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Simplifying the Startup Procedure: Focusing on the Improvement in the Incorporation System

Author Yang, Hyun-Bong Date 2013.03.05 Issue No 552
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It is important to identify the various regulatory factors that discourage the creation of startups and corporations and eliminate or counter those factors in order to revitalize the economy by fostering business startups and job creation.

 

The government’s decisions to abolish the minimum capital requirement and to simplify the incorporation procedure have made Korea one of the best countries for business startups, while dramatically increasing the number of newly created companies.

 

- A survey by the World Bank raised South Korea’s rank from the 126th in 2008 to the 24th in 2012 on the list of countries providing favorable environments for business startups.

 

- The number of newly created companies in Korea increased from 50,855 to 74,162 between 2008 and 2012.

 

Despite the Korean Government’s efforts to improve the incorporation procedure, problems persist that discourage business startups in Korea, including the obligation to have the articles of incorporation notarized upon capital increases and the inability of entrepreneurs to make use of the home startup system due to the lack of interdepartmental cooperation in advertising it.

 

In order to ensure that the simplification of the incorporation procedure produces tangible benefits, it is important to remove the obstacles resulting from the systematic updates as well as to enhance the public’s access to the home startup system.

 

- The capital-increase notarization requirement, limits on the terms of Board members, and the registration taxes attendant upon converting startups into corporations should be abolished or mitigated.

 

- The changes in the capital amounts and the articles of incorporation may be processed via the home startup system; online startups may be exempted from paying the supreme court fee stamps; the forms of corporations may be diversified; and the official corporate seal requirements may be replaced with signatures.