SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
4.6 Agreements With Local or Governmental Authorities
• stock corporation ( chusik hoesa ); and • limited liability company ( yuhan hoesa ). Five special forms of investment vehicles, the corporate restructuring REIT (CR-REIT), general REIT, real estate trust fund (RETF), real estate corporate fund (RECF) and project financing vehicle (PFV), are also available (see 5.2 Main Features of the Constitution of Each Type of Entity ). 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Stock Corporation A stock corporation has the familiar corporate structure of shareholders, a board of directors and one or more executives, and is organised under the articles of incorporation. Shareholders of a stock corporation are liable only up to an amount equal to their capital contribution, and shares may be transferred freely. Limited Liability Company A limited liability company is comprised of “members” instead of shareholders. As in the case of a stock corporation, the liability of mem - bers is limited to the amount of their capital con - tribution to the entity. However, a board of direc - tors is not required for a limited liability company, although one may optionally be created by the members. Unlike in some other jurisdictions, in Korea there is no material difference in tax treat - ment between a stock corporation and a limited liability company, as both are subject to two-tier taxation from the investor’s perspective (on cor - porate income and on dividends). Corporate Restructuring Real Estate Investment Trust A CR-REIT may be classified as a stock corpo - ration; it is required to invest 70% or more of its assets in “CR-REITable” assets, as defined
A government authority must consult other government authorities or agencies that will be affected by the permits/approvals being sought, before such permits/approvals are issued. That said, whether it is possible or necessary to enter into separate agreements with government enti - ties or utility suppliers, and what kinds of agree - ments are typical, may vary depending on the specific law applicable to each development project. For an example of an agreement that may be entered into, please refer to 2.8 Permit- ted Uses of Real Estate under Zoning or Plan- ning Law . 4.7 Enforcement of Restrictions on Development and Designated Use If a developer who has obtained permits/ approvals does not carry out the development in accordance with such permits/approvals, or does not adhere to the prescribed conditions, the relevant government authority may cancel such permits/approvals. In addition, if a developer engages in any con - duct in connection with a development project without obtaining the permits/approvals required under the relevant laws or does not satisfy a pre - scribed condition under the relevant laws, such developer may be subject to criminal sanctions (ie, imprisonment, penalty payment) or admin - istrative sanctions (ie, fine payment, business suspension). 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets There are two general forms of companies:
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