FDI Notification and Capital Remittance Alignment: Avoiding Common Delays in Korea Company Formation 2026

Table of Contents

Introduction: The #1 Mistake Foreign Investors Make in Korea

You’ve decided to incorporate a company in Korea. You’ve hired a legal advisor, prepared your documents, and transferred capital to a Korean bank. Everything seems on track—until your bank account remains frozen for weeks, preventing you from accessing funds, paying vendors, or sponsoring your D-8 visa.

What went wrong?

The most common culprit is a misalignment between FDI notification and capital remittance. According to legal experts and company formation specialists in 2026, this issue causes more delays than any other compliance error—yet it’s entirely preventable.

This article explains:

• Why FDI notification and capital remittance must align
• The correct sequence of steps for Korea company formation
• How to avoid bank account activation delays
• What to do if you’ve already made a mistake

If you’re a foreign entrepreneur planning to establish a Korean subsidiary, read this carefully. A single misstep here can delay your launch by 2-3 months.

What Is FDI Notification?

Foreign Direct Investment (FDI) notification is a mandatory registration with the Korea Development Bank (KDB) or a designated foreign exchange bank (e.g., Shinhan, Woori) when a foreign investor establishes a Korean company.

When Is FDI Notification Required?

FDI notification is required when:

• A foreign individual or entity invests KRW 100 million or more in a Korean company
• The investment results in 10% or more ownership of the company
• The foreign investor plans to engage in long-term business operations (not just portfolio investment)

What Happens If You Skip FDI Notification?

Failure to file FDI notification can result in:

• Bank account freezes – Your corporate account cannot be activated
• Inability to remit capital – You cannot transfer funds to Korea
• Visa denial – Immigration offices require proof of FDI for D-8 visas
• Penalties – Fines up to 3% of the investment amount

For a $100,000 USD investment, that’s a $3,000 penalty—plus the cost of delayed operations.

What Is Capital Remittance?

Capital remittance is the transfer of investment funds from a foreign bank account to your Korean company’s corporate bank account.

Why Does Capital Remittance Matter?

Korea’s banking regulations require that:

1. Capital must be transferred after FDI notification is filed
2. The transfer must match the exact amount declared in the FDI notification
3. The bank must verify the source of funds before activating the account

If any of these conditions are violated, your bank will freeze the account until compliance is restored.

How Much Capital Should You Remit?

While Korea’s Commercial Code technically allows companies to register with KRW 1 in capital, the Foreign Investment Promotion Act (FIPA) requires:

• Minimum KRW 100 million (~$75,000 USD) to qualify as FDI
• This threshold unlocks benefits like D-8 visa sponsorship and government subsidies

Pro tip: Many immigration offices unofficially expect KRW 300 million (~$220,000 USD) for D-8 visa approval, especially for service-based businesses. Consult with your legal advisor on the right amount for your industry.

The Correct Sequence: FDI Notification ➞ Capital Remittance ➞ Bank Activation

Here’s the correct sequence for foreign investors establishing a Korean company in 2026:

Step 1: Pre-Incorporation (Before Legal Entity Exists)

1. Choose your entity type – Jusik Hoesa (Corporation) or Yuhan Hoesa (LLC)
2. Obtain Apostille documents – Passport copies, proof of address, appointment letters
3. Reserve company name – Check availability with the Korean Intellectual Property Office
4. Draft Articles of Incorporation – Must specify investment amount and shareholder structure

Step 2: File FDI Notification (Before Remitting Capital)

This is the critical step most founders get wrong.

Before you transfer any money to Korea, you must:

1. Register FDI notification with Korea Development Bank (KDB) or a designated foreign exchange bank
2. Specify the exact investment amount (e.g., KRW 100 million)
3. Receive FDI registration certificate – This usually takes 1-2 business days

Key point: FDI notification must be filed before capital remittance. If you transfer funds first, the bank will reject the deposit or freeze your account.

Step 3: Remit Capital (After FDI Notification)

Once you have your FDI registration certificate:

1. Open a temporary deposit account at your designated foreign exchange bank
2. Transfer capital from your foreign bank – Amount must match FDI notification exactly
3. Provide proof of source of funds – Bank statements, wire transfer receipts, etc.

Timeline: Capital remittance usually takes 1-3 business days, depending on the originating country.

Step 4: Complete Corporate Registration (After Capital Deposit)

1. Obtain capital verification certificate from the bank
2. File judicial registration with the Seoul Central District Court (or local court)
3. Receive business registration certificate from the National Tax Service

Timeline: Corporate registration takes 3-5 business days.

Step 5: Activate Corporate Bank Account (After Registration)

1. Convert temporary deposit account to corporate account
2. Submit business registration certificate to the bank
3. Receive debit card and online banking credentials

Timeline: Account activation takes 1-2 business days if all documents are correct.

Common Mistakes That Cause Delays

Mistake #1: Remitting Capital Before FDI Notification

Scenario: A foreign founder transfers $100,000 to Korea before filing FDI notification, assuming they can register later.

Result: The bank freezes the funds. The founder must:

• File FDI notification retroactively
• Pay penalties (up to 3% of investment)
• Wait for bank compliance review (2-4 weeks)

How to avoid: Always file FDI notification before remitting capital.

Mistake #2: Mismatched Investment Amounts

Scenario: A founder files FDI notification for KRW 100 million but remits KRW 120 million, thinking “more is better.”

Result: The bank flags the discrepancy. The founder must either:

• Amend the FDI notification (additional fees + delays)
• Return the excess funds to the originating account

How to avoid: Remit the exact amount declared in your FDI notification. If you need to invest more later, file a supplementary FDI notification.

