Concept of Foreign Investment

Concept of Foreign Investment

In the laws related to the free economic zone and free trade zone, the regulations of Foreign Investment Promotion Act shall be applied to the concepts of the foreigner and the foreign investment

Foreigner (Article 2 of Foreign Investment Promotion Act and Article 2 of Enforcement Ordinance)

  • Individual having foreign nationality
  • Company established by the laws of foreign countries (foreign company)
  • Organization of international economic cooperation
    • Acting institutions of external economic cooperation affairs of foreign government
    • International organization dealing with the affairs on the development financing such as IBRD, IFC, ADB, etc
    • International organization dealing with or acting external investment affairs
  • Individual having the nationality of Republic of Korea who resides in foreign country

Type of Foreign-Investment

Acquisition of domestic companies' stock or equity
  • If the foreign investment amount exceeds 100 million won with 10% or more of the total number of stocks with voting rights or the total investment amount (this condition must be fulfilled by all investors)
  • The exception for the investment amount shall not acknowledged but the exception on the investment proportion shall be acknowledged.(In case of entering into any of following contracts, it will be acknowledged as direct investment of the foreigners although the foreign-investment is less than 0.1 billion won or the proportion of foreign investment is less than 30%)
    • Contract that the foreigner can send the executive or appoint the executive
    • Contract that sells the raw materials or products or purchase during the period more than 1 year
    • Contract that provides or introduces the technologies or for the joint research and development
Long-Term Loan
  • 5 or more years of loan provided to relevant foreign-investment company by the company having investment relationship with the overseas parent company of relevant foreign-investment company, holding total stocks or 50% or more of the total investment amount of the parent company
Investment to the non-profitable corporation
  • The corporation equipped with independent research facilities in the science and technology fields having more than 5 permanent employees who have 3 years of research career or more having bachelor degree or the degree of master or higher in the science and technology fields, etc.