How to Verify a Company in South Korea? An Ultimate Guide

South Korea has the world’s twelfth-largest economy and sixth-largest manufacturing sector. There are prominent opportunities but also obstacles to doing business in South Korea. The country is a world leader in technology and manufacturing; its bases provide advanced infrastructures and highly skilled manpower. It is a gateway to many Asian markets and benefits from government support toward innovation and entrepreneurship. In a relatively competitive market, with even foreign companies finding regulatory navigational challenges, business culture is still quite hierarchical and focuses significantly on long-term relationships; familiarity with the local customs and trust are essential considerations. It is an export-driven economy sensitive to world trends, attracting considerable foreign investments.

Due to the complexity and scale of different industries, robust company verification processes are crucial to avert risks and ensure compliance with certain regulations. If you are aiming to start a business or want to verify a company in South Korea, this simple guide will help you understand the challenges that you may face during the procedure in South Korea.

How to Verify if a Company is Registered in South Korea?

To verify a company in South Korea, it must be registered with the primary business registry Data Analysis, Retrieval, and Transfer System (DART). This public portal is operated by the Financial Supervisory Service (FSS). Basically, it is a comprehensive online system for corporate filings and public disclosures. Organizations listed on the Korea Exchange (KRX) must submit their financial statements, business reports, and other essential regulatory filings through DART.

Step-by-Step Guide to Verify a Company in South Korea

At the  DART portal, there are certain input parameters that allow you to verify a company in South Korea. To gain access to the business data, you may search the following:

• Company Name: On the government portal, you can search your desired company by its official name.
• Report Name: A business in South Korea can also be searched by the types of legal documents (compliance reports, audits, and performance analysis) that are used for that specific business. 
• Report Table: At South Korea’s DART portal, a report table organizes a company’s disclosures and filings, including financial statements, audit reports, and shareholder information, enhancing transparency for business verification or investment research.
• Advanced Search: In the advanced search section, you can also search for the company using different input parameters like company name, period, industry market listing, etc.

There are two main types of searches that can be used to verify a company in South Korea. One is an integrated public search, and the other is a search using a regular disclosure item. Reports can vary depending on the application, but they often include financial statements, compliance reports, audit trails, and performance analytics.

Challenges to Verify a Company in South Korea

• Challenging Taxation System

South Korea’s tax structure is multi-level. South Korea’s tax law changes from time to time, which makes it challenging for companies to keep up and may eventually lead to non-compliance.  Understanding and complying with the regulations is a daunting task for new and established firms.

• Complex Regulatory Framework

The regulatory regime in South Korea is complex, and the laws vary from sector to sector. There is a time-space burden and expertise required before getting accustomed to South Korea’s regulations. Business compliance becomes complex, which creates a possibility for noncompliance, followed by an amplified risk of expensive fines.

• Language Barrier

The biggest challenge has been the language. Although DART has been online in English since 2007, most disclosures are filed in Korean. As of now, having automatic translation at one’s disposal has helped a lot; however, variations between the original Korean originals and translations into English confuse at times because English versions happen to be non-mandatory and may not carry with them the same legal weightage.

• Navigation Complexity

The platform’s interface is unhelpful for a user not familiar with Korean financial regulations or terminologies. Though the search functionalities such as XBRL search have improved lately, the updates are still phased and result in real-time delays at times. In addition, when you click on a specific type of document, it only appears in Korean. The user may face difficulty in understanding the information in the document, making it difficult.

How to Verify an Ultimate Beneficial Owner UBO in South Korea?

To verify a company in South Korea, UBOs must also be identified and verified. An ultimate beneficial owner is a person in charge of the company who has 25% of the company’s share. The business register in South Korea does not publish information on the beneficial owners, and that has massive implications for corporate compliance. Lack of transparency on ultimate beneficial ownership information can raise financial and compliance issues because a shady structure of ownership complicates the possibility of compliance with KYB. Several businesses deliberately hide ownership while operating to avoid taxes or to involve themselves in some illicit financial crime, which is a cause for concern for business partners.

Conducting AML Checks on Businesses in South Korea

To verify a company in South Korea, anti-money laundering checks range from basic Know Your Business verification to sanction screening, designed to identify the related risks of both the business and its individuals. AML checks provide an ultimate shield to businesses, preventing them from getting caught up in illegal activities. In South Korea, companies that fail to undertake these checks are likely to be subjected to fines as well as other serious repercussions.

License and Certificate Verification

• Financial Supervisory Service

In South Korea, the financial sector is regulated by a government agency to have stability, transparency, and consistency under the regulations of the financial sector. Its principal function is supervising financial institutions, including banks, insurance companies, and securities firms. This report is made to the Financial Services Commission (FSC), the regulatory authority in South Korea. The FSS monitors financial institutions to ensure they comply with laws and best practices. This includes auditing their financial health, internal controls, and risk management systems.

• Korea Exchange (KRX)

South Korea operates an integrated or single market for securities known as the Korean market or KRX. This is the marketplace mark where equities, bonds, derivatives, and other financial products are sold. It is the country’s underpinning financial marketplace, providing cash to firms while giving investors the means to buy, sell, or exchange securities.

• Ministry of Strategy and Finance

The Ministry of Strategy and Finance (MOSF) is a crucial governmental body in South Korea that is responsible for planning and executing national economic and financial policies. It plays a vital role in shaping the country’s fiscal policies, economic growth strategies, and overall macroeconomic stability. The ministry combines the former Ministry of Finance and Economy and the Ministry of Planning and Budget.

The KYB – Your Partner In Business Success

To verify a company in South Korea, The KYB has compiled data from more than 250+ countries and states, making it possible to access many registries almost instantly. Another useful feature of The KYB is the ability to assist with business verification in South Korea, which is integrated with AML checks to ensure transparency. We help businesses ensure AML compliance by conducting thorough due diligence and verifying third parties during onboarding. We have everything laid out for you, making informed decisions has never been easier. Contact us today to get a free demo.