Types of companies that can be set up in Korea

South Korea, as a technology powerhouse and innovation hub, promises to bring countless development opportunities for international businesses. South Korea’s domestic consumer market is extremely potential, with high purchasing power and a special preference for cutting-edge products and services, especially in the fields of technology, fashion, beauty, and entertainment. Not only that, South Korea’s strategic geographical location also creates favorable conditions for businesses to expand their markets to neighboring Asian countries. In particular, South Korea is one of the world’s leaders in research and development (R&D), especially in the fields of information technology, electronics, automotive, and biology. Setting foot in Korea means that businesses will have access to the most advanced technologies, high-quality human resources and an extensive network of partners. Therefore, there are more and more foreign investors in Korea, so what types of companies can be established in Korea, Viet An Law would like to provide some information through the article below.

Types of companies that can be set up in Korea

Limited Liability Company

A limited liability company (Yuhan Hoesa) is one of the most popular types of businesses in Korea, especially favored by foreign investors.

Main features:

• Limited Liability: The members of the company are only responsible for the company’s debts within the amount of capital contributed. This helps to minimize financial risk for investors.
• Flexibility in management: Limited companies offer high flexibility in management and operations, allowing members to be more proactive in making decisions.
• Suitable for small and medium-sized businesses: This type of company is especially suitable for small and medium-sized businesses, or businesses with a limited number of members.

Advantage:

• Minimize financial risk for members.
• Simple incorporation and management process.
• High flexibility in operation.

Shortcoming:

• The ability to raise capital is more limited than that of a joint stock company.
• It may be difficult to transfer the contributed capital.

Joint Stock Company

Joint Stock Company (Jusik Hoesa) is one of the popular types of businesses in Korea, especially suitable for large enterprises or planning to raise capital from the stock market.

Main features:

• Charter capital: Charter capital is divided into shares, and the shareholders own these shares. Capital mobilization can be done through the issuance of shares to the public.
• Limited Liability: Shareholders are only responsible for the company’s debts within the value of the shares owned.
• Organizational structure: A joint-stock company has a structure consisting of the General Meeting of Shareholders, the Board of Directors and the Supervisory Board.
• Publicity: Joint stock companies are obliged to disclose financial information and business activities in accordance with the law.

Advantage:

• Ability to raise large capital: Easily raise capital from the stock market through the issuance of shares.
• High liquidity: Stocks can be easily traded on the stock market.
• High professionalism: Strict and professional organizational structure, ensuring the efficient operation of the company.

Shortcoming:

• High management costs: The cost of managing and operating a joint stock company is usually higher.
• High publicity: The disclosure of information can reveal the company’s business secrets.

Partnerships

A partnership (Hapmyong Hoesa) is a special type of business in Korea.

Main features

• Limitless liability: This is the most prominent characteristic of a partnership. The general partners (main members) are liable to unlimited with their entire assets for the company’s debts.
• General Partners:
  • A partnership must have at least two general partners.
  • The general partners jointly run the company’s business.
• Solidarity: General partners are jointly responsible for the company’s debts.
• Trustworthiness: This type of company is usually based on trust and close relationships between members.

Advantage:

• High Trust: Infinite responsibility creates high trust for partners and customers.
• Flexibility: Partnerships can operate flexibly due to the decisions made by the members together.

Shortcoming:

• High Risk: Unlimited liability is a major risk for general partners.
• Difficulties in raising capital: This type of company is often difficult to raise capital from outside.
• Joint responsibility: Each member must be responsible for the actions of all other members.

Limited Partnership Company

A limited partnership (Hapja Hoesa) is a special type of business in South Korea that combines the characteristics of a partnership and a limited liability company.

Main features:

• Two types of members: A limited partnership has two types of members: general partners (main members) and capital contributors. A general partner is liable for the company’s debts, while a capital contributor is only liable to the extent of the capital contribution.
• Limited and Unlimited Liability: A combination of limited and unlimited liability is the main differentiator of this type of company. This allows the company to raise capital from investors who want to limit risk, while still maintaining tight control over the general partners.
• Organizational structure: The organizational structure of a limited partnership company is often flexible, allowing members to agree on the management and administration of the company.

Advantage:

• Fundraising: The company can raise capital from a variety of sources, including investors who want to limit risk.
• Control: The general partners retain control of the company’s business.
• Flexibility: Flexible organizational structure, suitable for many types of businesses.

Shortcoming:

• Risks for Partnerships: Partnerships are subject to high risks due to unlimited liability.
• Complexity: The organizational structure is more complex than that of a limited liability company.