Share deal or business transfer: what you take over in Korea

There are two common ways to buy a Korean SME: buy its shares, or buy the business itself (yeongeop yangsu-do). The price can be the same and the result very different.

Share deal

You buy the company with everything in it. Employment contracts, permits and most contracts stay in place because the company itself does not change. So do its liabilities, including those not on the balance sheet, which is why due diligence and the seller’s representations matter most here. Check contracts for change-of-control clauses. Crossing 50% may trigger the deemed acquisition tax.

Business transfer

You take over the assets, contracts and staff listed in the agreement, and the rest stays with the seller. Liabilities generally stay behind unless you agree to take them. In exchange, each asset and contract moves separately: some contracts need the other party’s consent, some permits must be applied for again, and whether employees transfer with the business needs its own review. Acquisition tax applies to the real estate and other taxable assets you take over, and whether VAT applies depends on whether the deal counts as a transfer of the whole business.

How buyers usually decide

A share deal is usually simpler when the company is clean and its permits or contracts are hard to move. A business transfer can make sense when you want only part of the company or when past liabilities are hard to pin down. Either way, decide early: the choice changes what you check, what you sign and what you pay in tax.

General information only, not legal or tax advice. Work out the structure for any deal with your own advisers.