National Core Technologies (NCT) Review in Korea 2026: Navigating the New Investment Screening Process

Table of Contents

Introduction: Why NCT Review Matters in 2026

In 2026, Korea significantly tightened its foreign direct investment (FDI) screening process for companies operating in National Core Technologies (NCT). What was once a relatively straightforward investment registration process now requires mandatory pre-approval by an Expert Committee for any foreign investment involving NCT-designated sectors.

This shift is part of a broader global trend toward economic security and intellectual property protection. Countries like the United States (CFIUS), China (Negative List), and the EU (FDI Screening Regulation) have all implemented similar frameworks. Korea’s NCT review is its version of this protective mechanism.

For foreign investors and entrepreneurs, the implications are significant:

• Delayed timelines: NCT review adds 30-90 days to investment registration
• Rejection risk: Committee can deny or impose conditions on foreign investment
• Severe penalties: Operating without NCT approval can result in investment cancellation and fines

This guide provides a comprehensive breakdown of Korea’s NCT framework in 2026, which technologies are covered, how to navigate the review process, and what to do if your investment falls under NCT jurisdiction.

What Are National Core Technologies (NCT)?

National Core Technologies are defined under the Industrial Technology Protection Act as technologies deemed essential to Korea’s national security and economic competitiveness. If leaked or transferred abroad, these technologies could significantly harm Korea’s industrial standing.

Official Definition (2026)

According to the Ministry of Trade, Industry and Energy (MOTIE), NCTs are:

“Technologies that, if leaked or transferred to foreign entities, could weaken Korea’s competitiveness in strategic industries or threaten national security.”

Key Characteristics of NCT-Designated Technologies:

1. High economic value: Technologies with significant export or domestic market impact
2. Difficult to replicate: Proprietary processes, materials, or algorithms not easily reverse-engineered
3. Strategic importance: Critical to defense, infrastructure, or industrial competitiveness
4. Limited global availability: Korea is one of few countries with advanced capabilities in the field

Which Technologies Are Designated as NCT in 2026?

As of February 2026, Korea’s NCT list includes approximately 70+ technology categories across 12 major sectors. The list is updated annually by MOTIE, with new categories added as industries evolve.

Major NCT Sectors (2026):

Note: The above list is illustrative. For the official NCT designation list, consult MOTIE’s Technology Protection Portal (Korean language).

When Does NCT Review Apply?

NCT review is triggered only when all three conditions are met:

Condition 1: Foreign Investment in a Korean Company

“Foreign investment” includes:

• Acquiring shares in a Korean company (any percentage)
• Providing loans convertible to equity
• Establishing a branch or liaison office (if engaging in NCT-related R&D)

Condition 2: The Korean Company Owns or Develops NCT

The Korean company must:

• Hold patents or proprietary IP in NCT-designated areas
• Conduct R&D in NCT sectors
• Manufacture or commercialize NCT-related products

Condition 3: Foreign Investor Will Gain “Substantial Influence”

MOTIE defines “substantial influence” as:

• Ownership: 10% or more equity (lowered from 25% in 2025)
• Board representation: 1 or more board seats
• Technology access: Licensing, joint development, or IP transfer agreements
• Operational control: Management rights, veto powers, or strategic decision-making authority

If all three conditions are met, NCT pre-approval is mandatory.

The NCT Review Process: Step-by-Step

Step 1: Self-Assessment (Pre-Filing)

Before filing an FDI notification, investors should conduct a self-assessment:

1. Obtain a technology inventory from the target Korean company
2. Cross-reference against MOTIE’s official NCT list
3. Determine if the investment structure triggers “substantial influence”

Best practice: Engage a Korean law firm to conduct the assessment. Misclassification can result in severe penalties.

Step 2: Submit NCT Pre-Approval Application

If NCT review applies, submit an application to MOTIE’s Expert Committee via the Industrial Technology Protection System.

Required documents:

• Foreign investor background information (shareholder structure, financials)
• Target company technology description (patents, R&D pipeline, products)
• Investment structure and terms (shareholding %, board seats, IP access)
• Security plan (how will NCT be protected from foreign leakage?)

Processing time: 30-90 days (can be extended if Committee requests additional information)

Step 3: Expert Committee Review

The Committee evaluates:

• Risk of technology leakage: Will foreign investor gain access to NCT IP?
• National security implications: Is the investor from a “strategic concern” country?
• Economic impact: Will the investment strengthen or weaken Korea’s industrial position?
• Mitigation measures: Has the investor proposed adequate safeguards (e.g., IP firewalls, data localization)?

