NATIONALITY
An E-2 investor must establish the nationality of the commercial enterprise by showing that he or she owns at least 50 percent of the shares of the company. Therefore, an investor from a treaty country who wishes to immigrate and become a U. S. permanent resident likely will be applying for a direct EB-5 because regional center EB-5 projects do not allow an investor to hold at least 50 percent of the shares in the new commercial enterprise.
There is no nationality requirement for EB-5. The country of birth is relevant to all immigrant visa applicants because that is the country of chargeability for determining immigrant visa number availability based upon statutory per-country limits. China is oversubscribed. Vietnam and India are not far behind. Unfortunately, the United States does not maintain an investment treaty with any of these countries.
MARGINALITY
E-2 regulations require that the investment must be more than“ marginal,” which means that the company must have the present or future capacity to generate more than enough income for the investor or demonstrate that it will create a positive economic impact on the local economy. For new E-2 businesses, this requirement is met by showing a business plan that projects either high profits or at least some employment creation within the first five years of business operations.
BUSINESS PLAN
An EB-5 business plan, on the other hand, has more strict and different requirements, such as the requirement to demonstrate at least 10 full-time positions will be created for qualifying U. S. workers within the two-year conditional period of permanent residency. An attorney representing an investor client who is considering an E-2 first and a potential EB-5 later would be well-advised to have the E-2 business plan written with the EB-5 requirements in mind.
LAWFUL SOURCE OF FUNDS
Another requirement for both E-2 and EB-5 is to demonstrate the lawful source of the invested capital. Again, the E-2 and EB-5 requirements are slightly different, but as in the case of the business plan, the EB-5 requirements for lawful source of funds are more stringent than for an E-2.
Therefore, in documenting an initial E-2, an attorney might consider going the extra mile in requesting detailed documentation on the source and path of the investor client’ s E-2 funds, just in case an EB-5 might be in the client’ s future. If the E-2 invested funds are contemplated to be counted in a later EB-5 case, it would be wise to comply with the EB-5 source of funds documentation requirements.
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