Review of foreign exchange transaction law reporting upon acquisition of shares in a domestic corporation by a foreigner. Law firm Veat

Law firm Veat performed an in-depth legal review regarding whether a foreign national residing in the Republic of Korea triggers a reporting obligation under the “Foreign Exchange Transactions Act” when acquiring shares of a domestic corporation.

The Foreign Exchange Transactions Act considers foreign nationals engaged in business activities within Korea or residing in Korea for a certain period or longer as residents, and serves as an important legal standard for share acquisition. Therefore, when a foreign national residing in Korea intends to acquire shares, it is important to thoroughly review the resident requirements under the Foreign Exchange Transactions Act and receive appropriate legal advice to ensure compliance with the law.

Law firm Veat reviewed whether the foreign national in question qualifies as a resident under the Foreign Exchange Transactions Act, and then confirmed whether a report is required if that foreign national acquires shares of a domestic corporation.

Required “Foreign Exchange Transactions Act” reporting for foreign exchange transactions

When a foreign national acquires shares of a domestic corporation, and it falls under the reporting scope according to the Foreign Exchange Transactions Act, they must strictly comply with the relevant laws and regulations and proceed with the proper reporting procedures.

If the transaction qualifies as a capital transaction under the Foreign Exchange Transactions Act, it must be reported to the Minister of Strategy and Finance, and unless a non-resident acquires securities from a resident, it must be reported to the Governor of the Bank of Korea.

According to the Foreign Exchange Transactions Act, individuals with a domicile or residence within the Republic of Korea, or corporations with a principal office in Korea, are deemed residents. In particular, foreign nationals engaged in business activities in Korea or residing in Korea for a certain period or longer are also recognized as residents under the law.

Therefore, to confirm whether a foreign exchange reporting obligation arises when a foreign national acquires shares of a domestic corporation, it is necessary to receive advice from a legal expert with extensive experience in foreign exchange transactions to confirm whether it falls under the reporting scope, procedures, and required documents. 

Foreign exchange reporting can be applied to various transactions, including foreign currency remittances, foreign currency loans and borrowings, acquisition and transfer of securities, and international trade transactions. If foreign currency is paid or received without complying with the reporting procedures under the Foreign Exchange Transactions Act, it may constitute a violation of the Foreign Exchange Transactions Act. Such situations may give rise to legal problems, so it is important to consult with an expert with extensive experience in foreign exchange reporting and comply with proper procedures.

The Foreign Exchange Transactions Act has complex and detailed provisions, which can cause many companies to struggle to comply. Therefore, we recommend obtaining accurate legal review and professional advice from a foreign exchange lawyer to determine whether it falls under the reporting scope and which reports to proceed with.

Law firm Veat’s Foreign Exchange Reporting Center has a clear understanding of various foreign exchange transaction types, such as securities acquisition reporting by residents or non-residents, and foreign investment reporting, and provides a one-stop service covering all processes from identifying reporting scope to preparing the reporting form and submitting it to relevant agencies.>