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What offering documents are required for an EB-5 direct investment?

The corporate structure of the New Commercial Enterprise will be set up as a Limited Partnership with one EB-5 investor being the limited partner. Will this direct EB-5 investment require offering documents such as the PPM and Subscription Agreement? What offering documents are mandatory for an EB-5 direct investment?

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You should consult an experienced EB-5 attorney to discuss the specifics of your case and the business structure of the investment. At a minimum, in a direct investment via a Limited Partnership, you would need to have a Limited Partnership Agreement, appropriate business registration documents, an Escrow Agreement if escrow is utilized, a comprehensive business plan compliant with the requirements established by USCIS, etc.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    It will depend on the details of your corporate structure, but any documentation necessary to incorporate the investor into the project would be required as part of the I-526.

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    John J Downey

    Immigration Attorney
    Answered on

    It will depend on how you structure the total investment. Will there be a new commercial enterprise being established? How many investors will be needed? If only the one, then you could use a simpler structure. More info is needed to give an answer.

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    Oliver Huiyue Qiu

    Immigration Attorney
    Answered on

    In a direct EB-5 investment with only one investor, what the offering document should include depends upon how the investor is recruited. The Private Placement Memorandum or PPM is very common with regional centers, but rare in a direct EB-5 investment. USCIS would not reach that far as to regulate what type of offering documents to be presented to the potential investor. However, when filing with USCIS, it is common to include the Subscription, Investment or Partnership Agreement. In addition, a comprehensive business plan is also required by the regulation.

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    James Cai

    Immigration Attorney
    Answered on

    The subscription agreement should be sufficient, plus needed security filings with the state. However, a limited partner may not qualify as active management role for direct investment purposes. You should make him an active manager.

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    Melanie Yang

    Immigration Attorney
    Answered on

    If you invest in your own newly established enterprise, you do not need offering documents such as a PPM or subscription agreement. If you have other partners or shareholders in your enterprise, you need an operating agreement or shareholder''s agreement or just company by law and minutes to record the percentage of ownership and management roles of each investor.

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    Ian E Scott

    Immigration Attorney
    Answered on

    The offering documents required for an EB-5 investment are governed by SEC rules and depend on which exemption (if any) the project plans on using. For most regional centers/projects, you will see a full set of offering documents. If the investment is a direct investment, then the required documents will depend on where the investor resides and which exemptions are filed (e.g. if the issuer is relying on a 506 exemption and the investor is accredited, you may be able to provide less information). The answer is complicated though, so sitting down with an SEC and immigration lawyer is the best way to go.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    This is not an easy question to answer on a blog as the business side documents for EB-5 case is easily three inches high. While there is no set rules regarding what documents are required for EB-5, you need to note that the EB-5 investment is an investment vehicle requiring all the documents that will be required to receive investment according tosecurities laws. In addition, you will need to include documents for the immigration side of EB-5, including, and not limited to, the fact that this is a new business enterprise (or failing business) and how this business is expected to create the requisite 10-plus full-time, permanent jobs per investor. Please consult with an experienced EB-5 lawyer that does corporate and securities work.

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    James Yang

    Immigration Attorney
    Answered on

    Offering documents vary by project, and certain documents are not necessarily required by law. However, generally for a Limited Partnership, offering documents may include the subscription agreement, limited partnership agreement, PPM/offering memorandum, and escrow agreement (if an escrow account is used to temporarily hold investors'' EB-5 capital).

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    Robert Cornish

    Securities Attorney
    Answered on

    You will need a properly drafted PPM and subscription agreement, all of which will need to be narrowly tailored to your specific venture and the terms of investment. The PPM will provide the necessary risk disclosures, the parties and other professionals involved in the offering, the nature of the investment, fees that are being charged and the actual/inherent conflicts of interest between the parties involved in the raising of the funds. You should also consider the use of an arbitration clause to resolve disputes, as well as independent professionals for audit, escrow, administration etc. to avoid conflicts of interest and self-dealing in the eyes of the SEC. Your offering materials should also include a Limited Partnership agreement of the Fund to adequately disclose corporate governance matters. While there are no specific requirements for a PPM in a EB-5 deal, the federal and state securities laws apply. And as such, you are best protected to provide full disclosure in offering documents to prevent any questions down the road that could possibly lead to a lawsuit based on violations of those laws.

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