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RULES ON FOREIGN INVESTMENT

Notice No. 2016166, Sep. 22, 2016

CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose)

The purpose of these Rules is to provide for matters delegated by the Foreign Investment Promotion Act, the Enforcement Decree of said Act, and the Enforcement Rule of said Act and matters necessary for enforcing said Act.

Article 2 (Definitions)

(1)	The term "foreign investment" in these Rules means a foreign investment defined in Article 2 (1) 4 of the Foreign Investment Promotion Act (hereinafter referred to as the "Act").

(2)

The term "head of an entrusted agency" in these Rules means the head of the Korea Trade-Investment Promotion Agency or the head of a foreign exchange bank who is entrusted with the authority of the Minister of Ministry of Trade, Industry and Energy under Article 40 (2) of the Enforcement Decree of the Foreign Investment Promotion Act (hereinafter referred to as the "Enforcement Decree").

(3)	The term "foreign investment ratio" in these Rules means the foreign investment ratio under Article 5 (3) of the Act.

(4)

Deleted.

Article 3 (Standards for Classification of Business)

The classification of business used in these Rules shall be subject to sub-sub classification provided for in the Korean Standard Industrial Classification (Public Notice No. 2015-311 of the Statistics Korea).

Article 4 (Categories of Business Excluded from Foreign Investment)

Categories of business not permitted for foreign investment shall be as prescribed in attached Table 1 among all categories of business under Article 3.

CHAPTER II RESTRICTIONS ON FOREIGN INVESTMENT

Article 5 (Categories of Business regarding which Foreign Investment Restricted)

(1)	Categories of business regarding which foreign investment restricted that shall be publicly notified by the Minister of Trade, Industry and Energy after consulting with the competent Minister under Article 5 (1) 1 of the Enforcement Decree are as shown in attached Table 2.

(2)	Where a foreign investor intends to invest in a business subject to the criteria for permission among the categories of business listed in attached Table 2, he/she may do so within the scope of the criteria for permission.

(3)

A category of business, the time for opening is indicated among those listed in attached Table 2 shall be deemed deleted on the date such time arrives: Provided, That the same shall not apply where the time for opening is indicated just for partial opening or increased opening and the details thereof are not specified.

(4)	The Minister of Trade, Industry and Energy shall prepare and publicly notify the criteria for permission for the categories of business falling under the proviso to paragraph 3 before the time for opening arrives, after consulting with the competent Minister.

Article 6 (Definition of "Where a Foreigner Intends to Acquire De Facto Control over the Management of an Existing Domestic Company")

"Where a foreigner intends to acquire de facto control over the management of an existing domestic company" in Article 5 (1) 2 (a) of the Enforcement Decree means any of the following cases:

Where a foreigner intends to acquire a company (including where he/she intends to establish a new corporation by separating a specific part of business of a company; hereafter the same shall apply in this Article) through a trade of stocks, etc. of a company, exchange or merger between companies, exercise of security rights, receipt of payment in kind, or by any other method and he/she intends to own solely or jointly with any of the following persons at least 50/100 of the stocks, etc. of the company (including where a foreigner who becomes the largest holder of stocks, etc. holding less than 50/100 thereof and is able to exercise dominance over appointment of directors or management of the company whether directly or through a related party):

(a)	The spouse and lineal ascendants and descendants (including lineal ascendants and descendants of the spouse) of the relevant foreigner;

(b)	A foreign corporation, at least 50/100 of the total number of issued stocks or the total amount invested of which is owned by the relevant foreigner jointly with the persons in relationship prescribed in item (a) or (c) or under their de facto dominance;

(c)

The relevant foreigner and an employee of a person prescribed in item (b) or (d) (referring to an executive in cases of a corporation, and a commercial employee, an employee under an employment contract, and a person who make a living with the money or property of an individual in cases of an individual);

(d)	A foreign corporation which owns at least 50/100 of the total number of issued stocks or the total invested amount jointly with the corporation prescribed in item (b), the relevant foreigner and persons prescribed in items (a) and (c);

(e)	A foreigner who has agreed, by means of an agreement, contract, etc., to acquire or dispose of stocks, etc. or exercise voting rights (including the authority to direct the exercise of the voting rights) jointly with the relevant foreigner;

2.	Where a foreigner intends to take over or lease all or a major part of the business of a company or operate de facto the relevant company by being entrusted with the management of the company, solely or jointly with a related party.

CHAPTER III PROCEDURES, ETC. FOR REPORTING ON AND PERMISSION FOR FOREIGN INVESTMENT

Article 7 Deleted.

