South Korea has a good reputation among other countries worldwide when it comes to company formation. However, there are some basic precautions which must be taken into account when doing business in this country. For example, government transactions necessary for corporate documents completion are done in Korean. For this reason one may need a help of a professional who speaks this language in order to settle business affairs.

Doing business in South Korea
Another requirement is that the joint venture partner, if he or she is a South Korean shareholder shouldn't be a nominee in order to meet the rules of foreign company incorporation. Because of the Confucian ethics Koreans respect senior members of any community including business community; therefore senior business partners are welcomed to be present during important business meetings when concluding contracts with Korean clients or suppliers.

When incorporating a company in South Korea, such documents as tax return and annual audited financial statements should be submitted to country's authorities. In order to settle this annual statutory obligation in an effective manner one may need professional advice of Korean business specialist.

Business structures available in South Korea
There is a Korean Commercial Act the Commercial Code of Korea which provides for three main types of business organizations: private businesses, corporations and offices. Corporations are usually divided into General Partnership (GP), Limited Liability Partnership (LLP), Joint Stock Corporation (JSC) and Limited Liability Corporation (LLC).

In general there are several business structures available in South Korea these days: local corporation, private business, branch office and liaison office. There are two types of business ventures when it comes to establishing a local corporation (company): joint stock corporation (company) or JSC and a limited liability corporation (company) or LLC. The number of shareholders of LLC is usually not exceeding 50 and there are no requirements of board of directors. JSC must have at least one director who is elected and represents the board of directors.

Private business also includes the same amount of investment. Such business is often treated as Local Corporation due to owner taking all profits made while doing business and being a subject to unlimited liability. Branch office, on the other side, is when there is a representative of a foreign company in the frames of Korean branch office which must be registered with the court.

Business forms
In Partnership members have unlimited liabilities, meaning that every member has the authority to represent the company being liable to repay the debts of the company in case it will not repay its debts. However, the transfer of an ownership is limited. In Limited Partnership members have unlimited liabilities and limited liabilities. Unlimited members have the authority to execute the company's corporate affairs. Limited members participate in the company only by making capital investments and do not have executive power.

Korean company formation requirements and restrictions
In case if a foreigner wants to register himself as a foreigner-invested business - JSC or LLC the investment amount not less than 100 million is needed. Shares in such companies not necessarily must be held by Korean resident shareholders. JSC and LLC have higher compliance and administrative requirements than other business structure referred to as Branch office. There must be minimum two partners who are not limited by nationality. There are restricted series of sectors for foreign investment existing.

Branch office usually is not recognized as direct foreign investment and is treated as a single legal entity with no limits regarding investment or ownership and no requirements regarding formal incorporation while having rights to engage in sales activity that is why they are best for small-scale operations with an opportunity to move to a local subsidiary later in case it will be needed. Branch office establishment procedure is simpler than as it is with the previous business structure described.

Liaison office usually undertakes non-sales function referred to as market research etc. while not carrying out business that generates profits in the country. It is a business activity which is usually conducted in the name of the parent company. It is quite simple to establish. Such business structure must have been registered at the tax department while being also granted a distinct number, stating business registration.

By definition, the owners of a limited partnership are divided into two categories: general partners and silent or limited partners. Each party must be represented by at least one partner. The difference between the parties lies in the extent of their involvement in managing, taking liability for and sharing the company’s profits.

General partners
General partners in a limited partnership are those who bear unlimited liability for the company’s obligations. They have the right to participate in the management of the company, to vote on decisions and to determine the overall course of business development. General partners are usually also the ones who represent the company in dealings with third parties, as only they can enter into contracts with third parties on behalf of the partnership.

Limited partners
Limited or silent partners in a limited partnership are those whose liability for the company’s obligations is limited to the extent of their contributions. In other words, their liability does not extend beyond the amount they have invested in the company. This means that limited partners are better protected in the event of poor business planning and failures, but their influence within the partnership is limited as well. Limited partners cannot participate in the management of the company, i.e. they can invest, but they cannot control day-to-day operations or how their investments are managed.

Functions of a limited partnership
The main function of a limited partnership is to boost the partners’ chances of increasing their individual profits and security in comparison to what they would gain if they operated individually. Entering a partnership agreement may also allow the partners to compensate for the weaknesses, and utilise the strengths, of each individual: one of the partners may bring significant financial assets, another may be able to offer well-developed manufacturing facilities, while another may have a wide network of clients, etc.

Other than that, limited partnerships have no special functions and are mainly distinguished from other legal business structures by the way the roles are distributed between partners. A limited partnership can engage in any type of business activity, including trade, services, manufacturing, etc.

Advantages of a limited partnership
There are two main advantages of a limited partnership:

Co-operation
Asset protection
In a limited partnership, partners co-operate to achieve more than they would individually, compensating for their weaknesses and combining their strengths. A limited partnership can generate more capital investment by bringing in new limited partners, greatly expanding the company’s financial options.

Another important aspect is the protection of assets for limited partners. As their liability is limited to the value of their contributions, potential silent partners may consider it advantageous to join a limited partnership; because they can freely control their contributions, a partnership enables them to make a profit without taking major financial risks.

General vs limited partnerships
The main difference between a general and a limited partnership is the distribution of liability. In a general partnership, all of the liability is distributed equally between all partners, and that liability is unlimited, regardless of their contributions. By default, all rights over the income and management of the company are also shared equally, but this can be changed by amending the provisions of the partnership agreement. In a limited partnership, the extent of liability is different for general and limited partners. General partners have unlimited liability, meaning that their personal assets can be seized to cover the company’s debts, whereas a limited partner is liable only to the total value of their contributions.

