When You Should Get Advice
- We do not know how much my father's restaurant owes suppliers and lenders
- My brother, who actually ran the company, says he will take all the shares
- Because the shares have not been divided, the shareholders' meeting cannot choose a new representative director
- I found out that some of my father's company shares were held in an employee's name
- My siblings want to split everything equally between me, who helped build the company, and those who did not
Relevant Laws
Commercial Act (상법) Article 333 (Co-owned shares)
When shares are co-owned by several people, the co-owners must choose one person to exercise the shareholder's rights, and if there is no such person, the company need only give notice to one of the co-owners.
Civil Act (민법) Article 1008-2 (Contribution share)
A co-heir who specially supported the deceased for a considerable period, or who specially contributed to maintaining or increasing the deceased's property, can have a contribution share recognized by agreement or by a family court decision.
Inheritance Tax and Gift Tax Act (상속세 및 증여세법) Article 18-2 (Family business succession deduction)
When a small or medium-sized business or similar enterprise that the deceased ran continuously for 10 years or more is inherited, a certain amount is deducted from the taxable value for inheritance tax. There are separate requirements for the heirs and for post-inheritance compliance.
Statutes are summarized. The official Korean text is available at the Korea Law Information Center (law.go.kr).
What Is Inherited Differs for Sole Proprietorships and Corporations
If your parent was a sole proprietor, business assets such as the shop deposit, stock and equipment pass to the heirs, and so do debts such as unpaid supplier invoices, business loans and unpaid wages. The books are often not in order, so if you do not know how much is owed, consider limited acceptance (한정승인) within 3 months as well.
With a corporation, the company's building and deposits belong to the company, and what is inherited is the shares the deceased held. If the representative director acted as joint and several surety for company loans, those surety obligations are inherited, so the company's financial condition must also be examined.
Voting Rights Are Frozen Until the Shares Are Divided
Inherited shares are co-owned by the heirs until division, and voting rights on co-owned shares can only be exercised once one person has been chosen to exercise them. If the siblings cannot agree on that person, electing a new representative director or making important decisions at the shareholders' meeting can come to a halt.
That is why agreements that give the shares to the person who will carry on the company and settle with the other heirs through real estate or cash are common. If no agreement is reached, the family court decides the method of division by looking at the nature of the assets, the relationship among the heirs and the state of the business. For unlisted shares, even the valuation method becomes a point of dispute, and since who takes over the company is tied to the requirements for the family business succession deduction, it is wise to get a tax review at the same time.
Contribution to Building the Company and Shares in Other People's Names
A child who helped their father build up the company and increase its value can claim a contribution share (기여분). The court looks at whether the child was paid a proper salary, whether they put personal money into the company and what roles the other siblings played. Conversely, if a child received a high salary or shares from the company in advance, these may be counted as special benefits (특별수익).
If the deceased placed shares in the name of an employee or relative, you must show that the deceased was the real owner, using records of payment for the shares or the flow of dividends, and include the shares in the estate. If the named holder will not return them, a separate lawsuit is needed.
How We Handle an Inheritance Involving a Business
- 1
Identifying business assets and debts
We gather the books, business bank accounts, tax filings, receivables, payables and surety records to estimate the net assets.
- 2
Deciding on acceptance or renunciation
If the debts may be larger, we decide on limited acceptance or renunciation within 3 months, and then whether to keep running the business or wind it up.
- 3
Preventing a management gap
For a corporation, we choose the person to exercise the rights of the co-owned shares and check the articles of incorporation and shareholder register to set up how decisions will be made for now.
- 4
Preparing a division proposal
We combine shares, real estate and cash to calculate the shares of the person taking over the company and those to be paid out.
- 5
Mediation, adjudication and follow-up lawsuits
If agreement fails, we pursue an adjudication on division of the estate and a contribution share claim, and if needed, a lawsuit to recover shares held in another person's name.
Lawyers handling these cases
Hansol Kim Managing Partner
Former prosecutor at the Incheon District Prosecutors' Office, the Ansan Branch of the Suwon District Prosecutors' Office and the Hongseong Branch of the Daejeon District Prosecutors' Office
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Miso Kim Partner
Formerly at Daehwan Law Firm, in-house counsel on the legal team of Wemade Co., Ltd., and Oracle Law Firm
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Frequently asked questions
If I carry on running my father's shop, can I no longer renounce the inheritance?
Using or disposing of the shop's assets as an heir can be treated as simple acceptance (단순승인), after which renunciation or limited acceptance may be blocked. If you do not know how large the debts are, consider limited acceptance before continuing the business, and think about the effect before disposing of stock or equipment as well.
While he was alive, my father transferred all his company shares to my brother. Can I claim a forced heirship share?
If you are his child, you can. For inheritances that began on or after March 17, 2026, the rule is that you receive the value in money rather than the shares themselves. How the unlisted shares are valued will decide the amount, so first secure the company's financial records.
My father, the representative director, was a surety for the company's loan. Isn't it fine as long as the company repays it?
Surety obligations are inherited, so if the company cannot repay, the heirs may be asked to pay. If the company is in poor financial shape, weigh the value of the shares against the surety risk and consider limited acceptance.