EB5 Investors Magazine "Top 25 issue" Volume 9 Issue 1 - Page 95

" The EB-5 Reform and Integrity Act of 2022 reshapes the EB-5 industry by attracting different demographics of investors and pushing Regional Centers to look beyond the traditional pool of prospective purchasers ."
The EB-5 Reform and Integrity Act of 2022 reshapes the EB-5 industry by attracting different demographics of investors and pushing Regional Centers to look beyond the traditional pool of prospective purchasers . E-2 visa holders with a proven track of entrepreneurship , clear source of funds and available capital cannot be disregarded in the search for qualified investors .
purpose of compliance with securities laws , E-2 visa holders are very desirable candidates for Regional Centers marketing efforts , even despite their presence in the United States . Typically , EB-5 securities offerings solicit individuals outside the United States , with issuers invoking Regulation S exemption to the registration requirements 9 . When making an offering within the U . S ., EB5 issuers usually rely on Regulation D 10 .
Under Regulation D , Rule 506 ( c ), companies can broadly solicit and generally advertise the offering and still be deemed to follow the exemption ’ s requirements if the investors in the offering are all accredited investors ; and the company takes reasonable steps to verify that the investors are “ accredited ,” which could include reviewing documentation ( such as W-2s , tax returns , bank and brokerage statements , credit reports and the like ). This exemption may be more available in the offering concerning E-2 visa holders than any other non-immigrant in the U . S .
Rule 506 ( c ) does not propose a comprehensive list of methods for verification methods that would be deemed as “ reasonable ” but rather implies factual inquiry into purchasers of securities financial affairs . The documents that under standard scrutiny would provide necessary information regarding the purchaser ’ s financial standing – W2s , tax returns , bank statement , stock ledgers , etc – are usually readily available in E-2 context simply as being incidental to the visa status of the purchaser . Moreover , unlike , for example , F-1 students who invest the capital provided by the parents and rarely qualify for themselves , E-2 visa holders are generally established business owners and entrepreneurs who can be classified as “ accredited investors ” under the Rule 506 ( c ) based on level of income or net worth .
Natalia Polukhtin , attorney at Global Practice , specializes in investment immigrant and non-immigrant visa categories . Native to Russia , Polukhtin earned her graduate and undergraduate degrees from Moscow State University before obtaining a law degree from Mercer University School of Law . She developed unique expertise in documenting source of funds originated from CIScountries and published several articles on integration of non-traditional sources of funds , such as cryptocurrency , into the EB-5 process . She is a recipient of multiple professional awards , including Top 25 EB-5 Attorneys by EB5 Investors Magazine and recognition from IIUSA . She is a member of the Executive Council of the Immigration Law Section of the State Bar , and an author of a comprehensive guide written in Russian to business immigration to the U . S .
Sources :
1 INA § 101 ( a )( 15 )( E )
2 22 CFR § 41 . 51 ( b )( 7 )
3 8 CFR § 204 . 6 ( j )( 3 )
4 Spencer Enterprise Inc v . U . S ., 229 F . Supp . 2d 1025 , 1040 ( E . D . Calif . 2001 ) aff ’ d 345 F . 3d 683 ( 9th Cir . 2003 ).
5 Zhang v . USCIS et al , 978 F . 3d 1314 ( D . C . Cir . 2020 )
6 8 CFR 204 . 6 ( e )
7 Matter of Hsiung , 22 I & N Dec . 201 , 202-03 ( Assoc . Comm . 1998 )
8 Zhang , at 13 .
9 Regulation S of the Securities Act ( 1933 ) provides exemption from registration requirements based
on two factors ( 1 ) the offer must be made outside the United States ; and ( 2 ) neither the issuer nor the person acting on behalf of the issuer conducted “ direct selling efforts ” on behalf of the United States .
10 Regulation D provides exemption from registration requirement under the Rule 506 ( b ) allowing
private offerings without use of general solicitation and advertising and to the accredited investors only ; and Rule 506 ( c ) limiting the purchasers to those who qualify as “ accredited investors ”.
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