Closing a Company in South Korea

 

(e-mail) skkimlaw@naver.com

 

Closing a Company in South Korea

 

Closing a company is the process of apportioning its assets and dealing with its liabilities. It differs according to the relative sizes of a company’s assets and liabilities as shown in the following table.

	process
liabilities > assets	bankruptcy (Debtor Rehabilitation And Bankruptcy Act)
liabilities ≤ assets	liquidation (Commercial Act Articles 287-45, 531 to 542, 609 to 613)

 

When a company’s liabilities exceed its assets, you must file for bankruptcy according to Debtor Rehabilitation and Bankruptcy Act to distribute the company’s remaining assets to creditors and close it.

If the company’s liabilities do not exceed its assets, the liquidation process closes the company. The remaining assets are distributed to the shareholders through the liquidation process.

Bankruptcy is a complex process, so please seek legal assistance if you need to declare bankruptcy. This article only summarizes the liquidation process. The liquidation process proceeds as follows and takes at least three months.

step	process
1	Prepare relevant documents, such as a power of attorney, consent letter, passport copy, seal registration form, and proof of residence. Documents must be notarized and confirmed by an apostille or consulate.
2	Pay off small claims to reduce the list of creditors.
3	Hold a shareholders’ meeting where the shareholders decide to close the company and appoint a liquidator.
4	Announce the closing of the company twice in two months.
5	Request that creditors you know of to officially report the amount that you owe them.
6	Hold a shareholders’ meeting where the shareholders approve a list of assets and a financial position statement.
7	The liquidator submits dissolution information, liquidator information, the list of assets, and the financial position statement to the court.
8	After the two-month notice period described in step 4, set aside tax amount to be paid according to the tax office closure report, pay any remaining debts, and finally distribute any remaining assets to the shareholders.
9	The liquidator prepares a settlement statement.
10	Hold a shareholders’ meeting where shareholders approve the settlement statement.
11	Register the completion of the closing process at the South Korean registry office.
12	Report the completed closure to the South Korean tax office.
13	Pay final national and local taxes.
14	Return any permits or licenses to the competent government agency.
15	Companies with foreign investors must submit relevant documents to the bank where the company was registered to officially close it.
16	Remaining assets due to foreign shareholders will be remitted overseas.

 

 

KIM Sang Kyoon (김상균, 金相均), Attorney at Law (Seoul Bar Association)

He specialized in corporate law and wrote a book about commercial registration. He has conducted a wide range of commercial activities, including incorporating corporations, raising capital in redeemable convertible preferred stock (RCPS), and providing corporate advice. He provides advisory and transactional services in both Korean and English to domestic and foreign clients. Please contact him to find out how he can help you achieve your business goals in South Korea.

 

Email (Korean and English): skkimlaw@naver.com 

Telephone (Korean only): +82-2-596-6720
Fax (Korean and English): +82-2-6008-6761
Address: 9th floor, 113 Seochojungang-ro, Seocho-gu, Seoul 06644, South Korea