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Minimum Capital Requirements for Foreign Investment in Korea: KRW 100 Million FDI Threshold Explained (2026)

Minimum capital requirements for foreign investment in Korea

Minimum Capital Requirements for Foreign Investment in Korea: KRW 100 Million FDI Threshold Explained (2026)

One of the most frequent questions foreign investors ask when considering company formation in South Korea is: “How much capital do I need to invest?”

The answer is more nuanced than many realize. While Korea’s Commercial Code technically has no minimum capital requirement for most company types, the Foreign Investment Promotion Act (FIPA) establishes a KRW 100 million threshold that has significant implications for foreign investors.

This comprehensive guide clarifies the difference between legal minimum capital and FDI thresholds, explains when you need to meet the KRW 100 million requirement, and explores strategic alternatives for investors working with smaller initial budgets.

Table of Contents

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Understanding Korea’s Dual Capital Framework

Foreign investors establishing companies in South Korea operate under two distinct legal frameworks that sometimes create confusion:

1. Commercial Code (회사법)

Governs all companies in Korea, domestic and foreign-owned, setting basic corporate law requirements.

2. Foreign Investment Promotion Act (외국인투자촉진법, FIPA)

Governs foreign direct investment (FDI) specifically, providing incentives, protections, and setting minimum thresholds.

The key insight: You can form a company under the Commercial Code with very little capital, but you won’t qualify for FDI benefits without meeting FIPA’s KRW 100 million threshold.

Commercial Code: No Minimum Capital

Historical Context

Prior to 2009, Korea required:

These requirements were abolished to reduce barriers to entrepreneurship and align with global best practices.

Current Rules (2026)

Under current Commercial Code provisions:

Company TypeMinimum Capital Required
Stock Corporation (주식회사)None
Limited Liability Company (유한회사)None
PartnershipNone
Limited PartnershipNone

Practically speaking: You can form a Korean company with as little as KRW 1 in registered capital.

Why No Minimum Makes Sense

The elimination of minimum capital requirements:

Foreign Investment Promotion Act: KRW 100 Million Threshold

The FDI Definition

Under FIPA Article 2, Foreign Direct Investment (FDI) includes:

  1. Acquiring stocks or shares in a Korean company, where the foreign investor:

    • Acquires 10% or more of total shares, OR
    • Appoints officers/directors (regardless of ownership percentage)

  2. AND the investment amount is KRW 100 million or more

Both conditions must be met to qualify as FDI under FIPA.

The KRW 100 Million Threshold

Current threshold: KRW 100,000,000 (approximately USD $75,000-80,000 depending on exchange rates)

This threshold applies to:

Historical Adjustment

The KRW 100 million threshold has remained stable since 2004, despite:

In 2026, there are occasional discussions about raising the threshold to KRW 200-300 million to better reflect current economic conditions, but no official changes have been announced.

Why the Threshold Exists

The KRW 100 million minimum serves several policy objectives:

  1. Filters serious investors from token investments
  2. Reduces administrative burden on government agencies
  3. Focuses incentives on substantial investments
  4. Aligns with statistical reporting needs (OECD FDI data)
  5. Prevents abuse of FDI incentive programs

What KRW 100 Million Gets You

Meeting the KRW 100 million threshold qualifies you for significant FDI benefits and protections:

Benefits of FDI Status

ProtectionDescription
Investment GuaranteeProtection against unfavorable regulatory changes
Fair TreatmentNational treatment and most-favored-nation treatment
Compensation for ExpropriationGuarantees if government nationalizes assets
Profit RepatriationGuaranteed rights to remit earnings abroad
Dispute ResolutionAccess to international arbitration

2. Tax Incentives (Conditional)

Depending on industry and location:

Note: Tax incentives typically require:

3. Administrative Support

4. Visa Benefits

FDI investors and their families may qualify for:

5. Access to FDI Complaint Resolution

If you encounter regulatory obstacles or unfair treatment:

Costs of FDI Status

Meeting the threshold also means:

❌ FDI reporting obligations - Annual business reports
❌ Regulatory scrutiny - More detailed oversight
❌ Exchange control reporting - Foreign exchange transaction reports
❌ Investment maintenance requirements - Can’t reduce below threshold without consequences

Industry-Specific Capital Requirements

While FIPA sets a general KRW 100 million threshold, certain industries have higher minimum capital requirements regardless of FDI status:

Financial Services

IndustryMinimum Capital
BankKRW 25-100 billion
Insurance CompanyKRW 30-50 billion
Securities FirmKRW 3-5 billion
Asset ManagementKRW 3 billion
Credit Card CompanyKRW 30 billion

Construction

Transportation

Telecommunications

Import/Export Trading

Important: Always verify current requirements for your specific industry, as these change periodically.

Alternatives for Investors Below KRW 100 Million

What if you want to establish a Korea presence but aren’t ready to invest KRW 100 million initially?

