Scenario: a Vietnamese group plans to buy 51% of an operating technology company in Seoul. Unlike Japan’s “prior notification”, Korea uses a two-layer model: investment reporting plus technology/security screening — and the second layer is where deals get stuck.
South Korea: two layers — FIPA reporting and technology screening
Layer one is the Foreign Investment Promotion Act (FIPA): foreign investors report the investment — typically via KOTRA or a designated foreign-exchange bank — before remitting capital. This is an administrative procedure, not a permit. Layer two is what matters: for national core technology, defence and security sectors, deals may face security screening and be restricted or conditioned. Many Vietnamese investors, used to Vietnam’s “single registration”, underestimate layer two — especially where the target holds semiconductor, battery or strategic-material technology.
Merger control: the KFTC on asset/turnover thresholds
The Korea Fair Trade Commission (KFTC) reviews concentrations under the Monopoly Regulation and Fair Trade Act (MRFTA), based on the assets and turnover of the parties. Above the thresholds, filing and a waiting review apply — the same principle as Vietnam, with its own threshold set to be computed independently.
Vietnam: capital-contribution registration is the main gate
In Vietnam, the main gate for a foreign investor acquiring an operating enterprise is registration of capital contribution, share or stake purchase under the Law on Investment 143/2025/QH15 (effective 1 March 2026, replacing Law 61/2020/QH14) in the cases the law prescribes, plus member/shareholder change registration under the Enterprise Law 2020 (amended by Law 76/2025/QH15, effective 1 July 2025). The second screen is the economic concentration notification under the Competition Law 23/2018/QH14 and Decree 35/2020/ND-CP above thresholds. Unlike Korea, Vietnam has no separate technology/security screening layer — but the investment-registration gate is already tight for conditional sectors.
Due diligence: Korea is hardest on unions and cross-shareholdings
Korean DD has two signature potholes: powerful unions (strikes, collective agreements binding the buyer) and chaebol-style cross-shareholdings that obscure who really controls the company. In Vietnam, DD typically snags on land, sub-licences and opaque related-party receivables/payables.
Quick comparison
| Criterion | South Korea | Vietnam |
|---|---|---|
| Foreign-investment approval | Two layers: FIPA report (procedure) + technology/security screening for sensitive sectors | Registration of capital contribution/share purchase in prescribed cases (Law 143/2025) |
| Merger control | KFTC (MRFTA), asset/turnover thresholds | Economic concentration notification (Law 23/2018 + Decree 35/2020) |
| Capital-transfer tax | Non-resident sellers may face capital gains tax in Korea; check the Vietnam–Korea double tax treaty | Organisations: CIT (Law 67/2025/QH15 + Decree 320/2025/ND-CP); individuals: PIT |
| Typical closing timeline | 3–6 months; longer if technology/security screening applies | 1–3 months depending on registration and notification duties |
Recommended actions
1. Screen the target’s technology before pricing — security review is the biggest timeline variable. 2. Read the collective labour agreements closely in DD. 3. Map real ownership; do not trust nominal share ratios. 4. Confirm every point of Korean law with local counsel.
Frequently Asked Questions
Does buying shares in South Korea need investment approval like M&A in Vietnam?
Korea uses a two-layer model: layer one is FIPA investment reporting (an administrative procedure, not a permit); layer two is technology/security screening for sensitive sectors, which can restrict or condition a deal. In Vietnam, the main gate is registration of capital contribution, share or stake purchase under the Law on Investment 143/2025 in prescribed cases.
What does Korea’s technology/security screening catch?
Deals involving national core technology, defence and security — typically semiconductors, batteries and strategic materials. This layer causes the longest delays and should be assessed at target-screening stage.
What thresholds does the KFTC use?
The assets and turnover of the parties to the concentration (Monopoly Regulation and Fair Trade Act — MRFTA). Above the thresholds, filing and a review waiting period apply before closing.
What is hardest in Korean due diligence compared with Vietnam?
Unions (strikes, collective agreements binding the buyer) and chaebol-style cross-shareholdings that complicate identifying real control. In Vietnam, DD usually snags on land, sub-licences and related-party transactions.
What tax applies on transferring shares in a Korean company?
A non-resident seller may face capital gains tax in Korea; the Vietnam–Korea double tax treaty should be checked. In Vietnam, organisations pay CIT and individuals pay PIT.
How long does a Korean M&A deal usually take?
About 3–6 months in a smooth scenario; materially longer where the target involves sensitive technology subject to security screening.
