Financial Supervisory Service As the integrated supervisory authority, the FSS oversees financial services firms across
the entire financial sectors.


Incorporation of Financial Services Companies

Financial services businesses are regulated enterprises, and financial services companies are incorporated in accordance with established rules and standards as provided under the law.

Authorization, Approval, and Registration

Unless provided otherwise under the law, the incorporation of a financial services company requires FSC/FSS authorization, approval, or registration. Both authorization and approval are administrative actions that legally sanction a person (natural or legal) for a business activity. Although authorization and approval are similar in meaning and are often used interchangeably, authorization more narrowly means giving a person the permission to engage in a regulated business activity and approval granting the full legal effect to a business activity. Some financial services businesses merely require registration with the FSC/FSS, which is granted without any additional regulatory scrutiny when the applicant satisfies the established requirements.

Incorporation Requiring FSC/FSS Authorization

  • Banking: National bank, regional bank, foreign bank branch;
  • Financial investment services: Investment dealing, investment brokerage, collective investment schemes (excluding hedge funds), and trust services;
  • Nonbank financial services: Mutual savings banks, credit unions, and other deposit-taking financial services providers;

Incorporation Requiring FSC/FSS Approval

  • Nonbank financial services: Credit card companies;
  • Insurance: Life insurance, nonlife insurance, and hybrid insurance;

Incorporation Requiring FSC/FSS Registration

  • Financial investment services: Investment advisory companies, discretionary investment services companies, and hedge funds;
  • Insurance: Insurance intermediaries (including sales agents, insurance agencies, and brokers), actuaries, claims adjusters, and others providing product development or claims payout services;
  • Nonbank financial services: Leasing companies, installment finance companies, and new technology venture capital companies.

Review of Incorporation Application

Authorization/approval for the incorporation of a financial services company is granted after thorough review is performed of the incorporation application, especially in respect of the applicant's legal form, the feasibility and viability of the applicant's business proposals and plans, the availability of capital and the composition of the major shareholders, and the competence of the management.

Type of Applicant's Legal Form

As a rule, the incorporation of a financial service company is limited to a corporate form as recognized under the Commercial Act (commercial code) with some exceptions provided for credit unions and several other smaller institutions.

Feasibility and Viability of Applicant's Business Proposals and Plans

For the assessment of the feasibility and viability of the application, extensive analyses of the financial soundness of the proposed business as a going concern are made. Other assessment criteria include the prospect for the long-term business viability and the competitive effect of the new company on the industry.

Business Resources and Operational Capability

Human and business resources and operational capabilities that are needed to serve financial consumers and remain a going concern are another key review criterion. The appropriate levels of resources and operational capabilities may vary from industry to industry and the type of financial services to be offered. For services such as insurance requiring actuaries, claims adjusters and other specialist employees, the applicable laws and regulations provide for the required employee levels.

Capital Requirements

Specific minimum capital requirements are set for the incorporation of a financial services company are set as shown in the table below:

Capital Requirements
  • National bank
  • Regional bank
  • KRW100 billion
  • KRW25 billion
Financial investment services
Authorization given for each business line,
not for incorporation
  • Dealing
  • Brokerage
  • Collective investment schemes
  • Trust service
  • KRW1 to 90 billion
  • KRW500 million to KRW20 billion
  • KRW2 to 8 billion
  • KRW5 to 25 billion

Approval given for each business line, not for incorporation

  • Full insurance business
  • Single insurance line
  • Branch of foreign insurance company
  • KRW30 billion
  • KRW5 billion
  • KRW3 billion

Specialized credit finance companies:

  • Credit card companies;
  • Leasing companies;
  • Installment finance companies;
  • Facilities financing;
  • KRW20 billion for one or two specialized credit finance businesses;
  • KRW40 billion for three or four specialized credit finance businesses;
Mutual savings bank
  • KRW12 billion for the main office located in the Seoul Metropolitan City;
  • KRW8 billion for the main located in one of the five smaller metropolitan cities;
  • KRW4 billion for others;
Credit unions
  • KRW300 million for region-specific credit unions;
  • KRW100 million for group-specific credit unions;
  • KRW40 million for workplace-specific credit unions;

Composition of Management and Shareholders

The composition of the management and the shareholders of the proposed financial services company is reviewed in order to not only ensure the safety and soundness of the proposed company, but also prevent abuses by company insiders. The review of shareholders covers not only the organizers and major shareholders, but also persons specially related or connected to the shareholders and any other persons who are able to exert significant influence on the management of the proposed company. The review extends to the shareholders' ability to contribute capital to the company, their financial conditions, their past irregularities and rule violations, and the sources of funding for the incorporation.

In accordance with the principle of separation of banking and commerce, ownership in financial services companiesㅡespecially in deposit-taking institutions such as commercial banks and mutual savings banksㅡis restricted to prevent individuals, companies, and business groups from exercising undue influence on financial services companies. The review of the proposed management also takes place with particular emphasis on disqualifying causes and the ethical standards of the individual managers.

Preliminary Authorization/Approval

In order to ensure a smooth and cost-effective authorization/approval process for the incorporation applicant, the incorporation rules provide for a preliminary authorization/approval. Where it is determined that the applicant meets all of the authorization/approval requirements or an accelerated authorization/approval is warranted, a preliminary authorization/approval may be waived. The law provides for a transparent and expeditious incorporation process by imposing a specific length of time within which the review must be completed for both the preliminary and the final authorization/approval. An applicant that satisfies all the incorporation requirements must be promptly granted the authorization/approval sought. Where the authorized or approved company fails to comply with any of the incorporation requirements after receiving the authorization/approval, the FSC/FSS may revoke the authorization/approval (or the registration).

Authorization for Foreign Bank Branches

A foreign bank seeking to open or close a bank branch or a representative office in Korea must obtain an appropriate authorization from the FSC/FSS. The authorization of a foreign bank branch may be withdrawn where the branch's foreign-headquartered bank ceases to exist as a result of a merger or an assignment, receives sanctions for improper or unlawful conduct, or suspends or terminates its banking business. Foreign bank branches must report all such occurrences to the supervisory authority within seven days from the date of the occurrence. The banking license of a foreign bank branch is deemed to be revoked where the foreign-headquartered bank fails, loses its banking license, terminates its banking business, or ceases to function as a going concern.