Foreign Direct Investment(FDI)

Definition of Foreign Direct Investment

FDI refers to an investment made in order to forge lasting economic relations with a corporation of the Republic of Korea or a company run by a national of the Republic of Korea and includes the following forms of investment: acquisition of the stocks or shares of a Korean company; a foreign parent company’s provision of long-term loans with a maturity of five years or longer to a foreign-invested company; and a foreign national’s contribution to a non-profit organization.

Under the Foreign Investment Promotion Act, FDI should meet the following conditions:

  1. The amount of investment should be 100 million won or more.
  2. A foreigner should own 10 percent or more of either the total number of voting stocks issued by a Korean corporation or a company run by a national of the Republic of Korea, or its total equity investment

 

Loans with a maturity of not less than five years (based on the loan maturity prescribed in the first loan contract) supplied to a foreign-invested company by the following entities are recognized as FDI:

① An overseas parent company (OPC) of the foreign-invested company (corporation)

② A company that has capital investment relations with ①

③ A foreign investor (individual)

④ A company that has capital investment relations with a foreign investor (individual) (Article 2 (4), (5) of the Enforcement Decree of the Foreign Investment Promotion Act)