Possible outcomes:

1. Approval: Investment can proceed as proposed
2. Conditional approval: Investment allowed with restrictions (e.g., no IP transfer, no board representation)
3. Rejection: Investment denied (rare, but has occurred in semiconductor and defense sectors)

Step 4: FDI Registration

Once NCT approval is obtained, proceed with standard FDI registration:

• File with Bank of Korea (BoK) Foreign Exchange System
• Submit NCT approval certificate
• Complete investment within 6 months (can be extended)

Step 5: Post-Investment Compliance

After investment, the Korean company must:

• Submit annual NCT status reports to MOTIE
• Notify MOTIE of any changes in foreign ownership or IP structure
• Maintain security protocols (physical, cybersecurity, HR screening)

Failure to comply can result in investment cancellation and fines up to 3% of investment amount.

Common NCT Review Scenarios

Scenario 1: Foreign VC Investing in Korean AI Startup

Facts:

• U.S.-based VC investing $5M for 20% equity
• Korean startup develops AI chips (NPU) for autonomous vehicles
• VC gets 1 board seat and observer rights

NCT applies? Yes. AI chips for autonomous vehicles are NCT-designated. VC has >10% ownership + board seat = substantial influence.

Solution: VC must submit NCT pre-approval application, including security plan (e.g., no IP transfer to U.S. parent, data stored in Korea).

Scenario 2: Foreign Corporation Acquiring Korean Battery Manufacturer

Facts:

• Chinese battery company acquiring 51% of Korean company
• Korean company holds patents on solid-state battery cathode materials
• Acquisition includes IP licensing to Chinese parent

NCT applies? Yes (high risk). Solid-state batteries are NCT-designated. Majority ownership + IP licensing to foreign parent = very high scrutiny.

Outcome: Likely conditional approval or rejection given China’s strategic competition in battery sector. If approved, conditions may include:

• No IP transfer to China
• Independent Korean board majority
• Export controls on products using NCT

Scenario 3: Foreign Investor Taking <10% Stake, No Board Seat

Facts:

• Singapore sovereign wealth fund investing $2M for 8% equity
• Korean biotech company developing mRNA synthesis platform (NCT-designated)
• Investor has no board seat, no IP access, passive minority stake

NCT applies? No. <10% ownership + no board seat + no IP access = no substantial influence.

Solution: Standard FDI registration only (no NCT pre-approval required).

Red Flags That Trigger Enhanced Scrutiny

Certain factors make NCT approval more difficult or likely to face rejection:

1. Strategic Concern Countries

MOTIE does not officially publish a “concern countries” list, but in practice, investments from the following face higher scrutiny:

• China (especially in semiconductors, batteries, AI)
• Russia (defense, aerospace, nuclear)
• Countries with history of IP theft or sanctions violations

Mitigation: Provide detailed security protocols, consider minority stake structures.

2. Direct Competitors

If the foreign investor is a direct competitor in the same NCT sector (e.g., Chinese battery company buying Korean battery company), approval is unlikely unless:

• Investment is minority (<25%)
• Strong IP firewalls in place
• Economic benefit to Korea is clear (e.g., job creation, domestic production)

3. IP Transfer Provisions

Any clause allowing technology transfer, licensing, or joint development with foreign parent companies triggers red flags.

Best practice: Structure the investment as equity-only, with no IP transfer or licensing rights.

4. Foreign Government Ownership

If the foreign investor is state-owned or state-controlled, NCT review is extremely strict. Examples:

• Chinese state-owned enterprises (SOEs)
• Sovereign wealth funds with government ties
• Foreign government pension funds

Solution: Demonstrate independence from government decision-making (e.g., independent board, private fund management).

Consequences of Operating Without NCT Approval

Civil Penalties

• Investment cancellation: MOTIE can order unwinding of the transaction
• Fines: Up to 3% of total investment amount (e.g., $300K fine on $10M investment)
• Business restrictions: Korean company may be banned from government contracts or subsidies

Criminal Penalties (Severe Cases)

• Directors/officers: Up to 10 years imprisonment for intentional NCT violations
• Corporate criminal liability: Korean company may face criminal charges
• Export bans: Technology blacklist, preventing exports of NCT-related products

Reputational Damage

• Blacklisting: Company flagged in MOTIE database, blocking future FDI
• Media exposure: NCT violations often attract negative press
• Investor confidence: Future fundraising becomes difficult

Bottom line: Never attempt to bypass NCT review. The penalties far outweigh any time savings.

How to Expedite NCT Review

While the standard review takes 30-90 days, certain strategies can accelerate the process:

1. Pre-Consultation with MOTIE

Before filing, request an informal consultation with MOTIE’s Foreign Investment Policy Division. Benefits:

• Clarify whether NCT applies
• Understand Committee’s likely concerns
• Adjust investment structure to address issues upfront

Cost: Free. Timeline: 1-2 weeks for initial feedback.

