Liquidation Procedure in Korea

I. Overview
When a company in Korea decides to cease operations, it must undergo a formal liquidation procedure pursuant to the Korean Commercial Code and other applicable laws. Liquidation ensures that the company’s business affairs are properly wound up, its outstanding debts are settled, and any remaining assets are distributed to shareholders. Below is a general overview of the procedure.

II. Resolution for Dissolution and Appointment of Liquidator
The process begins with a special resolution of shareholders at a general meeting, where the company resolves to dissolve and appoints a liquidator. In most cases, a director is appointed as the liquidator, but any qualified person may assume the role. From this point onward, the liquidator oversees the company’s affairs until completion of the liquidation.

III. Registration of Dissolution
Following the resolution, the company must register its dissolution and the appointment of the liquidator with the competent court registry. This registration legally completes the dissolution process and provides public notice that the company is now in liquidation.

IV. Notification to Creditors
The liquidator is required to give public notice to creditors to present their claims within a statutory period of at least two months. Known creditors must also be individually notified. No distributions to shareholders may be made until creditors have had sufficient opportunity to file claims and all creditor protections are satisfied.

V. Settlement of Debts and Liquidation of Assets
During the claim period and thereafter, the liquidator will:
  • Investigate and realize the company’s assets
  • Resolve pending business affairs
  • Collect receivables
  • Pay debts in accordance with statutory priorities
Once all liabilities are discharged, any surplus assets are distributed among shareholders on a pro-rata basis.

VI. Tax and Regulatory Filings
As part of the liquidation, the liquidator must file required corporate income tax returns and, where applicable, VAT and other regulatory filings. In the case of foreign-invested companies, the cancellation of the foreign investment registration under the Foreign Investment Promotion Act must also be completed.

VII. Final Meeting and Completion of Liquidation
After completing the above steps, a final general meeting of shareholders is convened to approve the liquidator’s report and settlement of accounts. Following this approval, the liquidator registers the completion of liquidation with the competent court registry. Company records must be preserved for the statutory retention period (10 years for key documents, 5 years for transactional documents).

VIII. Practical Timeline
The actual duration of liquidation depends on the complexity of the company’s affairs. Straightforward cases may be completed within several months, while more complex liquidations may take longer. The process typically spans from the initial resolution and registration of dissolution through creditor notification, settlement of debts, tax filings, and the final registration of liquidation.
  Sojong Partners has extensive experience advising clients on the liquidation and dissolution of companies in Korea. We have assisted a wide range of foreign and domestic enterprises through each phase of the liquidation process, providing tailored legal solutions that address the unique circumstances and needs of each client. This overview is provided for general informational purposes only and does not constitute legal advice. For more information or to discuss your company’s liquidation in Korea, please feel free to contact us.