The Regional Center Program was created in 1992 to offer an alternative to the original — and only — method of EB-5 investment, direct investment. The Regional Center Program introduced regional center investment, which entails investing in a project sponsored by an EB-5 regional center. This investment method comes with a wide array of benefits, and its popularity is made clear as it comprises roughly 95% of all EB-5 investments. One of the main advantages to regional center investment is its ability to pool the funds of multiple investors into a single project.
There is no “standard” number of EB5 investors for regional center projects because each project varies in its financial needs and estimated job creation. Therefore, the number of investors in any given regional center project will depend on the project’s characteristics, i.e. size, location, industry sector, etc. A project’s offering documentation should indicate the number of investors it is seeking.
Naturally, the structure of regional center investments affects the role investors have in managing the project itself. With direct investment, investors are solely responsible for their EB5 investment business and are heavily involved in managerial operations. They have complete control over their EB5 project. In contrast, regional center investors generally take a “hands off” approach to their investment.
The majority of regional center projects are structured as limited partnerships, and all EB5 investors who subscribe to the project purchase partnership agreements and become limited partners. Regional center projects can also be structured as limited liability companies, in which investors purchase equity rights to become members. The level of involvement for limited partners varies depending on the nature of the investment and the project’s structure. A regional center investor’s responsibilities may range from minimal involvement to active voting duties on policy and managerial issues. However, investors who sign on as limited partners are generally given very light managerial duties pertaining only to important decisions.
