Tax & Regulation February 9, 2026 · 39 min read

Foreign Investment Promotion Act (FIPA): Legal Guide for Canadian Companies

Key Takeaway

South Korea's Foreign Investment Promotion Act (FIPA) provides Canadian companies with a structured, promotion-oriented legal framework for market entry—offering investment incentives, clear eligibility thresholds, and a notification-based (rather than approval-based) process for most investment types. Understanding FIPA's definitions, qualifying investment structures, and restricted industry rules is foundational to any Korea market entry strategy.

Implications

Canadian companies should note that FIPA's KRW 100 million minimum threshold and 10% voting share requirement are critical eligibility benchmarks—falling below these figures means an investment will not qualify for FIPA protections or incentives, and may be treated as portfolio investment with no associated benefits. Long-term loan structures (5+ years from a foreign parent) offer an alternative qualifying pathway worth considering for companies not pursuing full equity stakes. Engage Invest Korea (KOTRA) early as a no-cost, one-stop facilitation resource. For sector-specific or regionally incentivized opportunities, Free Economic Zone authorities and local government investment offices should be mapped against the target business location from the outset.

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