2. Hire Specialized Legal Counsel

Law firms with NCT experience can:

• Draft security plans that satisfy Committee requirements
• Leverage relationships with MOTIE officials
• Anticipate and address objections proactively

Typical cost: $10K-$50K depending on complexity.

3. Propose Strong Mitigation Measures

The Committee is more likely to approve if you proactively offer:

• IP firewalls: No technology transfer to foreign parent
• Data localization: All NCT-related data stored in Korea
• Korean board majority: Foreign investor takes minority board seats
• Export controls: Restrictions on exporting NCT products to certain countries

4. Highlight Economic Benefits

Emphasize how the investment strengthens Korea’s economy:

• Job creation (local hires)
• R&D investment in Korea
• Domestic production expansion
• Export growth potential

Frequently Asked Questions

Q1: How do I know if a technology is NCT-designated?

A: Consult MOTIE’s official NCT list (updated annually). If unsure, request a pre-determination from MOTIE (2-3 weeks processing time).

Q2: Can I invest first and seek NCT approval later?

A: No. NCT approval must be obtained before investment. Retroactive approval is not permitted.

Q3: What if the Korean company doesn’t know if it owns NCT?

A: Many startups are unaware their technology is NCT-designated. Conduct due diligence early—review patents, R&D focus, and product roadmap.

Q4: Can I structure around NCT review (e.g., loan instead of equity)?

A: Risky. MOTIE looks at substance over form. If a loan is convertible to equity or includes IP access, it may still trigger NCT review.

Q5: What happens if NCT status changes after I invest?

A: If a technology is newly designated as NCT after your investment, you are generally grandfathered in. However, any changes in ownership or IP structure will trigger new review.

Case Study: How a European VC Successfully Navigated NCT Review

Investor: European cleantech VC
Target: Korean hydrogen fuel cell company
NCT trigger: Fuel cell membrane technology (NCT-designated)
Investment: $10M for 25% equity + 2 board seats

Initial Challenge:

• Committee concerned about IP transfer to Europe
• Investor’s home country had less strict export controls than Korea
• Deal timeline at risk (due diligence completed, term sheet signed)

Solution:

1. Pre-consultation: VC met with MOTIE before filing (2 weeks)
2. Restructured deal: Reduced board seats from 2 to 1, agreed to Korean board majority
3. Security plan: Committed to no IP licensing outside Korea, data localization in Korean cloud
4. Economic benefits: Pledged to help Korean company expand to EU market (export growth)

Outcome:

• Approval granted in 45 days (faster than average)
• No major conditions beyond agreed security plan
• Investment closed successfully

Key lesson: Proactive engagement with MOTIE and willingness to adjust deal structure are critical for NCT approval.

Conclusion: NCT Review Is Manageable with Proper Planning

Korea’s National Core Technologies review process is strict, but navigable for foreign investors who:

• Conduct early self-assessment
• Engage experienced legal counsel
• Propose strong security measures
• Demonstrate economic benefit to Korea

The 2026 tightening of NCT rules reflects Korea’s growing emphasis on economic security and IP protection—a trend that will likely continue. Foreign investors who understand and respect this framework will find Korea remains an attractive destination for tech investment.

Next Steps: Preparing for NCT Review

1. Conduct Technology Due Diligence

Before term sheet execution, verify:

• Does the target company hold NCT-designated IP?
• Are there pending patents in NCT sectors?
• What percentage of revenue comes from NCT products?

2. Assess Investment Structure

Consider:

• Minority stake (<10%) to avoid NCT review entirely
• Observer rights instead of board seats
• Earn-in structures that delay majority ownership until NCT status changes

3. Engage Local Expertise

Work with advisors who have NCT review experience:

• Korean law firms with MOTIE relationships
• FDI consultants specializing in NCT compliance
• Korean tax/accounting firms for financial structuring

4. Budget for Delays

Add 60-90 days to your investment timeline if NCT review applies. Communicate this to stakeholders upfront.

📩 Contact Us

SMA Lawfirm specializes in NCT compliance and foreign investment screening. Our services include:

• NCT self-assessment and pre-determination requests
• Expert Committee application preparation
• Security plan drafting
• Deal restructuring to minimize NCT risk

Email: sma@saemunan.com
Services: FDI compliance | NCT review support | M&A advisory

Disclaimer: This article is for informational purposes only and does not constitute legal advice. NCT designations and review criteria change frequently. Consult qualified legal counsel for your specific transaction.