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What happens if an EB-5 investor has a passive role in the business?

I will be starting a project with an EB-5 investor. Can the individual who is investing be just an investor and not actually active in the daily company? How do we set this up so he still gets the EB-5 green card?

Answers

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    Jimena G Cabrera

    Immigration Attorney
    Answered on

    The investor cannot have a passive role in regard to the investment. The investor does not have to be involved in the day to day managerial control, but he must be engaged in the policy formation and that is fine. Depending on the formation of your company, there are different ways to do so.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    The investor must be at least minimally involved in the management of the new commercial enterprise. A limited partner (or LLC member) with voting rights or the right to advise on general policy-making for the NCE would meet this requirement. A purely passive investor without any such rights would not qualify for EB-5.

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    Charles Foster

    Immigration Attorney
    Answered on

    Legally, an investor should have more than a passive role, at least in name. However, for the most part, investors in EB-5 regional center projects are limited partners, which are effectively passive investors. An investor in a direct EB-5 investment should have more of a substantive role in both name and practice. Specific daily activity is not required.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    It is okay if the investor is acting in a decision-making role as a limited partner or board member.

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    Shiyong Ye

    Immigration Attorney
    Answered on

    If it is a regional center project, most investors will play a rather passive role with some voting rights to determine certain limited issues such as reinvestment.

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    Phuong Le

    Immigration Attorney
    Answered on

    You are correct that an EB-5 investor cannot merely be a passive, detached investor. However, there is no requirement for the EB-5 investor to be actively involved in the day to day operations of the company; it is sufficient for him or her to be involved in major policy or voting decisions as a member/partner of an LLC/LLP. These duties and rights should be clearly laid out in the corporate documents.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    It is usually set up as a limited partnership, but you need to consult the rules in the state where it is located.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    The EB-5 immigrant investor does not need to manage the company or be responsible for the day-to-day management of the company. He can be a limited liability partner engaged in policy formation.

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    Vaughan de Kirby

    Immigration Attorney
    Answered on

    They must have what USCIS defines as an active role. This does not mean that they must be involved in all business decisions. I would recommend you consult with your investment immigration attorney to see that the commercial enterprise is structured properly and the EB-5 investor's participation is properly documented.

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    Irina Rostova

    Immigration Attorney
    Answered on

    As long as the EB-5 investor has voting rights under a standard LP agreement and a standard state LP act, it is usually enough to meet the management requirement. EB-5 investors are not expected to be involved in the daily operations of the business.

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