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How can a business make changes after EB-5 investment?

A specialty construction contractor is looking to use EB-5 investments to expand our operations. I am part of the company management and have my own potential investors in China; I am hoping to accomplish this with a direct investment of $3 - $5 million from one foreign individual. We currently have two owners of the company. Would the EB-5 investment complicate/restrict any potential ownership changes in the near future (whether it be the addition of more partners or if an owner decides to retire)? If there are certain members of our team whose performance warrants termination, is there a time to do this that may be more advantageous as it relates to the EB-5 job generation accounting?

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    Ownership changes or other changes that do not materially change the business plan and job creation estimates of the EB-5 new commercial enterprise should not have any adverse effect with respect to U.S. immigration. If the EB-5 investor is otherwise eligible and sustains his or her investment in the new commercial enterprise and creates the required number of full-time jobs, then it should be fine. There is no U.S. immigration requirement for an EB-5 investor to own a certain (or constant) percentage of the new commercial enterprise.

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    John J Downey

    Immigration Attorney
    Answered on

    It is difficult to give a complete answer without a more detailed description of your company. However, with what you have described you could form a new company with the the investor as a limited partner and your current company as the general partner. This organization could then invest in the project known as the New Commercial Enterprise (NCE) and create the jobs required under EB-5.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    Typically investors are partners or at least limited partners in the enterprise; changing the management team other than the investors may be OK depending on the business documents, provided the business plan is not materially changed, jobs are created and the investor gets what they were promised from the deal.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    Making your potential project EB-5 compliant and setting up the EB-5 structure will require an attorney's assistance, but the potential investors' management role can be limited to voting on policy matters. The structure also specifies what entity the investors are actually members or limited partners of.

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    Robert Cornish

    Securities Attorney
    Answered on

    You have an interesting dynamic here, as not all of the investment from the one individual has to be in the form of an EB-5 investment. It can be straight up, normal investment to some degree. That means you can structure your company in a variety of ways using varying methods to accommodate the corporate governance needs at hand, as well as tax and immigration. The entity into which the investment is made can be structured accordingly as well I believe, but it will take a substantive conversation with corporate and immigration counsel to ascertain how you want to handle a construction entity with perhaps some sort of separate entity, subsidiary or perhaps even a parent company with which to contract for labor and management purposes.

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