An online trading company is a trading company that operates primarily through the internet and its e-commerce tools. Similar to any regular retail company, online retailers specialize in buying goods from manufacturers and reselling them to consumers or other retailers. However, the online nature of this business makes it different and comes with specific benefits and limitations. Selling goods online offers enormous opportunities and advantages, since you can trade worldwide and save on organizational and administrative costs such as wages, office rent and others.

The main difference is that a 100% online trading company (with no physical stores whatsoever, just headquarters and warehousing facilities) requires virtual rather than physical infrastructure. An offline trading company needs offices, shops, warehouses and a logistics network that connects suppliers, offices and points of sale; An online trading company needs offices, storage space, powerful servers and websites, and a flexible logistics system that allows it to serve customers in many locations.

As you can see, online trading companies require less physical infrastructure, but they also need to be much more flexible to serve their customers. While a website is a useful addition for a regular trading company, for an online trading company it is an indispensable tool without which the company cannot function – hence the high demands on the website and host server's capabilities.

Functions of an online trading company
The main function of an online trading company is to purchase goods from a manufacturer and sell them on to retailers and consumers. A secondary, but nonetheless essential, task is to deliver the goods to customers, as usually online trading companies lack physical infrastructure, such as shops, outlets and other points of sale.

To buy and sell goods, an online trading company must set up a hub for transferring products from manufacturers to customers. In this case, that hub is a website. Just as a physical shop requires designers and marketing specialists to arrange and present products in the most advantageous way, a digital shop also requires specialists to guide customers through the possible buying options.

As for delivering goods, an online trading company can choose to either establish the delivery network itself, or outsource this task by entering into a contract with a logistics company. The online trading company then hands over its goods to the logistics company, which takes care of delivering the goods using its own network.

Key aspects of trading online
Although the goods or services sold by online trading companies will vary, there are some common elements due to the specific ways in which these companies market and sell their final products. Here are some of the main issues that you will encounter, regardless of what you are selling online.

Distance selling
A special category of online trading business is EU distance selling. E-commerce has made huge gains in Europe, and the online market is growing year-on-year. However, every retailer must understand the implications of e-commerce in the EU in terms of VAT. VAT rules are quite different for online sellers; for example, there are different thresholds for VAT registration (e.g. GBP 70,000 for the UK, EUR 35,000 for Poland or Italy, EUR 100,000 for Germany). There is no minimum threshold for providers of digital, electronic and broadcast services, who must apply VAT at the rate set by the country where the consumer is located.

Online stores and websites
Naturally, a website is an absolute must for any online business. Designed as an online store (describing the range of products available, their prices and features), the website must also include the following important sections:

Delivery and returns policy
Contact page, with a phone number, address, email address and other contact information for consumers to use
Online payment options
Online payment solutions
A way to accept online payments is by far the most important consideration for an online business. Your consumer must have a way to pay for your products and services instantly and securely. There are two basic ways to accept payments on your online store:

By using an online payment system, for example PayPal
By using a merchant account to accept direct credit card payments
A merchant account is a special bank account opened for online business purposes, in order to facilitate secure transactions between merchant and customer. Merchant accounts are set up by agreement between the bank and the merchant and they allow you to accept payments in many ways, usually by credit or debit card.

Nominee services are typically provided by an intermediary to conceal the beneficial owner's business. Nominee services relate to nominee shareholders and nominee directors. As a rule, the nominee service should also include a PO box service (office address for correspondence purposes). Nominee services are suitable for large corporate structures for tax planning purposes and often involve international elements. For example, the beneficial owner is located in a different country than the company itself.

Nominee shareholder services are normally performed on the basis of a declaration of trust whereby the nominee declares that they hold shares on behalf of someone else and have no authority to make decisions in the company, vote at a shareholders meeting or receive dividends, unless: the customer has expressly instructed it. The nominee has no rights to sell shares unless requested by the client. However, the Client and the Agent may agree on specific tasks for the Agent to perform. Such duties are often delegated to lawyers and attorneys who are professionals in the field and can protect the interests of the client.

Nominated director, also called 'shadow director', who normally only appears for official records, while the company is in effect ruled by the client by power of attorney. Based on the authorization, the customer can open a bank account and assume full management and control of the company.


Benefits of nominee services
The benefits of using nominee services are evident in cases where a business owner wishes to maintain their privacy and reduce access to official records or does not want their name to be associated with the business in question. In addition, there may be situations where an individual has restrictions on performing the proposed activity or where the law requires local management, such as a local secretary in Hong Kong.
When quick action is required to register a company abroad in the event the client is unable to travel, it is often more convenient to temporarily appoint a local company director. When intending to open a business in a foreign jurisdiction such as the British Virgin Islands, Belize or Hong Kong, it can be physically difficult to appear in person.

Nominee services usually guarantee confidentiality and anonymity. However, disclosure is sometimes made to banks or investigative authorities during court proceedings.

The nominee services are often used for tax planning and wealth protection purposes. If the ultimate beneficiary of the full corporate structure resides in low-tax jurisdictions, it should enjoy the benefits of the low-tax regime for the dividends received from the profits generated.

Other benefits derive from the country of registration and are often related to financial statements and reports. In some tax haven jurisdictions there is no requirement to file the annual form, hence low auditing and accounting requirements which offer certain advantages if the individual is willing to increase privacy and confidentiality and hide their assets.