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Living areas explanation

This information is drafted as of April 15, 2014.
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 Concept of foreign investment
Foreign investment, to which the 「Foreign Investment Promotion Act」is applied, shall refer to the ownership of a company's stocks or stakes by a foreigner for the purpose of establishing a continuous economic relationship with and participating in the management of the said Korean company; an overseas holding company and other entities providing a long-term loan of five years or longer to a foreign-capital invested company; OR a foreigner contributing to a non-profit corporation.
Foreigner
Individual
- Individuals of a foreign nationality including those who are of Korean nationality but who hold permanent resident status in a foreign country or a stay permit that substitutes for permanent resident status (Article 2.(1).1 and 2.(2) of the 「Foreign Investment Promotion Act」, Article 3 of the Enforcement Decree of the same Act).
Foreign corporation
- Corporations established in accordance with foreign law (Article 2.(1).1 of the「Foreign Investment Promotion Act」)
International economic cooperative organizations
- ① An agency which vicariously fulfills the foreign economic cooperation business of the government of a foreign country, ② An international organization which deals with business matters concerning development finance, such as the International Bank for Reconstruction and Development, the International Financial Corporation, and the Asia Development Bank, ③ An international organization which either directly or vicariously deals with business matters concerning external investment (Article 2.(1).1 of the 「Foreign Investment Promotion Act」 and Article 2.(1) of the Enforcement Decree of the same Act).
Foreign investment
The term 'foreign investment' shall refer to one of the followings ① Where a foreigner purchases stocks or stakes of a Korean corporation or a company, ② Where a loan with a maturity of not less than five years is extended to a foreign-capital invested company by its overseas holding company or another entity, or ③ Where a foreigner contributes to a non-profit corporation (items (a) to (d) of subparagraph 4 of Article 2 of the「Foreign Investment Promotion Act」).
Investment by acquiring stocks or stakes
- Where a foreigner purchases stocks or stakes of a Korean corporation (including a Korean corporation in the process of being established) or a company run by a national of the Republic of Korea, for the purpose of establishing a continuous economic relationship with and participating in the management of the said Korean corporation or company (item (a) of subparagraph 4 of Article 2 of the「Foreign Investment Promotion Act」).
Investment through loan
- Where a loan with a maturity of not less than five years is extended to a foreign-capital invested company by ① its overseas holding company, ② a company in a relationship of capital investment with the said holding company, ③ a foreign investor, OR ④ a company in a relationship of capital investment with the said foreign investor (Article 2.(1).4.(b) of the 「Foreign Investment Promotion Act」 and Article 2.(4) & (5) of the Enforcement Decree of the same Act).
Investment through contribution
- Where ① a foreigner makes a contribution to a non-profit corporation, which is a Korean corporation (including ones in the process of being established), in the science and technology area and has a certain level of human resources and facilities for research, to establish a continuous cooperative relationship or ② other contributions by foreigners into non-profit corporations. In such cases, the Foreign Investment Committee shall recognize the said non-profit corporations’ business and others as appropriate for foreign investment (Article 2.(1).4.(c) & (d) of the 「Foreign Investment Promotion Act」and Article 2.(6) & (7) of the Enforcement Decree of the same Act).
Foreign investor
- Foreigner who is in possession of stocks or stakes OR has made a contribution (Article 2.(1).5 of the 「Foreign Investment Promotion Act」).
Foreign-capital invested company
- Company a foreign investor has financed (Article 2.(1).6 of the 「Foreign Investment Promotion Act」).
Object of investment
- The term 'object of investment' shall refer to that in which a foreign investor invests in order to possess stocks or stakes (investment means) and includes the followings (Article 2.(1).7 of the 「Foreign Investment Promotion Act」 and Article 2.(9) to (11) of the Enforcement Decree of the same Act):
1. Foreign means of payment as prescribed by the 「Foreign Exchange Transactions Act」 or domestic means of payment by the exchange of the said foreign means of payment;
2. Capital goods;
※ 'Capital goods' is defined as follows (Article 2.(1).8 of the 「Foreign Investment Promotion Act」):
(a) Machinery, facilities, equipment, parts, and accessories in the capacity of industrial facilities (including vessels, motor vehicles, aircraft, etc.);
(b) Livestock, breeds or seeds, trees, fishes and shellfishes which are necessary for the development of agriculture, forestry, and fisheries;
(c) Such raw materials and reserve supply as are deemed necessary by the competent Minister (referring to the head of the central administrative agency in control of the project concerned) for the initial test (including pilot projects) of the facilities concerned;
(d) The fees for transportation and insurance required for the introduction of those mentioned under (a), (b) and (c); and
(e) Service or technology that help build facilities or provide advice.
3. Proceeds from the stocks or stakes acquired under the conditions as prescribed by the 「Foreign Investment Promotion Act」;
4. Industrial property rights, the right to be utilized in the industrial activities from among the copyrights under the 「Copyright Act」, and the layout-design right under subparagraph 15 of Article 2 of the 「Act on the Layout-Designs of Semiconductor Integrated Circuits」, other equivalent technologies thereto, and rights pertaining to the use of such rights or technologies;
5. Where a foreigner closes his own branch company or office and then converts the branch company or office into another domestic corporation, or where a domestic corporation whose stocks or stakes are possessed by a foreigner is dissolved, the residual property allotted to the said foreigner upon the liquidation of the said branch company, office, or corporation;
6. The amount of redemption of loans with a maturity of not less than five years extended to a foreign-capital invested company OR of other loans from foreign countries;
7. Stocks of foreign corporations listed in the foreign securities markets;
8. Stocks owned by foreigners under the 「Foreign Investment Promotion Act」or the 「Foreign Exchange Transactions Act」;
9. Real estate located in Korea; and
10. Money coming from the sale of stocks or stakes and real estate of a Korean corporation or a company run by a Korean citizen, held by a foreigner in accordance with the 「Foreign Investment Promotion Act」or the 「Foreign Exchange Transactions Act」(Article 2.(11) of the 「Enforcement Decree of the「Foreign Investment Promotion Act」).
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