – not applicable; • limited liability company – not applicable; • CR-REIT – seller of the assets is a company subject to corporate restructuring; • general REIT – at least 70% of the assets are invested in real estate; • RETF – more than 50% of the assets are invested in real estate (with certain excep - tions); • RECF – more than 50% of the assets are invested in real estate (with certain excep - tions); and • PFV – investment is made in facility and SOC development, natural resource development, or other specific development projects which require large amounts of time and money. Requirements for real estate development pro - jects invested in by each type of entity are as follows: • stock corporation – not applicable;
• limited liability company – not applicable; • CR-REIT – the investment ratio is required to be set by shareholders’ resolution and the business plan is required to be confirmed by a licensed real estate investment consulting service company; • general REIT – the investment ratio is required to be set by shareholders’ resolution and the business plan is required to be confirmed by a licensed real estate investment consulting service company; • RETF – the business plan is required to be confirmed by an appraisal company; • RECF – the business plan is required to be confirmed by an appraisal company; and • PFV – it is required to invest all of its assets in real estate development projects. The applicability of corporate income tax to each type of entity is as follows: • stock corporation – taxable; • limited liability company – taxable; • CR-REIT – dividend declared deduction; • general REIT – dividend declared deduction; • RETF – not taxable; • RECF – dividend declared deduction; and • PFV – dividend declared deduction (appli - cable through the fiscal year ending on or before 31 December 2025). The governing law of each type of entity is as follows: • stock corporation – KCC; • limited liability company – KCC; • CR-REIT – Real Estate Investment Trust Act (REITA) and KCC; • general REIT – REITA and KCC; • RETF – Financial Investment Services and Capital Markets Act (FISCMA) and KCC; • RECF – FISCMA and KCC; and
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