Who pays the investor back? Is it the developer or regional center who pays the investor? What is the process like?
First, a guarantee on return on your investment cannot be given. Please refer to the limited partnership contract executed between the parties. The terms within the contracts should answer your questions.
An investor will be paid according to the terms of her investment contract. Be careful and ensure that you read the contract very well. If you invest through regional center, your investment contract with the RC should be clear on how and when your investment performance would be reported, how much stock you have, periodic reporting about how well the stocks are doing, etc. In most investment circumstances, investors are paid dividends for the investment and it depends on the type of projects their money is invested in. If the investment is with a regional center (RC), for the sake of this question, the RC should be providing the investors information on how their investments are performing, how much dividend the investors will earn, etc. Last but not least, bear in mind that investment is also considered risky venture, you may lose your investment as well in an EB-5 venture because you are placing the capital at risk.
There is no guaranteed paid back as your money must be at risk. Each regional center has its own rules and you can of course look at their immigration track record as well as what exit strategy has been applied in the past in terms of money being paid back, return on your money, percentage of immigration approvals for I-526 and I-829, etc. Best to get some legal guidance.
It would depend on the documents that regional center has with the developer and you. In order to answer your question, we will need to review the partnership agreement and loan agreement or equity agreement, etc. that went into your I-526. Your attorney should be able to explain it to you.
Typically, the USCIS-approved regional center will create an affiliate company. That affiliate, often called the new commercial enterprise (NCE), is the corporate entity that is seeking to raise capital by selling ownership interests to investors. The NCE then pools the capital raised from the sale of ownership interests, and then the NCE invests or loans the proceeds into the job creating entity (or JCE according to USCIS policies). In the offering documents (typically includes business plan, private placement memorandum, subscription agreement, operating or partnership agreement and more) the NCE describes the terms/conditions and risks/rewards of investing in the NCE. It is typically the NCE which provides the investors, as owners of the NCE, the only opportunity for return on investment, both principal as well as any profit and loss.
Your return on investment is from the commercial enterprise that you have invested in based on the agreement under which the investment was made (same with any other normal investment relationship), not the regional center. And like any other investment, no guaranteed returns.
That will depend on the terms of the EB-5 investment you make. In most loan models it occurs at the end of the term of the loan when the principal (your investment) becomes due. The Limited Partnership receives the payment from the borrower and distributes it to the EB-5 investors. Generally this occurs in five or six years from investment.
As you may know, the law does not allow a guaranteed return of the investment funds. But if the regional center''s project proves to be successful, then the investor may receive his entire invested funds back plus any profits. You need to read the subscription agreement or any other documents that the regional center will provide you very carefully to understand how the investor will get back his/her invested funds, if any. If you have any questions or concerns about this matter, please feel free to contact me.
Please note under the EB-5 program the EB-5 investor is investing their personal funds at risk. The EB-5 documentation cannot state that there will be a return or guarantee of any of the principal EB-5 investment funds back to the investor. Some EB-5 projects under a regional center program allow the investment funds to ultimately be loaned to the EB-5 project from the new commercial enterprise , and in this case there is an exit strategy for the repayment of those loan proceeds from the EB-5 project to the new commercial enterprise which was the company that the foreign national investors first invested in.
Any return of your principal investment should be negotiated after you remove your condition. Your limited partnership contract should state who you are to negotiate with in case you decide to sell your interest. This is a contractual relationship, so read your contracts with both regional center and developer. Hire an experienced attorney to represent you. Some of the terms of regular investment returns may not work for the purposes of EB-5 program as they may put into jeopardy your ability to receive a 10-year legal permanent resident card, hence an experienced EB-5 immigration attorney is a must to review your contracts with Regional Center and developer as well.
Just like any other investment, there is no guarantee of any return. The terms of the deal between the investor and the project usually are described in a subscription agreement, PPM and limited partnership agreement or operating agreement. It is very important for the investor to conduct sufficient due diligence before investing so that he or she understands the risks involved. There are professional service providers on the eb5investors.com website who can offer such services. At a very basic level, the investor should understand if the project is based upon equity involvement of the new commercial enterprise in the project or if it is a loan based participation in the project (i.e., investor makes an equity investment in a new commercial enterprise that provides financing to the project).
Investor returns are paid based on the provisions of the partnership agreement (or other organizational documents) of the new commercial enterprise that receives the investment. The new commercial enterprise is normally a special purpose entity that exists solely to pool the EB-5 investors'' funds and make a single investment with those funds into the job creating entity. Sometimes, the new commercial enterprise and the job creating entity are the same, but in those cases, the only asset of the job creating entity will be the particular project, and the investors'' claim on that asset will be limited to their rights as limited partners, shareholders or members of that entity. EB-5 returns can never be guaranteed by another entity such as the regional center or the developer. The returns will come from the project only, and only to the extent the project is able to generate those returns after payment of others who have senior priority. The rights of EB-5 investors to distributions are often complex and investors should read the offering materials carefully and obtain professional advice concerning these terms.
The entity that the investor makes their investment, the new commercial enterprise, would provide any return on the investment. Please note that no project or regional center can guarantee the return of the investment principal!
