The EB-5 program does not necessitate a minimum equity amount for EB-5 investors looking to invest in a certain business, either brand new or already established. An aspect investors should be aware of is that their proprietary share of the business should align with the extent of their involvement with the business, specifically regarding management or administration. Direct EB-5 investors especially are expected to meet a certain standard when it comes to participating in the business’s operations.
When adjudicating I-526E petitions, United States Citizenship and Immigration Services (USCIS) will assess whether a certain level of “active involvement” has been fulfilled on the part of the direct EB-5 investor. In other words, direct EB-5 investors must have some involvement in the NCE’s management and policy-making to comply with EB-5 program regulations.
Direct EB-5 investors have the option of structuring their business in a way that allows them to maintain active involvement to the best of their ability. Certain structures will enable the investor to assist with day-to-day business operations and also depend on experts with considerable commercial experience.
Among the many different business structures, limited partnerships allow for the investor to team up with someone who has had previous experience in business and rely on them for executive decisions in matters of policy. The investor’s requirement for active engagement will be fulfilled as long as the contract stipulates that they have “certain rights, powers and duties normally granted to limited partners” in accordance with the Code of Federal Regulations.
Another business structure investors can consider is corporations. In this scenario, the EB-5 investor’s active engagement level can be satisfied through their position within the corporate business. Such positions could include president, vice president, CEO, CFO, or executive vice president. If the investor, as with a limited partnership, wants to rely on the commercial expertise of another partner within the company, it would be more appropriate for the investor to hold the position of either president or vice president. In this arrangement, the investor is in charge of management and policy, while the CEO or CFO oversees day-to-day operations.
