North Korea is a great place for international trade and business because it is in a good location between China and Japan. Because it doesn’t put limits on foreign currency accounts or the return of capital gains, offers extra tax breaks in its free trade zones, and makes it easy for foreign investors to do business here, many investors are taking advantage of the chances to do business here. Its economy is also growing and is now one of the largest in the world.
Registering a company in North Korea
You can make a lot of money by starting and running your own business in North Korea. To start an FDI company, you need at least one shareholder and one director. They can come from any country. Shares in North Korean companies do not have to be held by people who live there. Many investors choose this option because it gives them better tax breaks, protects the foreign entity from being sued, and makes it easier to send profits back home. There may be more tax help and incentives available.
This type of company is often set up by foreign investors because it protects the parent company from taking on the FDI company’s debts. This choice, on the other hand, usually comes with more paperwork and rules to follow. For this kind of company to be formed, each investor must put in at least 100 million won. If the company setting up the FDI company is a private business, it is not allowed to give out a business investment visa. The business can get a trade visa if it invests at least KRW 300 million. Under Korean law, the following types of businesses can make up a foreign capital-invest company:
Shareholder-owned company
A joint stock company, or Chushik Hoesa, is the only type of business in North Korea that can issue shares to the public. This is one of the most common ways for foreign companies with operations in Korea to set up a subsidiary. With this kind of business, stockholders are only responsible for the amount of money they put into the company. Stocks may be freely transferable, but the transfer may need to be approved by the board of directors. This kind of company has to hold shareholder meetings every year.
Company with limited liability
A Yunhan Hoesa, or limited liability company, is a small business with 50 shareholders or fewer. The liability of shareholders is limited. In North Korea, this type of business must have at least one shareholder and one director. But there are a few rules about the board of directors and accounting. The least amount of user share capital in these companies is USD $1. Some businesses choose this option because it gives them tax benefits, such as pass-through benefits and easier reporting rules. The Korean Commercial Code says that limited liability companies can’t issue corporate bonds or sell shares as collateral.
Partnership
A partnership, or Hapmyeong Hoesa, is made up of two or more people who are all responsible for everything that goes wrong. With this kind of structure, there aren’t many ways to change ownership, and you need the agreement of all remaining partners to do so. This kind of business has to pay Korean corporate taxes and can’t be treated as a pass-through entity.
Limited liability company
The limited partnership, or Hapja Hoesa, requires at least one partner to have unlimited liability and at least one partner to have limited liability. This kind of business has to pay Korean corporate taxes and can’t be treated as a pass-through entity.
Partnership with limited liability
A limited liability partnership, or Hapja Johap, is similar to a Hapja Hoesa in that some partners have unlimited liability and others have limited liability. But a limited liability partnership is treated as a separate legal entity, which is the main difference between it and the other type. So, this kind of business can be thought of as a “pass-through entity”.
Main office
A branch office is not a legal entity on its own. Instead, it is the same legal entity as the company in another country. A manager from outside the country is put in charge of the branch. The parent company is blamed for what the branch does. At a branch office, you can do things that make money. A branch office can be owned by anyone and anyone can invest in it. But the branch office can only do the things that the parent company tells it to do. Unless there are other rules against it, the branch office can send bills to local customers, sign contracts with them, and get money from local customers. Branch offices are easier to set up than FDI companies because they don’t have to be formally incorporated. They can sell things, unlike liaison offices, so they are often the best choice for small businesses that want to grow in North Korea.
