[Advice] Providing advice related to overseas direct investment reporting during the Flip process.

Law firm Veat provided legal advice to A, who holds shares in a US corporation as a domestic investor during the Flip process, regarding the necessity of reporting foreign direct investment.

Flip means a procedure for converting a foreign corporation whereby a domestic company establishes a foreign corporation and the newly established foreign corporation becomes a subsidiary of the domestic company. When a Flip, the procedure for converting a foreign corporation, is carried out, the location of the parent company or holding company changes from the domestic to a foreign country, but the composition of shareholders remains the same in the foreign corporation. Because of various advantages such as the ease of receiving investment from overseas venture capital firms, many startups are highly interested in the procedure for converting a foreign corporation, Flip.

However, if the acquisition of foreign stock corresponds to foreign direct investment under the Foreign Exchange Transactions Act, a prior report must be filed, and in some cases, a reporting obligation arises even if the acquisition of shares is less than 10%, so it is considered necessary to have legal advice from a specialized attorney.

Veat reviewed the Foreign Investment Promotion Act, the Foreign Exchange Transactions Act, and other relevant legislation to confirm the necessity of reporting by the Korean shareholder in A’s Flip process, and after considering the particularities of the transaction, compiled opinions from banks, the Bank of Korea, and the Ministry of Strategy and Finance, and based on this, prepared the documents and submission materials for reporting foreign direct investment.

Law firm Veat has built trust relationships with local law firms located in the US, Europe, and Singapore through numerous Flip experiences, and collaborates closely as needed to provide consulting services. If you need legal advice regarding Flip and reporting foreign direct investment, please contact Law firm Veat.

Thank you.
Law firm Veat