Option 1: Form Company Without FDI Status

Structure:

Advantages: ✅ Lower initial capital requirement (can be as low as KRW 1)
✅ Simplified formation process
✅ Less regulatory reporting
✅ More flexibility to test market

Disadvantages: ❌ No FDI protections or guarantees
❌ No tax incentives
❌ More difficult D-8 visa acquisition (may need E-7 or other visa)
❌ No KOTRA support
❌ May face restrictions in certain industries

Best for:

Option 2: Start as Branch Office

Structure:

Advantages: ✅ No minimum operating fund legally required
✅ Simpler structure than subsidiary
✅ Profits/losses flow directly to parent
✅ Lower compliance burden

Disadvantages: ❌ Parent company has unlimited liability for branch activities
❌ Generally cannot qualify for FDI incentives
❌ Scope of activities may be limited
❌ Less favorable tax treatment in some cases
❌ Banking and vendor relationships may be more difficult

Best for:

Option 3: Partner with Korean Entity

Structure:

Advantages: ✅ Lower capital requirement for foreign investor
✅ Local partner knowledge and connections
✅ Shared risk
✅ May qualify for different incentive programs

Disadvantages: ❌ Shared control and profits
❌ Partnership disputes risk
❌ Due diligence on partner required
❌ May be difficult to exit

Best for:

Option 4: Phased Capital Injection

Structure:

Process:

  1. Month 0: Form company with KRW 50 million capital
  2. Month 1-6: Operate and establish market presence
  3. Month 6: Inject additional KRW 50 million+ (reaching KRW 100 million+)
  4. Month 6: File FDI report and claim FDI status

Advantages: ✅ Test market with lower initial risk
✅ Eventually gain FDI benefits
✅ Demonstrate business viability before full commitment

Disadvantages: ❌ No FDI protections during initial phase
❌ Retroactive tax incentives may not be available
❌ Visa issues during early phase
❌ Two-step process adds complexity

Best for:

Strategic Considerations: Meeting vs. Avoiding the Threshold

When to Exceed KRW 100 Million

Strongly consider meeting the threshold if:

✅ You plan long-term operations in Korea (5+ years)
✅ You’re in a high-tech or R&D industry eligible for tax incentives
✅ You need D-8 visa for yourself or key employees
✅ You’re investing in a designated FDI zone with incentives
✅ Your industry requires substantial initial capital anyway
✅ You want investment protection and repatriation guarantees
✅ You anticipate potential disputes and want legal protections

When to Stay Below KRW 100 Million

Consider avoiding the threshold if:

✅ You’re testing the market with uncertain commitment
✅ Your business model requires minimal capital (consulting, online services)
✅ You want maximum flexibility to pivot or exit
✅ You can secure visas through other means (marriage, employment, etc.)
✅ Your industry has no FDI incentives anyway
✅ You prefer minimal regulatory reporting
✅ You plan rapid growth and can inject capital later when certain

Financial Planning Considerations

Beyond the KRW 100 million investment, budget for:

Expense CategoryEstimated Cost (KRW)
Legal and registration fees3-8 million
Office deposit and rent (annual)20-100+ million
Business registration taxes1-3 million
Initial operating expenses (6 months)30-100+ million
Employee salaries (if hiring)40-80+ million annually per employee
Total First-Year BudgetKRW 200-400+ million

Key insight: The KRW 100 million FDI threshold is just the registered capital. Total cash needs are typically 2-4x higher for sustainable operations.

Definitions

Registered Capital (등록자본금)

Paid-In Capital (납입자본금)

Korea’s 100% Payment Rule

Unlike some jurisdictions (e.g., China, where 25-30% payment is sometimes allowed initially), Korea requires 100% of registered capital to be paid in before company registration.

Process:

  1. Open temporary capital verification account with Korean bank
  2. Remit full registered capital from overseas
  3. Bank issues capital verification certificate
  4. Complete company registration with Ministry of Justice
  5. Convert account to regular corporate account after registration

Important: You cannot register a company with KRW 100 million capital but only pay in KRW 50 million. The full amount must be deposited.

Timing of Capital Injection

For FDI reporting:

Best practice timeline:

  1. File FDI report with designated financial institution
  2. Within 30 days: Remit capital from overseas
  3. Within 60 days of remittance: Complete company registration
  4. Within 60 days of registration: File FDI completion report

Currency Conversion and Timing Issues

Exchange Rate Fluctuations

The KRW 100 million threshold is fixed in Korean won, but most foreign investors think in their home currency.

Example scenario (USD investor):

PeriodUSD/KRW RateUSD Needed for KRW 100M
January 20241,300$76,923
July 20251,400$71,429
February 20261,250$80,000

Implication: Depending on timing, the same KRW 100 million investment requires different USD amounts.