Mistake #3: Using the Wrong Bank

Scenario: A founder opens an account at a bank that is not designated for foreign exchange transactions (e.g., a local credit union).

Result: The bank cannot process FDI registration. The founder must:

• Close the account
• Open a new account at a designated bank (e.g., Shinhan, Woori, Hana)
• Re-file FDI notification

How to avoid: Use a designated foreign exchange bank from the start. Major options include:

• Shinhan Bank
• Woori Bank
• Hana Bank
• Korea Development Bank (KDB)

Mistake #4: Incomplete Source of Funds Documentation

Scenario: A founder remits capital but cannot provide bank statements proving the origin of funds.

Result: The bank refuses to activate the account, citing anti-money laundering (AML) regulations.

How to avoid: Prepare the following before remitting capital:

• Bank statements showing the source account (last 6 months)
• Wire transfer receipts
• Proof of employment or business income (if funds come from salary/revenue)
• Tax returns (if funds are from savings)

What to Do If You’ve Already Made a Mistake

If you’ve already remitted capital before filing FDI notification, here’s how to fix it:

Step 1: Immediately Contact Your Bank

Explain the situation and ask if they can hold the funds while you file FDI notification. Some banks will allow a grace period (1-2 weeks) if you act quickly.

Step 2: File FDI Notification Retroactively

You can still file FDI notification after remitting capital, but:

• Expect penalties (up to 3% of investment)
• The bank may require additional compliance checks
• Processing time may extend to 3-4 weeks

Step 3: Submit Supporting Documents

Provide the bank with:

• FDI registration certificate (retroactive)
• Proof of source of funds
• A written explanation of the error

Step 4: Wait for Compliance Review

The bank will review your case and decide whether to:

• Activate the account (if documentation is sufficient)
• Require additional documents
• Freeze the account pending investigation

Timeline: Retroactive FDI registration can take 2-6 weeks, depending on the bank’s workload and your documentation quality.

FDI Notification and D-8 Visa: Why Alignment Matters

For foreign entrepreneurs planning to live in Korea, the D-8 visa (business investor visa) is essential. However, immigration offices require:

1. Proof of FDI registration – You must submit your FDI certificate with your D-8 application
2. Evidence of capital remittance – Bank statements showing the investment amount
3. Business substance – A physical office, employees, or operational contracts

Key point: If your FDI notification and capital remittance don’t align, immigration will reject your D-8 application.

How to Coordinate FDI and D-8 Visa

The best approach is to treat FDI notification and visa sponsorship as a unified project:

1. File FDI notification first – This establishes your legal basis for investment
2. Remit capital and complete corporate registration – This proves you have operational capacity
3. Apply for D-8 visa – Submit FDI certificate + bank statements + business plan

Timeline: If done correctly, you can receive D-8 visa approval within 4-6 weeks of FDI notification.

2026 Update: What’s Changed?

Korea’s FDI regulations have tightened in 2026, with a focus on “quality investment” rather than quantity. Here’s what’s new:

1. Stricter Bank Compliance

Banks now require more detailed source of funds documentation, including:

• Tax returns (for high-net-worth individuals)
• Employment contracts (for salary-based investments)
• Business revenue statements (for entrepreneur-funded investments)

Takeaway: Start gathering documentation before you initiate capital remittance.

2. Faster FDI Processing (If Done Right)

The Korea Development Bank (KDB) has digitized FDI notifications, reducing processing time to 1-2 business days—if all documents are correct.

Takeaway: Use the KDB online portal (e-FDI system) for faster turnaround.

3. Higher Penalties for Non-Compliance

Penalties for late or incorrect FDI notifications have increased to up to 3% of the investment amount (previously 1-2%).

Takeaway: Get it right the first time—the cost of errors has gone up.

Practical Checklist: Ensuring FDI-Capital Alignment

Use this checklist to avoid delays:

Before FDI Notification

• Choose a designated foreign exchange bank (Shinhan, Woori, Hana, or KDB)
• Gather Apostille documents (passport, proof of address, appointment letters)
• Calculate exact investment amount (minimum KRW 100 million for FDI)
• Prepare source of funds documentation (bank statements, tax returns)

During FDI Notification

• File notification with KDB or designated bank
• Specify exact investment amount and currency
• Receive FDI registration certificate (1-2 business days)

During Capital Remittance

• Open temporary deposit account at designated bank
• Transfer exact amount declared in FDI notification
• Submit proof of source of funds to bank
• Obtain capital verification certificate

After Corporate Registration

• Convert temporary account to corporate account
• Submit business registration certificate to bank
• Receive online banking access and debit card

For D-8 Visa Applicants

• Submit FDI certificate + bank statements to immigration
• Provide business plan and office lease agreement
• Wait 4-6 weeks for visa approval

Conclusion: Why Alignment Is Non-Negotiable

FDI notification and capital remittance alignment is not a “nice-to-have”—it’s a legal requirement that determines whether your Korean company can operate.

In 2026, Korea’s regulatory environment prioritizes quality investment and compliance transparency. Banks and immigration offices are enforcing stricter standards, which means:

• More documentation required upfront
• Longer delays if you make mistakes
• Higher penalties for non-compliance

The good news? If you follow the correct sequence (FDI notification ➞ capital remittance ➞ bank activation), the entire process takes just 1-2 weeks.

Don’t let a preventable mistake delay your Korea launch by months.

📩 Need help with FDI notification or capital remittance?
SMA Lawfirm has guided 200+ foreign investors through Korea’s company formation process with zero compliance errors. Contact us at sma@saemunan.com for a step-by-step setup plan.