[Foreign Investment in South Korea]: How to Enter the South Korean Entertainment Industry by Acquiring Shares

Foreigners have many ways to invest in South Korea and conduct business. If a foreign investor is a legal entity (company), they can establish subsidiaries, branches, or liaison offices in South Korea as needed. Foreign investment in South Korea can be a great opportunity, especially with the rise of the Korean Wave (Hallyu) and its impact on various industries.

Foreign investors can also form a joint venture by establishing a new company in South Korea as shareholders together with other investors. Another common investment method is acquiring a portion of an already established South Korean company. This way, investors can acquire part of the shares and operate the company jointly with existing South Korean shareholders without fully acquiring 100% of the shares.

Case Study: Chinese Investor Acquires 95% of a South Korean Entertainment Company

In this case study, we look at a Chinese investor who invested by acquiring 95% of the shares of a South Korean entertainment company. This investment was in the South Korean entertainment industry, where the influence of the Korean Wave is growing rapidly. The Chinese investor aimed to expand their entertainment business by acquiring a South Korean entertainment agency.

### Investment Background and Process for the Chinese Investor in South Korea

As the Korean Wave spread from Asia to the global stage, foreign investors' interest in South Korea has also increased significantly.

The South Korean company acquired by the Chinese investor is an entertainment agency specializing in discovering and nurturing artists (including singers and actors) and producing, distributing, and selling content such as broadcasts, performances, and films. With the Korean Wave's global expansion, the Chinese investor was eager to deeply participate in the South Korean entertainment industry, recognizing its immense growth potential.

### Due Diligence and Signing Agreements in South Korea

First, the investor conducted a basic due diligence on the target South Korean company. This due diligence aimed to thoroughly review the potential risks and contingent liabilities of the company in accordance with South Korean regulations. After this review, the Chinese investor decided to acquire 95% of the shares from the existing shareholders. After signing the share purchase agreement, a shareholders' agreement was also signed with the existing South Korean shareholders.

Since the existing South Korean shareholders had been managing the company for a long time and had accumulated rich experience in the entertainment industry, it was decided to retain them as the CEO (Representative Director) to continue managing the company. Additionally, an incentive agreement was signed, which outlined performance targets and bonuses for meeting those targets.

### Additional Investment and Legal Support in South Korea

After the acquisition, the company required additional capital. The Chinese investor injected more funds to stabilize the company and support its expansion within the South Korean market. This financial support ensured that the company could operate smoothly and grow in the competitive entertainment landscape of South Korea. Additionally, the Chinese investor provided legal advisory services essential for running the company in South Korea. For instance, the investor helped with visa issuance and drafting contracts for trainees sent from China to South Korea, ensuring compliance with South Korean legal requirements.

### Continued Legal Support for Foreign Investors in South Korea

Thanks to this comprehensive support, the Chinese investor successfully entered the South Korean entertainment industry. Through close cooperation with existing South Korean shareholders, the investor achieved stable management of the company. Leveraging the global popularity of the Korean Wave, they were able to expand their business not only in China but also in other international markets.

### Why Foreign Investment in South Korea is Attractive

Foreign investments in South Korea can be made in various forms, including forming new joint ventures or acquiring shares in existing companies. Each method requires different legal and management procedures, depending on South Korean laws and regulations. The South Korean market offers unique opportunities, particularly in booming industries like entertainment, technology, and manufacturing.

### How Siwoo Law Firm Supports Foreign Investors in South Korea

The International Investment/Transaction Team of Siwoo Law Firm provides professional consultation services to help foreign investors successfully enter the South Korean market. With expertise in South Korean laws, regulations, and business culture, Siwoo Law Firm helps investors navigate the complexities of investing in South Korea, ensuring a smooth entry and successful operations.

For further assistance:

Siwoo Law Firm International Investment and Transaction Team
Ryu Seungho, South Korean Attorney 
**Email: [ryu@siwoo-law.com (mailto:ryu@siwoo-law.com)**