Deregistration of a Foreign-Invested Company in Korea: Grounds and Procedure

A foreign-invested company registration in Korea is cancelled in three cases: (1) the company files a business closure report, (2) the foreign investor transfers all of its shares to Korean nationals or Korean companies or loses them all through a capital reduction, or (3) the registration was made on a sham capital contribution (Foreign Investment Promotion Act, Article 21(4)). Cases (2) and (3) must lead to deregistration; case (1) may. Once deregistered, the company must return its registration certificate, tax incentives may be clawed back, and any D-8 status based on the company needs to be reviewed. This guide is for foreign investors and staff who are winding up a Korean company or selling the foreign stake.

Key points

The Act lists three grounds: business closure report (discretionary), loss of all foreign-held shares (mandatory), and sham capital contribution (mandatory).
A partial share transfer is not a ground for deregistration. It requires a change of registration within 60 days.
After receiving the deregistration notice, return the registration certificate to the entrusted agency. If it is not returned within 30 days, the deregistration is publicly announced.
Under Article 121-5 of the Restriction of Special Taxation Act, reduced or exempted corporate tax, customs duties and local taxes can be recovered.
D-8-1 status depends on a registered foreign-invested company, so plan the visa status of executives and staff before deregistration.

What does deregistration of a foreign-invested company mean?

A company registers as a foreign-invested company once the foreign investor has paid in the contribution or completed the share acquisition (FIPA Article 21(1)). The registration must be made within 60 days of that event (Enforcement Decree Article 27(1)), and a foreign-invested company registration certificate is then issued (Enforcement Rule Article 17(3)).

Deregistration removes that status. The legal authority belongs to the Minister of Trade and Industry, but confirming the grounds and giving notice or public announcement are entrusted to KOTRA and foreign exchange banks (Enforcement Decree Article 40(2)). That is why companies usually hear about deregistration from KOTRA or their foreign exchange bank.

When is the registration cancelled?

Ground	Legal basis	Result
The company files a business closure report under Article 8(8) of the Value-Added Tax Act	FIPA Art. 21(4)(1)	May be deregistered
The foreign investor transfers all of its shares to Korean nationals or Korean companies, or all of its shares disappear through a capital reduction	FIPA Art. 21(4)(2)	Must be deregistered
The registration was obtained by faking the payment of the contribution	FIPA Art. 21(4)(3)	Must be deregistered

A partial transfer or a partial reduction of the foreign stake is not a ground for deregistration. It triggers a change of registration instead (FIPA Art. 21(3)(3)), as does a change in the foreign investment ratio or the company name (Art. 21(3)(4)). The change must be filed with the entrusted agency within 60 days, together with proof of the change and the original registration certificate (Enforcement Rule Art. 17(2)).

How does the deregistration procedure work?

Checking the grounds — The Minister must check at least once a year whether any ground has arisen (Enforcement Decree Art. 28(1)). KOTRA and foreign exchange banks carry out this check under entrustment.
Notice or announcement — Before deregistering, the company is notified or a public announcement is made (Enforcement Decree Art. 28(2)). The notice uses Form 18-2, the Confirmation of Deregistration of a Foreign-Invested Company, and may be served electronically (Enforcement Rule Art. 17-2(1)).
Returning the certificate — The company must return its registration certificate to the head of the entrusted agency (Enforcement Rule Art. 17-2(2)).
Announcement if not returned — If the certificate is not returned within 30 days of the notice, the deregistration is publicly announced (Enforcement Rule Art. 17-2(3)).
Notice to other agencies — The National Tax Service, the Korea Customs Service and any local government that supported the company are informed (Enforcement Decree Art. 28(3)).

What changes after deregistration?

Recovery of tax incentives

Article 121-5 of the Restriction of Special Taxation Act treats deregistration under the FIPA as a ground for recovery. Reduced corporate or income tax must be paid back with interest (para. 1, item 1), and exempted customs duties, individual consumption tax and VAT (para. 2, item 1) as well as reduced acquisition and property tax (para. 3, item 3) can also be recovered. Recovery may be waived in some cases, such as deregistration caused by dissolution through a merger (para. 5, item 1). Ask a certified tax accountant to calculate and file the amount.

Mandatory share transfer after a sham contribution

If the company is deregistered because the contribution was faked (Art. 21(4)(3)), the foreign investor must transfer its shares to Korean nationals or Korean companies within six months of deregistration. With approval, this period can be extended by up to six months for unavoidable reasons (FIPA Art. 28(6)(2)).

