Foreign investment issues
What are the restrictions, fees and taxes applicable to foreign investment or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of seizure of the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that might ease these restrictions? Would these activities require registration with a government authority?
There are no fees or taxes imposed on foreign investments.
There are no specific treaties applicable only to project financing. However, if a free trade agreement has been signed between South Korea and a specific country (for example, Chile, Peru, the United States and European Union member states), a large project must involve an international bidding process and the bidding must be implemented in a fair manner for the participants in the international bidding.
What restrictions, fees and taxes apply to insurance policies on project assets provided or guaranteed by foreign insurance companies? Can these policies be payable to foreign secured creditors?
Under the Insurance Business Act, an insurance business license must first be obtained to sell insurance policies in South Korea and as such a foreign insurer without a South Korean insurance business license cannot sell insurance policies in South Korea. Generally, the process used is where a South Korean insurance company that has obtained an insurance business license in South Korea sells insurance products to the project company and the South Korean insurance company purchases reinsurance with a foreign insurance company. In fact, South Korean insurance companies sell insurance products in South Korea using the terms and conditions of foreign insurance companies’ policies as is.
There is no discrimination per se when a foreign lender is paid with insurance proceeds. There are no restrictions on the payment of insurance proceeds abroad. However, this may be subject to the prior filing of an exchange declaration with the competent authorities.
Restrictions for workers
What are the restrictions for bringing in foreign workers, technicians or managers to work on a project?
A foreign worker coming to South Korea must obtain a residence visa under the Immigration Control Law. A foreign investor or a foreign worker of an invested company (manager, senior manager, specialist, etc.) can obtain a business investment visa. A business investment visa may be issued to skilled foreign workers who intend to work in the management, administration, manufacturing, technology, or research and development of a foreign-invested enterprise. A foreigner may reside in South Korea to the extent permitted by the corresponding visa. A person who wishes to stay 91 days or more in South Korea must be registered as a foreigner, which requires submission of a registration application along with other required documents to the head of the immigration office or at a branch having jurisdiction over the foreigner’s residence within 90 days of entering South Korea. Any change in the alien’s registered information, visa status or period, place of work or place of residence must also be reported under the Immigration Control Act.
What are the restrictions on importing project equipment?
There are no particular restrictions related to the import of equipment.
What laws exist regarding the nationalization or expropriation of project companies and assets? Are there forms of investment that are specially protected (against nationalization or expropriation)?
Absent extreme circumstances (eg, war), there is no law providing for the nationalization or forced expropriation of commercial facilities.
If a concession agreement is terminated, the agreement may require the concessionaire to return its concession rights to the government.
Date declared by law
Indicate the date the above information is accurate.
June 17, 2022