According to the USCIS Policy Manual, “the immigrant investor must be engaged in the management of the new commercial enterprise [NCE], either through the exercise of day-to-day managerial responsibility or through policy formulation.” Regional center investors typically have reduced management responsibilities compared to direct EB-5 investors, with a focus on policy formulation rather than day-to-day management. Investors who invest directly in a project are typically required to have substantial managerial commitments and are often involved in the NCE’s day-to-day operations.
This makes regional center investments ideal for EB-5 investors who want to live far away from the EB-5 project in which they intend to invest or who have limited business management experience. These factors contribute to the historic popularity of regional center investments. Regional centers typically create limited liability companies or limited partnerships. These organizational structures allow the EB-5 investors to take on limited managerial responsibilities. These limited responsibilities are typically restricted to the investor being involved in policy formation and voting on pertinent business issues, meaning that the investor is largely spared from spending significant amounts of time on the project.
While the reduced managerial involvement attracts some people to regional center investments, direct EB-5 investment is more suitable for investors who wish to retain more control over their EB-5 investment. Direct EB-5 investment may also be more suitable for investors who have extensive business experience and who are focused on the financial returns on their EB-5 investment.
EB-5 investors and developers should take care when structuring a project to ensure that the investor is adequately involved with the NCE to satisfy the management requirement of the EB-5 program. Working with experienced EB-5 professionals can benefit all those involved in EB-5 investment activities, and investors should consult EB-5 immigration counsel from the outset to reduce financial and immigration risk.
