When most people think of foreign direct investment (FDI) they imagine a company entering a new country through a ‘greenfield’ investment, however the more common method (especially in developed economies) is through a cross-border merger or acquisition (M&A) transaction.

Basically, according to Korea’s Foreign Investment Promotion Act (FIPA) a FDI cross-border M&A transaction is defined as -

The acquisition of shares or equity of a domestic business for the purpose of establishing a continued economic relationship through participation in managerial activities.”

And the transaction must comply with the following stipulations -

• Minimum Foreign Investment Amount: KRW 50 million
• Foreign Investment Ratio: 10% or more of the voting stocks or total invested capital

For a much more detailed explanation please visit the Invest KOREA homepage here, or download their “Guide to FDI in Korea 2009“