Article 8 (Documents, etc. for Report or Application for Permission)

(1)	In filing a report or an application under Article 2 or 17 of the Rule, a foreign investor may choose to file it either in Korean or English.

(2)	Documents related to the reporting on or application for permission for a foreign investment shall be prepared in Korean except in English referred to in paragraph (1): Provided, That a document prepared in English and difficult to be prepared in Korean shall be accompanied by a Korean translation.

(3)	In filing a report or an application for conferment of the right of representation, an agent of a foreign investor shall append a letter of delegation.

(4)	A document verifying the nationality of a foreigner shall be any of the following documents:

1.	Where a foreigner is a corporation or organization: A certified transcript of registry issued by the government or any other authorized agency of the relevant state;

2.	Where a foreigner is an individual: A document verifying the nationality, such as a certificate of citizenship or passport issued by the government or any other authorized agency of the relevant state.

(5)

Notwithstanding paragraph (4), if a reporter or applicant holds the nationality of the Republic of Korea, the abovementioned document may be substituted by a certificate of permanent residency issued by the government or any other authorized agency of the state where he/she resides, a certificate of registry of a Korean national residing abroad issued by the head of a diplomatic establishment abroad, etc.

Article 9 (Documents, etc. Required at Time of Requesting Preliminary Verification before Filing Report on Investment)

(1)

Matters to be publicly announced by the Minister of Trade, Industry and Energy under Article 5 (6) of the Enforcement Decree shall refer to the copies of the documents verifying the following matters: Provided, That Article 8 (4) and (5) shall apply mutatis mutandis to the part concerning nationality in subparagraph 1:

1.	Trade name or name and nationality of an investor (including a related party under subparagraph 1 of Article 6; hereinafter the same shall apply);

2.	Trade name or name and address of a target domestic company (hereinafter referred to as "target company");

3.	Trade name or name, address, and size of assets (only applicable to where it is intended to incorporate a new corporation by separating a specific part of the business of a company under subparagraph 1 of Article 6 or take over such part) of a corporation to be newly incorporated;

Total amount of investment, investment ratio (referring to the ratio of stocks, etc. an investor of the stocks, etc. of the target company intends to acquire the method of investment (referring to the type of an object of investment under Article 2 (1) 8 of the Act and the amount of investment by type) and details of source of procurement of investment funds;

5.	Transferor of stocks, etc.;

Investor's business plan (including details of business, details of participation in management, products, details and level of technology, production process, front back industry, and detailed business relation, etc. with the parent company and overseas subsidiary companies) and financial statements (including those for the recent year and two preceding years);

Whether the target company has supplied or provided any individual goods or service to the Ministry of Defense (including the Defense Acquisition Program Administration, units, agency and government-funded agencies subject to the management and supervision by the Ministry of Defense or the Defense Acquisition Program Administration) or to any defense contractor defined in subparagraph 9 of Article 3 of the Defense Acquisition Program Act during the past three years;

8.	Whether the target company has produced any goods or technical data under the Public Notice on exportation and importation of strategic items (Public Notice No. 2016-43 of the Ministry of Trade, Industry and Energy);

9.	Whether the target company has entered into any individual contract treated as a state secret under Article 13 (4) of the National Intelligence Service Act for the past three years.

(2)	Where any change is made in the details referred to in subparagraphs of paragraph (1), the relevant foreigner or the target company shall inform the competent Minister or the Minister of Trade, Industry and Energy thereof without delay.

(3)

Where the competent Minister or the Minister of Trade, Industry and Energy determines that it is necessary to conduct additional confirmation on the details of the copy of the documents submitted under paragraph (1) or where no confirmation of the target company is made in connection with the matters prescribed in paragraph (1) 7 through 9, the competent Minister or the Minister of Trade, Industry and Energy may request necessary data from the relevant foreigner or the target company within a fixed period of at least seven days.

(4)

In cases falling under paragraphs (2) and (3), the date a foreigner has requested verification under Article 5 (6) of the Enforcement Decree shall be the date a notification on change was made or the correction of data has been completed by the relevant foreigner or the target company, upon the request of the competent Minister or the Minister of Trade, Industry and Energy.

Article 10 (Notification, etc. of Details of Report or Permission)

(1)

Where the Minister of Trade, Industry and Energy or the head of an entrusted agency issues a certificate of completion of report on foreign investment or grant permission under Article 5 or 6 of the Act, he/she shall inform the competent Minister of such fact : Provided, That the same shall not apply to any case of the increase in investment which does not fall under items of Article 5 (1) 2 of the Enforcement Decree, without adding the category of business intended to be operated.

