The Korean government introduced the Limited Partnership and the Limited Liability Company through the most recent Amendment to the Korean Commercial Code("KCC") which will be in effective from April 15, 2012. The government is strongly expecting that small business corporations practically use well those two new business types since they have used mostly only one type of business, so called the C corporation since there has been lack of options for the small business corporations to select as their business entity. The KCC only had 4 types of corporation, such as the Partnership Company, the Limited Partnership Company, the Stock Company, and the Limited (Liability) Company which has almost same structure as that of the newly introduced Limited Liability Company.
However, there is a reasonable doubt whether the small business corporations in Korea practically use the new types of business under the Amendment of the KCC since they have specially had a strong preference the stock company as their business types of entity for some reason examined in this Article. Moreover, for the new business types, the Limited Partnership and the Limited Liability Company, do not meet the small business corporations’ needs in Korea, there should be something other than the new business types which are newly introduced to Korea.
In the United States, the Limited Partnership and the Limited Liability Company are very popular among the small business corporations. So the Korean government just introduced those business types. The government wants small business corporations practically use those types of business well just like that the small business corporations in the U.S. do. However, the Korean government missed something that the S Corporation is in the United States and the S Corporation is the most popular type of business among the small business corporation. Actually the small business corporations in the U.S. have taken the type of S Corporation the most. In Tax Year 2006, S Corporations accounted for 3.9 million, or 66.3 percent, of the 5.8 million corporate returns filed, continuing to be the most popular type of corporate entity. The number of S Corporations increased 5.1 percent to 3.9 million for Tax Year 2006, representing nearly two-thirds of all corporations. But the Korean government have not seen the S Corporation at all when the government deliberated some types of businesses in the U.S. such as the Limited Partnership and the Limited Liability Company for introducing those to Korea.
Thus, this Article introduces and examines the S Corporation in order for the small business corporations in Korea to select itself as their business legal entities. Since there have not been any former studies about detailed Legal issues of the S Corporation, this Article might be the one which trigger some events of studying the S Corporation and discussing the introduction of the S Corporation to the KCC.