South Korea warned North Korea on Friday that it had acted "illegally" in freezing the assets of South Korean companies and staff expelled from the jointly run Kaesong industrial zone.
Seoul`s Unification Minister Hong Yong-Pyo said Pyongyang`s decision to kick out the South Korean firms was "very regrettable" and added the North would have to take full responsibility for any consequences.
North Korea on Thursday said it was closing Kaesong completely and placing it under military control.
All South Koreans working in the zone, which lies 10 kilometres (six miles) inside North Korea, were expelled and told they could only take their personal belongings.
It also ordered a "complete freeze" of all assets left behind, including raw materials, products and equipment.