What is the procedure under the Foreign Investment Promotion Act when a foreign-invested company carries out capital increase without consideration?
A. If a foreign investor acquires stocks, etc. free of charge from the relevant foreigninvested company, the foreign investor shall notify the acquisition of stocks, etc. under Article 5 (2) 2 of the Foreign Investment Promotion Act within 60 days from the acquisition of stocks. (The amount of foreign investment does not increase because there is no infusion of new investment funds.)
The foreign-invested company should file for registration of alteration. Although there is no increase in the actual amount of investment by the foreign-invested company, the total par value of the stocks held by the foreign-invested company rises due to an increase in the number of stocks. This increase should be reflected in the registration.
Documents certifying the acquisition of stocks such as the statement of resolution of a shareholder meeting on the capital increase without consideration, a certificate of corporate registration and a shareholder register issued after the execution of the capital increase should be submitted.
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*This article is extracted from Invest KOREA information center, 2023