(2)

When Minister of Trade, Industry and Energy grants permission to a foreigner who has filed an application for permission for foreign investment by means of acquisition of existing stocks, etc. under Article 6 (1) of the Act for the purpose of acquiring the existing stocks, etc. of a foreign-capital invested company from any citizen or corporation of the Republic of Korea, he/she shall notify the head of the relevant entrusted agency thereof without delay.

(3)	When the Minister of Trade, Industry and Energy grants, or declines to grant, permission for foreign investment under Article 5 (7) of the Enforcement Decree, he/she shall notify the head of the relevant entrusted agency thereof without delay.

(4)

Where a foreigner has submitted to the competent Minister or the Minister of Trade, Industry and Energy a request for prior verification under Article 5 (6) of the Enforcement Decree and the Minister or the Minister of Trade, Industry and Energy verifies the requested matter is not eligible for review under any item of Article 5 (1) 2 of the Enforcement Decree, the relevant Minister shall notify the relevant foreigner and the head of the relevant entrusted agency thereof without delay.

(5)

Deleted.

CHAPTER IV

Articles 11 through 16 Deleted.

CHAPTER V HEADS OF ENTRUSTED AGENCIES, ETC.

Article 17 (Heads of Entrusted Agencies)

(1)

The authority of the Minister of Trade, Industry and Energy specified in subparagraphs of Article 40 (2) of the Enforcement Decree under the main sentence of the same Article 40 (2) shall be entrusted to the heads of entrusted agencies listed in attached Table 4 and the heads of trade office, branch offices, office, and business office, designated by the relevant heads of entrusted agents: Provided, That where the nationality of a person who intends to make a foreign investment is Cambodia, Laos or Cuba, such authority shall not be entrusted as the heads of any entrusted banks listed in B (b) of attached Table 4.

(2)

When the head of an entrusted agency intends to designate or change the head of a trade office, branch office, office or business office to fully or partially delegate the authority entrusted under paragraph (1), he/she shall file a report thereon with the Minister of Trade, Industry and Energy in advance.

(3)

Where a financial institution designated as an entrusted agency pursuant to paragraph (1) is unable to perform its duties related to foreign investment due to a cause, such as merger with another financial institution, all documents related to the reports on foreign investments of foreign-capital invested companies which have been managed by the relevant entrusted agency shall be transferred to another agency designated as an entrusted agency. In such cases, the head of the relevant entrusted agency shall immediately inform the foreign-capital invested company thereof and file a report thereon with the Minister of Trade, Industry and Energy.

(4)	Where the head of any entrusted agency falls under any of the following cases, the Minister of Trade, Industry and Energy may revoke the entrustment:

1.	Where he/she requests any unnecessary document contrary to the provisions of Article 19 (2);

2.	Where he/she fails to faithfully comply with the standards for handling business affairs;

3.	Other cases where the Minister of Trade, Industry and Energy deems to have any good reason to revoke the business entrustment.

(5)	Where the head of an entrusted agency delegated with the authority under paragraph (1) intends to return the relevant entrusted authority, he/she shall request the Minister of Trade, Industry and Energy to take necessary measures.

Article 18 (Placement, etc. of Personnel in Charge)

(1)	The head of an entrusted agency shall open a window to deal with the affairs entrusted under paragraph 17 and arrange personnel in charge.

(2)	The head of an entrusted agency shall establish and operate a facility for providing guidance in foreign investment and for receiving, handling, etc. of complaints.

(3)	The head of an entrusted agency shall keep civil affairs formulas, guidebooks, and other materials related to foreign investment in the facility referred to in paragraph (2) and furnish them when a civil petitioner requests them.

Article 19 (Promotion of Foreign Investment)

(1)	The head of an entrusted agency shall strive to induce foreign investment through domestic and overseas business offices, etc. under his/her control.

(2)	In performing the affairs entrusted by the Minister of Trade, Industry and Energy under Article 40 (2) of the Enforcement Decree, no head of any entrusted agency shall request any unnecessary document other than the forms prescribed in the Rule.

Article 20 (Changes of Entrusted Agency)

(1)

Where a foreign investor or a foreign-capital invested company that has filed a report pursuant to Article 5 of the Act or registered as a foreign-capital investment company under Article 21 of the Act intends to change the entrusted agency due to the change of his/her or its bank or relocation of the main office, or for any other reason, he/she or it shall file an application for the change of the entrusted agency with the head of the existing entrusted agency.

(2)

The head of an entrusted agency in receipt of an application for change of the entrusted agency under paragraph (1) shall transfer without delay all documents related to the report on foreign investment of the relevant foreign investor or the foreign-capital investment company to the head of a newly entrusted agency that intends to perform follow-up management affairs.

