Practical Handbook for Korean Company Acquisitions Flowchart + Document Checklist + Key Pitfalls to Avoid-With Bilingual Chinese-Korean Compliance Guidance

South Korea is a key manufacturing and technology hub in East Asia. Chinese enterprises’ acquisitions of local Korean companies commonly occur in sectors such as semiconductor equipment, biopharmaceuticals, automotive parts, and content copyright. Unlike mergers and acquisitions (MA) in Europe and the United States, South Korea enforces clear and stringent regulatory requirements for foreign investors-particularly concerning sensitive industries, cross-border data transfers, and employee placement. Below outlines practical implementation guidelines based on South Korea’s Foreign Investment Promotion Act (2025), Commercial Act, Monopoly Regulation and Fair Trade Act, and the latest operational guidance issued by the Financial Supervisory Service (FSS).

I. Core Process Five Key Steps

1. Preliminary Due Diligence Phase Engage a Korean domestic law firm and certified public accounting firm to conduct comprehensive legal, tax, labor, and intellectual property due diligence. Special attention must be paid to identifying undisclosed joint-and-several guarantees, binding collective labor agreements, or delisting risks for KOSDAQ-listed target companies.

2. Foreign Investment Notification Where the acquirer’s equity stake exceeds 10% or the investment amount surpasses KRW 100 million (approximately RMB 530,000), a Foreign Direct Investment (FDI) notification form must be submitted to the Ministry of Trade, Industry and Energy (MOTIE). For non-sensitive sectors, approval is typically granted within five business days.

3. Korea Fair Trade Commission (KFTC) Review Prior notification is mandatory if, post-transaction, the buyer’s market share in the relevant market exceeds 20%, or the transaction value exceeds KRW 300 billion (approximately RMB 1.6 billion). The review period may last up to 30 days.

4. Equity Closing and Registration Upon completion of fund remittance, apply to the Ministry of Justice for equity change registration using the bank-issued “Foreign Exchange Notification Confirmation Certificate,” and simultaneously update the Business Registration Book.

5. Post-Closing Compliance Filings Where personal information processing is involved, the data transfer plan must be reported to the Personal Information Protection Commission (PIPC) within seven days; if more than 50 Korean employees are retained, an “Employment Maintenance Plan” must be submitted to the Ministry of Employment and Labor.

II. Required Documentation Checklist

1. Investor Entity Certification Documents Notarized and authenticated copy of the Chinese parent company’s Business License (with certified Korean translation), plus audited financial statements for the past two fiscal years;

2. Original Share Purchase Agreement and its certified Korean translation (must be authenticated by a Korean notary public);

3. MOTIE-required “Pre-Investment Notification Form for Foreign Investment” and “Business Plan” (which must specify commitments regarding technology transfer, local employment retention rate, and RD investment);

4. KFTC-required documents “Market Share Analysis Report” and “Summary of Competitive Impact Assessment,” both prepared by a licensed Korean antitrust attorney;

5. Bank-issued “Confirmation Letter of Foreign Currency Remittance” and “Statement of Legitimacy of Funding Sources” (bearing the official seal of a bank located in mainland China).

III. Three Critical Regulatory Red Lines

1. Dual-use technologies (e.g., precision optical components, RF chip design tools) Additional non-objection letter from the Defense Acquisition Program Administration (DAPA) is mandatory.

2. Acquisitions of media, publishing, or broadcasting enterprises Must undergo content safety review by the Korea Communications Commission (KCC).

3. Where the target company holds government-funded RD projects administered by the Ministry of Science and ICT (MSIT), prior consultation with MSIT is required to determine obligations concerning assumption or repayment of related subsidies.

The above constitutes the principal legally binding procedural framework and documentary requirements currently applicable to corporate acquisitions in South Korea. We hope this information proves helpful to you.