Impact on D-8 visa status

D-8-1 (investment in a corporation) is the status for essential professionals working in management or technical roles at a Korean corporation that is a foreign-invested company under the FIPA (Ministry of Justice stay manual). Extension applications require a copy of the investment company registration certificate, and immigration offices check deregistration status through KOTRA's registration lookup system when reviewing visas and stay permits. A deregistered company is unlikely to support D-8-1 requirements, so plan a change of status or departure for the representative and staff before deregistration.

What should you prepare before deregistration?

Decide whether the share transfer is full or partial. A partial transfer means a change of registration within 60 days, not deregistration.
Set the order of closure steps. The business closure report to the tax office (VAT Act Art. 8(8)), the dissolution and liquidation of the company, and the foreign-invested company registration are separate procedures.
Review past tax incentives. If the company received corporate tax, customs or local tax reductions, check the recovery risk with a tax accountant in advance.
Check the visa status of foreign staff. Review the stay periods of D-8 holders and their families and plan the next step.
Locate the original registration certificate. It must be returned once the notice arrives.

What mistakes do companies often make?

Assuming a closure report finishes everything — returning the certificate, tax recovery and D-8 status are handled separately.
Skipping the change of registration after a partial transfer — a change in the foreign investment ratio must be registered within 60 days.
Lending the registration certificate to someone else — transferring or lending it is prohibited (FIPA Art. 21(6)) and can lead to an administrative fine of up to KRW 10 million (Art. 37(1)(4)).

Official sources (checked against the original text)

Foreign Investment Promotion Act, Article 21(4) — the Minister "may revoke the permission or cancel the registration"; in cases of items 2 or 3 the Minister "shall" do so.
Enforcement Decree of the FIPA, Article 28(1) to (3) (deregistration) and Article 40(2) (entrustment to KOTRA and foreign exchange banks)
Enforcement Rule of the FIPA, Article 17-2 — notice by deregistration confirmation, return of the certificate, announcement if not returned within 30 days
Restriction of Special Taxation Act, Article 121-5 — recovery of reduced taxes upon deregistration (paras. 1 to 3) and exceptions such as dissolution by merger (para. 5)
Ministry of Justice Stay Manual by Status (September 2026), Corporate Investment (D-8) — definition of D-8-1, extension documents (copy of the investment company registration certificate), deregistration lookup through KOTRA
Checked on 3 October 2026 against the current statutes on law.go.kr and the Ministry of Justice manuals (September 2026 edition). Rules change often, so confirm again right before you apply.

How A-One Administrative Agency can help

A-One Administrative Agency prepares and files the documents needed to change or close a foreign-invested company registration, and prepares visa change and extension documents for D-8 holders. Calculating and filing recovered taxes is the work of a certified tax accountant, and disputes or lawsuits over share transfers are the work of an attorney, so we coordinate with those professionals where needed.

Frequently asked questions

Q. Is the registration cancelled automatically when we file a business closure report?

A closure report is a ground under FIPA Article 21(4)(1), but the Act says the registration "may" be cancelled in that case. The entrusted agency (KOTRA or a foreign exchange bank) confirms the ground and then sends a deregistration confirmation.

Q. If the foreign investor sells only part of its shares, is the company deregistered?

No. A partial transfer requires a change of registration (FIPA Art. 21(3)(3)). File the application, proof of the change and the original certificate with the entrusted agency within 60 days.

Q. What should we do after receiving the deregistration confirmation?

Return the foreign-invested company registration certificate to the head of the entrusted agency. If it is not returned within 30 days of the notice, the deregistration is publicly announced (Enforcement Rule Art. 17-2).

Q. Do we have to pay back reduced taxes after deregistration?

Article 121-5 of the Restriction of Special Taxation Act lists deregistration as a ground for recovering reduced corporate tax, customs duties and acquisition tax. There are exceptions, such as dissolution by merger, so confirm the exact amount with a tax accountant.

Q. Our representative holds a D-8 visa. What happens if the company is deregistered?

D-8-1 is granted to essential professionals of a foreign-invested company, and immigration offices check deregistration status through KOTRA. Extension based on a deregistered company is difficult, so plan a change of status or departure before deregistration.

Q. What happens to the shares if deregistration is due to a sham contribution?

The foreign investor must transfer its shares to Korean nationals or Korean companies within six months of deregistration. With approval, the period can be extended by up to six months for unavoidable reasons (FIPA Art. 28(6)(2)).

Q. Which agency handles deregistration?

The authority belongs to the Minister of Trade and Industry, but confirming the grounds and giving notice or announcements are entrusted to KOTRA and foreign exchange banks (Enforcement Decree Art. 40(2)). The certificate is also returned to the entrusted agency.