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When are EB-5 investors required to exit from the enterprise?

I represent a group of Italian entrepreneurs interested in the EB-5 program. If the investors join a new regional center, what happens to their investment and role in the enterprise after five years? Are they required to withdraw the remaining amount after the five years? Or can they remain as stakeholders in the business?

Answers

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You will need to review the project's offering documents, such as a LLC agreement or Limited Partnership agreement, private placement memorandum, and subscription agreement to determine what the exit strategy is. Investors may choose to stay invested or follow the exit strategy as per offering documentation and withdraw their capital contributions. This would depend on whether the project is an equity-based or loan-based investment.

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    John J Downey

    Immigration Attorney
    Answered on

    They can remain. All business arrangements are stated in the operating documents, i.e. Limited Partnership Agreement, Operating Agreement, etc. The parties are free to determine any lawful exit strategy.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    They may remain invested in the business. The five-year timeline seen in many EB-5 projects is based on the expected timeline to obtain full, lawful permanent residency, as the investment must be sustained throughout this entire period.

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    Michael A Harris

    Immigration Attorney
    Answered on

    The answer to your question will depend on the project offering documentation in which the Italian investors make their capital contribution to. Some projects involved with regional centers will offer investments in which the foreign investor funds are used by a partnership to make a loan to a job creating enterprise project. In those projects, if the funds are ready to be returned to the investors, they will have to wait until the conditions on their residence are removed, which can take usually around five years from the date they started the EB-5 process. Now, if the investors make a capital contribution to a project in which they received an equity interest, then the date that their capital will be returned to them will be at a time in the future depending on the liquidity or potential revenues of the business. That event of the return of their capital in an equity partnership could not happen until after the conditions on the residency are removed.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    This depends on whether these investors invested in an equity-based EB-5 project or a loan-based project. If the investment is in an equity-based EB-5 project, then the investor holds equity interest in that project and receives the interest or some rate of return on investment as long as the limited partnership lasts. However, if the investment is in a loan-based project, as almost all of the regional centers do these days, then the investor will likely receive their investment funds at loan maturity, which is normally five to six years after all the required jobs are created and I-829s are approved.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    They can remain as stakeholders unless the terms of the agreement require their exit.

  • Avatar

    Lynne Feldman

    Immigration Attorney
    Answered on

    They remain as stakeholders in the business.

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