When the issuance of a certificate of a foreign-invested enterprise is rejected due to
a shortage of foundation capital
Entrepreneur “S”
Entrepreneur “S” reported his investment of 100 million won and completed
the required remittance under the Foreign Direct Investment procedure
to open a restaurant in Korea. He spent considerable time to find a suitable place.
After he paid a deposit and rent and was re-issued
with a balance certificate from the bank, he completed the business registration.
When he revisited the bank for a certificate of a foreign-invested enterprise, his application was rejected due to a shortage of foundation capital.
A balance certificate is deemed valid by a registry office within 15 days from its issuance
A corporation of capital of 1 1 billion won or less can prove its capital amount through a bank balance certificate. The valid period of the balance certificate is 15 days so the corporate registration must be completed within 15 days in order to allow the investor to establish a corporation with the capital that has been proved already, even if he has used some of the money.
The minimum capital amount to establish
a foreign direct investment company is 100 million won
In accordance with the Foreign Investment Promotion Act,
to be recognized as a foreign direct investment company,
an investor should hold at least 10 percent of shares in the company
concerned and the investment amount shall be over 100 million won
Currently, the investor used part of the money that was supposed
to be used as capital and then was issued with a balance certificate,
so the capital has decreased as much as the sum that he used.
Through additional remittance and a capital increase,
it is necessary to increase the amount of capital to
meet the requirement for a foreign direct investment company
The capital proved by his balance certificate is now insufficient to establish
a corporation. The investor should remit as much money as required
to fill the shortage and be issued with a balance certificate to
increase the capital stock, thereby ensuring that the capital amount
meets the minimum requirement for foreign direct investment.