Introduction

Korea remains an attractive destination for foreign investment, supported by a mature industrial ecosystem, a stable regulatory environment and ongoing government efforts to facilitate FDI.

At the same time, recent amendments to FIPA and tighter controls under the Act on the Prevention of Divulgence and Protection of Industrial Technology ("ITPA") and the Act on Special Measures for Strengthening and Protecting the Competitiveness of National High-Tech Strategic Industries ("NHTSIA") signal Korea's shift toward a more security-focused oversight model, mirroring trends seen in the United States and the European Union.

As these changes continue to roll out, foreign investors pursuing mergers and acquisitions ("M&A"), joint ventures or technology-related transactions should expect more comprehensive screening, longer review timelines and heightened regulatory scrutiny across sensitive sectors.

Summary of major changes in 2025

• With major regulatory changes taking effect between 2024 and 2026, the most notable development in 2025 is the FIPA amendment bill, which substantially expands Korea's national security review system. The proposal would bring indirect foreign investment made through foreign-invested enterprises within the scope of FDI screening, requiring mandatory prior notification for any investment that triggers a security review. This effectively eliminates the current ability to complete certain transactions through post-closing notifications.
• Korea continues to tighten its technology protection regime under ITPA and NHTSIA in response to rising incidents of industrial technology leakage. Recent amendments to ITPA authorize the Ministry of Trade, Industry and Energy ("MOTIE") to impose daily fines on companies holding National Core Technologies ("NCTs") that either proceed with a transaction posing a serious threat to national security in violation of corrective measures, such as suspension, prohibition or reversal orders, or obtain approval or acceptance of a notification through fraudulent or improper means.
• The recent launch of the FDI Execution Support Taskforce by MOTIE reflects the government's whole-of-government approach to foreign investment. The task force helps foreign investors navigate the investment process, providing guidance on regulatory approvals and supporting compliance with reporting requirements, among other things.

Who files?

The obligation to file a foreign investment notification or obtain approval rests with the foreign investor whose transaction qualifies as a "foreign investment" under FIPA. A FIPA filing may also be submitted by a proxy, provided it is accompanied by a power of attorney.

Notifications or applications for approval under ITPA and NHTSIA must be submitted by the target company holding NCTs or National High-Tech Strategic Technologies ("NHTSTs"), as applicable. Although foreign investors are not directly obligated to file, they are expected to comply with MOTIE's requests for cooperation, such as providing information, unless a valid reason exists not to do so.

Types of deals reviewed

All FDI that meets the definition of "foreign investment" under FIPA must be notified to a designated foreign exchange bank (FIPA notification). Under FIPA, "foreign investment" includes cases where a foreign investor acquires 10 percent or more of the voting shares in a Korean company, has a right to appoint company officers, or invests in local nonprofit organizations, provided that the investment amount is at least ₩100 million (approximately US$67,800).

The 2025 FIPA amendment bill expands the scope of foreign investment to include cases where a foreign investor uses a foreign-invested enterprise to acquire substantial control over a Korean company, meaning indirect foreign investment. Transactions within this scope will require prior notification, even if they would otherwise qualify for post-closing reporting.

If the investment involves a target company designated as a "defense industry company" by MOTIE, the investment requires MOTIE approval under FIPA ("FIPA approval").

If the investment results in the foreign investor acquiring de facto control over the management of an existing domestic company and presents national security concerns, a security review is triggered. Failure to file, submission of false information, or acquisition of shares in violation of the applicable obligations may result in criminal penalties of up to 3 years' imprisonment for notification violations and up to five years for breaches of national security restrictions.

A security review may be initiated not only upon submission of a FIPA notification, but also at the request of the relevant ministry ministers or whenever the MOTIE minister deems it necessary, even before a foreign investor files a FIPA notification.

Additionally, under ITPA, overseas M&A transactions involving target companies possessing NCTs developed without government subsidies require notification to MOTIE before the investment can proceed. There are currently 76 technologies designated as NCTs, including semiconductors, displays, electronics, automobiles and railways, steel, shipbuilding, nuclear power, information and communication, space, biotechnology, machinery, robotics and hydrogen.

If the NCTs were developed with government research and development subsidies, the transaction requires approval by MOTIE (ITPA approval) following deliberation by MOTIE's Industrial Technology Protection Committee (ITP Committee).

