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[FAQ] Why long-term loan foreign investments are not recorded as foreign investment amount?

Updated: Sep 5, 2023

Q. A foreign investment in the form of a long-term loan is not recorded as the amount of foreign investment on a certificate of registration of foreign-invested company. What is the reason?

A. A foreign investment in the form of a long-term loan is recognized as foreign investment under Article 2 (1) 4 (b) of the Foreign Investment Promotion Act. But, because it does not constitute a foreign investment in the form of equity investment which is recorded on the certificate of registration of a foreign-invested company (Articles 2 (1) 4 (a), 2 (1) 4 (c), and 2 (1) 4 (e) of the same Act), it is not recorded as the amount of foreign investment on the certificate of registration.


Also, under Article 21 (1) of the Foreign Investment Promotion Act, foreign investments eligible for registration of a foreign-invested company are limited to the following: where a foreign investor has completed payment for the object of investment (new shares); where a foreign investor has completed the acquisition of stocks, etc. (existing shares); or where a foreign investor has completed contribution to a nonprofit organization.




 

*This article is extracted from Invest KOREA information center, 2023.

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