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Investment procedure

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Investment procedure

step1.Filing of an LOI step2.Submission of the investment proposal step3.Review of the investment proposal step4.Negotiations
step5.Designation of a project developer step6.Land contracting step7.Obtainment of permits for the project
step1.Filing of an LOI
Description Supports
  • Submit an investment proposal (project plan).
  • Submit a Letter of Intent (LOI).
  • Submit documents evidencing the capability for executing the project.
  • Business Information Memoranda of investors and consortium members, which comprise the corporate profile, performance, financial position, organization, internal agreements and fundraising plans of the company, evidentiary documents issued by financial institutions, etc.
  • A range of information related to the project
step2.Submission of the investment proposal
Description Supports
  • Project goals and background
  • Development plans(conceptual goals, facilities to build, development strategies, building plans, drawings, etc.)
  • Plans for raising and committing funds: equity capital and other funds
  • Project scheme and structure
  • Results of a project feasibility analysis and the industrial spin off of the project
  • Project Management
    • Project process management plans
    • Risk Management
    • Measures for reducing negative effects
  • Plans for recouping costs and paying back borrowings
  • Management and operation schemes
    • Land, property maintenance, disposal, sale, etc.
    • Brand, plans for attracting tenants, etc.
  • The investor, if so desired, will be referred to potential domestic partners such as developers, contractors, law firms, accounting firms, consulting firms, financial institutions, etc.
  • Information on incentives, administrative services and other support
step3.Review of the investment proposal
Description Supports
  • The feasibility of the investment proposal is analyzed, and its adequacy reviewed.
  • The investor's executive capability is examined.
  • The investor, if deemed capable, is selected as a preferred candidate.
  • Credit checks are made.
  • The willingness of consortium members and the likelihood of fundraising are verified
    (through interviews with decision makers, etc.)
step4.Negotiations
Description Supports
  • The agenda for negotiations is set in consultation.
  • Investment principles are agreed upon
    (an MOU, a concession agreement, or heads of agreement).
step5.Designation of a project developer
Description Supports
  • Completion of investment prerequisites: completion of the staffing of the developer organization, etc.
  • Designation of a project developer: a foreign corporation or a consortium
  • Completion of investment procedures:
    • Investment notification
    • Introduction of initial funds
    • Contribution of capital
    • Incorporation of a special purpose entity (SPE) or the establishment of a branch
    • Registration as a foreign-invested company
  • Information on the incorporation of a special purpose entity (SPE)
  • Legal, accounting and other consulting
step6.Land contracting
Description Supports
  • Land appraisal
  • Land contracting and the payment of down payments
  • Transfer of title upon the payment of the balance payment
  • No-bid contracting for the sale and leasing of property owned by central and local governments
  • Land price payable in installments over long a period of time, lease fee discounts and/or exemptions, and other assistance under the contract
step7.Obtainment of permits for the project
Description Supports
  • Completion of environmental impact assessments, and the approval for execution plans
  • Obtainment of design and building permits
  • commencement of the establishment of plants and groundbreaking (engineering work)
  • Designation of a Project Manager and the provision of project management services
  • Infrastructural support

Investment programs

Foreigner (Art. 2 of the Foreign Investment Promotion Act; Art. 2 of the Enforcement Decree of the FIPA)

  • Any individual of foreign nationality
  • Any legal entity incorporated under the laws of a foreign country (foreign corporation)
  • Any international cooperative organization
    • Any agency offering international economic cooperation for and on behalf of a foreign government
    • The IBRD, the IFC, the ADB or any other international organization performing development financial services
    • Any international organization performing international investment services for itself or any other entity
  • Any Korean national who is granted permanent residency in another country

Types of foreign investment (Art. 2 (4) of the FIPA; Art. 2 (2) of the Enforcement Decree of the FIPA)

  • Where a foreigner acquires shares and/or equity interests in domestic businesses
  • Where a foreigner owns 10% or more of voting capital stock or the total voting equity investment
  • Where a foreigner owning less than 10% or more of voting capital stock or the total voting equity investment enters into any contract:
    • that allows the foreigner to dispatch or elect officers
    • under which raw materials or products are delivered or purchased for a period of one year or more or
    • under which technology is provided, introduced or jointly researched and developed.
    • Major facilities: medical tourism facilities, tourist resort facilities, and educational research and development facilities
  • The amount of investment (per person if two or more foreigners are included in the investors) is 100 million Korean won or more.

Long-term loans

  • The overseas parent of a foreign-invested company
  • Any five-year or longer loan that is extended to a foreign-invested company by any of the following companies holding an equity interest in the overseas parent of such foreign-invested company:
    • any overseas company holding a 50% or more equity interest in such overseas parent; or
    • where an overseas parent holds a 50% or more equity interest in such foreign-invested company:
    • any overseas company holding a 10% or more equity interest in such overseas parent;
    • any overseas company in which such overseas parent holds a 50% or more equity interest; or
    • any overseas company holding a 50% or more equity interest in any other overseas company that holds a 50% or more equity interest in such overseas parent.