Securities compliance considerations when preparing offering documents in a post-RIA world -

Securities compliance considerations when preparing offering documents in a post-RIA world

By Ronald R. Fieldstone and Rohit Kapuria​​

The EB-5 Reform and Integrity Act of 2022 (RIA) had much guidance that would seem intuitive, and much that remains unclear as a result of the absence of definitive guidance from USCIS on a number of interpretive matters related to the RIA’s requirements.

The RIA brought forth special set-asides that include 20% or 2,000 visas per year for rural projects, 10% or 1,000 visas for TEA projects, and 2% for infrastructure projects.

These set-asides enable Mainland Chinese and Indian nationals to be current for a period of time in investing in these projects and also receive priority processing. Pre-RIA investors do not get this benefit and are subject to a multi-year retrogression.

As a result, especially for rural projects that already have two years of visas for the current and past fiscal years, together with excess visas that add on to these numbers, the demand for these investment opportunities has increased dramatically. Many of the rural projects are in high-end markets, making the opportunity that much more attractive.

The new provision of the RIA also allows concurrent filing for those EB-5 investors who are in the U.S.  If the EB-5 investor is currently in the U.S. in a non-immigrant status at the same time they are filing their EB-5 petition, they can concurrently file their applications for conditional residency.


Filing deadlines: Compliance with the uncertain filing deadline by Regional Centers (RC) of Form I-956, Application for Regional Center Designation (Form I-956), and whether or not all RCs are required to file such forms or whether the requirement only applies to those RCs that will actively sponsor new projects in the post-RIA world;

Payment amount: Whether all RCs must pay the EB-5 Integrity Fund fees of $10,000 (if they have oversight of less than 20 EB-5 investors) or $20,000 (if they have oversight of more than 20 EB-5 investors) in order to meet the good standing requirements under the RIA.  The absence of clarity relates to whether such payments are due from Active RCs or could pertain to those that will not sponsor new projects in the post-RIA world (Inactive RCs);

Promoters: Questions surrounding whether all of an EB-5 issuer’s foreign-based contracted persons/employees would be required to file the Form I-956K, Registration for Direct and Third-Party Promoters (Form I-956K) or the Form I-956H, Bona Fides of Persons Involved with Regional Center Program (“Form I-956H”) or no forms at all.

The obligations related to foreign finders or so-called migration agents and now, their sub-agents, with the filing of Form I-956K and the related amendments subsequent to signing agreements with each new NCE. USCIS’s expansive view of Form I-956K appears to include even those employees who may have more administrative duties and do not receive any form of transactional base compensation;

The concept of a “promoter” and the obligation to ensure that the EB-5 investor provides written confirmation that s/he is aware of the compensation payments to the RC, the NCE’s Manager/GP, the migration agent, and their respective subagents of a foreign promoter.

Authority role: There is confusion on how to determine what USCIS’s standards are to ascertain which persons have “substantive authority” in a new commercial enterprise or a Regional Center with respect to the requirements for filing the Form I-956H;

Fund administrator: The underlying role of the newly defined and required “Fund Administrator” in comparison with a new commercial enterprise’s (NCE) decision to rely on GAAP audited financial reporting instead.  Much of the current discussion relates to cost, ongoing oversight, and subsequent reporting requirements when making a decision as to which option an NCE should utilize.


Investor roles: Describing the treatment of pre-RIA and post-RIA investors in the same NCE and the structural issues related thereto. Such considerations go well beyond the fact that an NCE might have investing members who have invested at differing investment amounts of potentially $500,000, $900,000, and now $800,000 investors for projects located in ongoing targeted employment area (TEA) eligible projects;

Sustainment Period: The ongoing interpretive confusion surrounding the definition of “Sustainment Period” is whether it relates to the completion of two years of conditional residency by an EB-5 investor (which has been the standard for a number of years) or some other configuration.  Such interpretation is especially critical so that an NCE can properly project loan maturity dates and determine whether or not its EB-5 investors would be subject to redeployment;

Promoter compensation: Ensuring that the offering documents include detailed disclosures on all fee-based compensation to third-party promoters and finders and to the extent the Form I-956F includes a general disclosure of such fees to the relevant RC, the NCE must be sure to amend the EB-5 investor disclosure on a case-by-case basis so that the EB-5 investor will acknowledge the relevant compensation details that are specific to such sale of membership/partnership units in the NCE;

Job creation priority: How to allocate job creation allocation priority – would it be on the basis of the Form I-526E petition filing dates, approvals thereof, start of conditional residency, filing of the Form I-829 petition or approvals thereof;

Risk factors: Given the current high demand for rural projects, preparing relevant risk factors that are unique to projects located in rural areas irrespective of the underlying project’s asset class;

Related to the risk factor disclosure, Form I-956F requires that the NCE specifically cite the specific portions of the offering documents detailing all relevant risk factors that EB-5 investors would be exposed to following investment in the NCE;

Wait time: Disclosing ongoing uncertainties related to processing times for Form I-526E petitions and related and subsequent investor filings thereto;

Subscription Agreement: The need to completely update the Subscription Agreement to provide for the Subscriber (EB-5 Investor) to confirm the representations set forth in Form I-526(E) together with an Addendum to be attached to the Subscription Agreement that discloses the compensation arrangement with the RC, the “Manager”/”General Partner,” the migration agent (including registered broker-dealers) and subagents.  The difficulty here is that to the extent the Subscriber is a party to a side agreement that modifies the compensation to the third parties, the same would need to be taken into account when such an Addendum is executed.  This results in another complication and burden to be addressed.

Operating Agreement: The Operating/Partnership Agreement needs to address the RIA, the Subscription requirements, and the job allocation provisions.  The RIA may otherwise require an updating of or reconsideration of when the investors obtain such allocation priority when the I-526 is filed or approved, when the investor obtains conditional residency status, or when the investor files the I-829 Petition.

Overall, the disclosure obligations have increased significantly to factor in the requirements contained in the RIA, with the immigration risk factors also needing to be addressed as well.

It is apparent that the risk, cost of compliance, and expansion of disclosures is now the norm in preparing offering documents as well as the forms that need to be filed in connection with it.  As a result, the NCEs should spend more time and effort when preparing the underlying offering documents.  These are not “template” offering documents that can simply be slapped together for a new EB-5 offering.

Rohit Kapuria

Rohit Kapuria, vice chair and partner of Saul Ewing LLP’s Global Immigration and Foreign Investment Practice, handles private offerings under the EB-5 investor visa program. Kapuria regularly represents EB-5 lenders, EB-5 borrowers, banks, regional centers, real estate developers, investors working on direct EB-5 projects, and migration brokers. He has worked on over 350 EB-5 transactions, with a combined capital development cost in excess of $7 billion, around the country. Kapuria has received regular recognition for all his efforts from the EB-5 industry at large and was also named a Top 40 Illinois Attorney Under 40 To Watch in 2021. 

Ronald Fieldstone

Ronald Fieldstone

Ronald R. Fieldstone, chair and partner of Saul Ewing Arnstein & Lehr LLP’s Global Immigration and Foreign Investment Practice, routinely serves as corporate/securities/real estate counsel in EB-5 immigrant visa investor offerings for an array of industries. Both developers and regional centers rely on his advice in these deals, resulting in his track record of handling more than 400 EB-5 projects with a combined capital raise in excess of $8 billion. He is chair of the firm’s Opportunity Zones and Qualified Opportunity Funds Practice. Fieldstone received his undergraduate degree and his MBA from the Wharton School of Business and his law degree from the University of Pennsylvania.

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