(3)

Upon receiving relevant documents, the head of an entrusted agency who is newly entrusted to perform follow-up management affairs under paragraphs (1) and (2) shall file a report without delay on names of foreign investor, foreign-capital investment company, the head of the former entrusted agency, etc. with the Minister of Trade, Industry and Energy.

(4)

Where a foreign investor or foreign-capital investment company files a report on foreign investment or acquisition of stocks, etc. under Articles 5 through 8-2 of the Act or files an application for registration or registration for change under Article 21 of the Act with the head of the Korea Trade-Investment Promotion Agency which is not the relevant entrusted agency, he/she or it need not change the relevant entrusted agency, notwithstanding paragraph (1).

(5)

Upon receiving a report or an application for registration under paragraph (4), the head of the Korea Trade-Investment Promotion Agency shall proceed with the affairs related to the report and registration and transfer the relevant documents concerned without delay to the head of the relevant entrusted agency.

Article 21 (Request, etc. for Cooperation of Head of Entrusted Agency)

If deemed necessary for dealing with complaints, etc. of a foreign investor or foreign-invested company, the head of an entrusted agency may request cooperation from the Minister of Trade, Investment and Energy or the head of a grievance committee under Article 15-2 (7) of the Act.

Article 22 (Reporting)

The head of an entrusted agency shall file a report with the Minister of Trade, Industry and Energy on the record of reports, etc. on foreign investment as separately prescribed by the Minister of Trade, Industry and Energy.

Article 23 (Standards for Handling Business Affairs)

In addition to matters prescribed in Articles 17 through 22, the Minister of Trade, Industry and Energy may prescribe the standards for handling by the head of an entrusted agency, etc. of business affairs related to foreign investments

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 24 (Standards for Classification of Industry-Supporting Service Business)

The industry publicly announced by the Minister of Trade, Industry and Energy under Article 25 (1) 1 and 2 (e) of the Enforcement Decree shall refer to the logistics business under subparagraph 10-4 of Part 2 of Table 1 attached to the Rules on Tax Exemption or Reduction for Foreign Investment (Public Notice No. 2012-17 of the Ministry of Strategy and Finance).

Article 25 (Assistance Given by Commissioners of the National Tax Service and the Korea Customs Service)

(1)

The Commissioner of the National Tax Service shall conduct an examination under Article 19 (1) of the Enforcement Rule each year and notify the results thereof to the Minister of Trade, Industry and Energy within 60 days from the deadline of return of tax base under Article 60 of the Corporate Tax Act or Article 70 of the Income Tax Act.

(2)	The Commissioner of the Korea Customs Service shall conduct an examination under Article 19 (2) of the Enforcement Decree each year and report the results thereof to the Minister of Trade, Industry and Energy.

Article 26 (Scope, etc. of Information Subject to Prohibition of Public Disclosure)

(1)

"Data prescribed by the Minister of Trade, Industry and Energy" in Article 21 of the Rule means the matters related to the business plan such as design drawings, flow chart of production process and production of products, and other trade secrets of a foreign-capital investment company which are likely to significantly harm the rightful interest of the relevant company, if disclosed.

(2)

Article 21 of the Rule and paragraph (1) shall apply mutatis mutandis to the performance of the business affairs by the head of an entrusted agency defined in Article 2 (2) and the heads of trade offices, branch offices, offices, and business office delegated with all or part of the authority by the head of the relevant entrusted agency.

Article 27 (Application of Statutes concerning Treatment of Civil Petitions)

Except as otherwise expressly prescribed by the Act, the Enforcement Decree, the Rule or these Rules, the procedures for reporting, permission, etc. related to foreign investments and importation of technology shall be governed by the Civil Petitions Treatment Act and its subordinate statutes.

Article 28 (Deadline for Reexamination)

The deadline for taking measures, such as repeal, amendment, etc. of this Public Notice in review of the change in any statutes or actual conditions, etc. after the issuance of this Public Notice pursuant to the Regulations on the Issuance and Management of Directives and Established Rules (Presidential Directive No. 334) shall be August 25, 2019.

ADDENDA

(1)	(Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2)	(Effective Period) Article 22 shall remain in effective until June 29, 1999.

(3)	(Repeal of Other Public Notices) The Rules on Foreign Investment (Ministry of Finance and Economy Public Notice No. 1999-6) and the Rules on Technology Introduction (Ministry of Finance and Economy Public Notice No. 1998-49) shall be repealed respectively.

ADDENDUM <Public Notice of the Ministry of Commerce, Industry and Energy No. 2000-24, Feb. 29, 2000>

These Rules shall enter into force on March 1, 2000.

ADDENDUM <Public Notice of the Ministry of Commerce, Industry and Energy No. 2000-28, Mar. 16, 2000>