SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
in the relevant regulations, and to manage its assets through an asset management company with net assets of KRW7 billion or more and with five or more professionals. Real Estate Investment Trust A general REIT may be classified as a stock corporation, and it is required to invest 70% or more of its assets in real estate and manage its assets through an asset management company with net assets of KRW7 billion or more and with five or more professionals. Real Estate Trust Fund An RETF may be classified as a trust; it is required to manage its assets through an asset management company with net assets of KRW1 billion or more and with three or more profes - sionals. Real Estate Corporate Fund An RECF may be classified as a stock corpora - tion; it is required to manage its assets through an asset management company with net assets of KRW1 billion or more and with three or more professionals. Project Financing Vehicle A PFV may be classified as a stock corporation, and it is required to manage its assets through an asset management company that is a share - holder of the PFV, or a company set up by a Stock corporations and limited liability compa - nies are required to pay a corporate registration tax of 0.48% of the par value of shares issued upon establishment and, thereafter, upon each capital increase. If a company is established in an overpopulated control area or a company increases its capital within five years of its estab - shareholder of the PFV. Tax Benefits and Costs
lishment, a stepped-up capital registration tax rate of 1.44% (ie, triple the normal rate) applies. However, CR-REITs, general REITs, RECFs and PFVs are not subject to such tripling of capital registration tax nor to the stepped-up acquisi - tion tax normally applied to real property located in overpopulated control areas. Land owned by a public REIT or a public fund for their business use is not separately taxed for property tax purposes and is not subject to com - prehensive real estate tax. However, this excep - tion does not apply to PFVs. As to the corporate income tax benefits appli - cable to each type of entity, please refer to 5.5 Applicable Governance Requirements . 5.3 REITs REITs are real estate investment vehicles that are actively used in Korea. Both private and public offerings are available, and general REITs in par - ticular are required to offer at least 30% of their shares to the public, as described in 5.5 Appli- cable Governance Requirements . Furthermore, there are 19 REITs listed on the stock market. Foreign investment is also permitted (please refer to 5.5 Applicable Governance Require- ments regarding the requirements for qualifica - tion). 5.4 Minimum Capital Requirement The minimum capital requirement for each type of entity is as follows: • stock corporation – not applicable (KRW100 million for foreign-invested companies); • limited liability company – not applicable (KRW100 million for foreign-invested compa - nies); • CR-REIT – KRW5 billion; • general REIT – KRW5 billion;
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