Overseas M&A transactions involving companies possessing NHTSTs are also subject to an approval process (NHTST approval) similar to ITPA approval. Unlike NCTs, no distinction is made based on whether the NHTSTs were government subsidized or independently developed. Currently, 19 technologies across six sectors, semiconductors, displays, secondary batteries, biotechnology, robotics and defense, are classified as NHTSTs. Under ITPA, technologies designated as NHTSTs are treated as NCTs.

For purposes of ITPA and NHTSIA, overseas M&A transactions include acquisitions of 50 percent or more of total shares of a company, or less than 50 percent if the foreign investor becomes the largest shareholder with dominant influence over the appointment of officers or management. Transactions involving the takeover or lease of all or a substantial part of the target's business, or the exercise of dominant influence through loans or capital contributions, are also covered.

Scope of the review

When submitting a foreign investment notification or application for approval, a foreign investor must indicate whether the proposed investment could pose a threat to national security.

Pursuant to FIPA, when evaluating national security risks, MOTIE gives specific consideration to factors explicitly identified in the law, including potential disruption to the production of defense industry materials, diversion of export-controlled goods for military use, disclosure of state secrets, threats to international peace and security, and the risk of NCT leakage.

In evaluating these risks, MOTIE also specifically considers the investor's legal and security compliance, the target's core technologies and alternatives in Korea, and the investment's potential impact on national defense, technology and supply chain security.

While the specific review criteria for ITPA or NHTSIA approval are not explicitly set out in the law, the Regulations on Operation of Security Review Procedures for Foreign Investment (MOTIE Public Notice No. 2022-115) establish detailed evaluation standards. These criteria broadly address threats posed by the foreign investor, or the foreign government, if applicable, vulnerabilities of the target company, and the potential impact on national security.

Review process timeline

FIPA notifications are due after signing the transaction documents and before remittance of funds, although certain transactions, such as the acquisition of listed shares, may be reported within 60 days after closing unless they fall within the scope of national security review.

In most cases, a FIPA notification is a routine formality and is cleared within a few days, provided that the target's business is not subject to sector-specific restrictions and all required documentation is in order.

For transactions requiring FIPA approval, such as investments in companies in the defense industry, MOTIE has 15 calendar days to issue its decision, with the option to extend the review for an additional 15 calendar days. MOTIE generally adheres to these statutory review timelines.

For transactions subject to national security review, the Security Review Expert Committee ("Expert Committee") must complete a preliminary review within 90 days, extendable once by 30 days, and report to MOTIE's Foreign Investment Committee for deliberation. MOTIE then issues a final decision within 45 days thereafter.

Transactions involving NCTs or NHTSTs must be notified to, or approved by, MOTIE before closing. For notifications, MOTIE has 15 days from receipt to determine whether the transaction may seriously affect national security, excluding any time required for a separate technical examination. If a transaction is deemed to pose a serious national security risk, MOTIE may, within 30 days of issuing its decision and after consulting relevant agencies and the ITP Committee, issue suspension, prohibition or restoration orders.

For approval applications, MOTIE has 45 days from receipt to determine whether the investment poses a national security threat. That determination is made through deliberation by the ITP Committee. As with notifications, any time required for a separate technical examination is excluded from the 45-day period.

Although statutory timelines are established, NCT and NHTST reviews may take longer in practice due to technical assessments.

How foreign investors can protect themselves

Given Korea's strengthened FDI review framework, foreign investors should account for potential review timelines when planning investments, particularly those involving NCTs or NHTSTs.

A key protective measure under FIPA is the pre-confirmation process, which allows investors to seek advance clarification from MOTIE or other competent ministries on whether a contemplated transaction falls within the scope of national security review. MOTIE is required to respond within 30 days, unless additional documentation is required, making this process an effective tool for identifying review obligations early in the deal cycle and mitigating the risk of unexpected screening.

Because FIPA allows ex officio security reviews even without a foreign investment filing, foreign investors should factor regulatory considerations into their transaction structures. In addition, the 2025 FIPA amendment bill's expansion of "foreign investment" to include indirect foreign investment reinforces the need for investors to assess whether their ownership structure could trigger filing or review obligations.

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