Risk Management Strategies

1. Buffer Amount

Invest slightly above KRW 100 million (e.g., KRW 110-120 million) to account for:

2. Timing Optimization

3. Currency Reporting

When filing FDI report:

Wire Transfer Considerations

Fees typically reduce the amount received:

Pro tip: Use dedicated international business transfer services (Wise, OFX, etc.) for better rates on smaller amounts, but confirm they support FDI reporting requirements.

Practical Examples and Case Studies

Case Study 1: US Tech Startup - Below Threshold Strategy

Scenario: California-based SaaS startup wants Korea office for customer support and sales.

Initial Decision:

Chosen Structure:

Year 1 Results:

Year 2 Decision:

Outcome: Successfully tested market with lower risk, then formalized FDI status when business was proven.

Case Study 2: Japanese Manufacturer - Met Threshold Immediately

Scenario: Osaka manufacturing company establishing Korea production facility.

Initial Decision:

Chosen Structure:

Benefits Received:

Year 3 Results:

Outcome: FDI incentives and protections were essential to business model; meeting threshold immediately was correct strategy.

Case Study 3: French Consultant - Branch Office Approach

Scenario: Paris-based consulting firm wanted Korea presence for occasional projects.

Initial Decision:

Chosen Structure:

Year 1-2 Results:

Year 3 Decision:

Outcome: Branch office provided low-commitment entry; converted to full subsidiary when business justified it.

Case Study 4: Singapore E-Commerce - Phased Approach Failed

Scenario: Singapore e-commerce platform wanted Korea expansion.

Initial Plan:

Reality:

Pivot:

Lessons:

Outcome: Ultimately successful but with 6-month delay and unnecessary complications.

Future Capital Increases

Increasing Capital Above Initial Amount

Many investors start at KRW 100 million and later increase capital as business grows.

Process for Capital Increase:

  1. Board resolution approving capital increase
  2. File amendment to Articles of Incorporation
  3. Issue new shares to existing or new shareholders
  4. Deposit additional capital in corporate account
  5. Update business registration with tax office and Ministry of Justice
  6. File amended FDI report (if increasing FDI investment)

Timeline: 2-4 weeks typically

Costs:

Capital reduction is technically possible but:

⚠️ Triggers FDI compliance issues if you fall below KRW 100 million
⚠️ Requires creditor notification (60-day process)
⚠️ May void tax incentives received
⚠️ Signals financial distress to stakeholders

Better alternatives:

Planning for Future Growth

Best practice: Set initial capital at a level that:

✅ Meets KRW 100 million threshold (if seeking FDI status)
✅ Provides 12-18 months operating runway
✅ Allows for unexpected expenses (15-20% buffer)
✅ Reflects realistic business plan projections
✅ Avoids premature need for capital increase (additional costs/compliance)

Example sizing:

Business TypeRecommended Initial Capital
Consulting / Services (2-3 employees)KRW 100-150 million
E-Commerce / Online Platform (5-7 employees)KRW 150-300 million
Manufacturing / Production (15+ employees)KRW 300-800 million
Technology R&D (10-15 employees)KRW 200-500 million

Conclusion: Strategic Capital Planning for Korea Success

Understanding Korea’s minimum capital requirements—or more precisely, the distinction between Commercial Code rules and FIPA’s FDI threshold—is essential for foreign investors.

Key Takeaways:

✅ Commercial Code: No minimum capital technically required
✅ FIPA (FDI status): KRW 100 million minimum for benefits and protections
✅ Industry-specific: Some industries have much higher minimums
✅ Strategic choice: Meeting threshold depends on your business model, timeline, and needs
✅ 100% payment: Korea requires full capital paid in before registration
✅ Alternatives exist: Branch office, non-FDI company, or phased approach possible
✅ Total budget: Plan for 2-4x the registered capital for realistic first-year operations

The KRW 100 million threshold is not an absolute barrier—it’s a strategic decision point. Carefully evaluate whether FDI status benefits justify meeting the threshold for your particular situation.

Many successful foreign businesses in Korea started below the threshold and later formalized FDI status. Others met the threshold from day one and benefited significantly from incentives and protections.

The right choice depends on your unique circumstances—business model, industry, timeline, risk tolerance, and long-term Korea commitment.

Need Strategic Advice on Korea Company Formation and Capital Structure?

SMA Lawfirm helps foreign investors optimize their Korea entry strategy, including:

✅ Capital structure planning - Right-sized for your business and FDI goals
✅ Entity selection - Corporation vs. LLC vs. branch office analysis
✅ FDI vs. non-FDI evaluation - Cost-benefit analysis for your situation
✅ Tax incentive optimization - Maximizing available benefits
✅ Complete formation services - From FDI filing through business registration

📩 Contact us at sma@saemunan.com for a consultation tailored to your Korea investment plans.

Our experienced team has helped hundreds of foreign investors structure their Korea entry optimally—from startups with minimal budgets to large multinational investments. We can guide you through the capital decision and ensure your structure supports long-term success.

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