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How do multiple investors maintain active roles in a direct investment?

If a direct investment requires 20 investors ($10 million), how should one prepare a business plan showing that all of these investors will be actively managing the business at the same time? What kind of legal documents are best to use for this type of arrangement?

Answers

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    Barbara Suri

    Immigration Attorney
    Answered on

    Use employment contracts, outlining the management role of each investor.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    This would not only be in the business plan, but should also be in the corporate structure documents.

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    Michael A Harris, Esq

    Immigration Attorney
    Answered on

    It can be accomplished if the investors are, at minimum, limited partners (or a limited member) who have the types of rights, privileges and voting powers as limited partners would, according to the Uniform Limited Partnership Act (ULPA). The operating agreement would provide for this. A qualified immigration lawyer can explain to your corporate attorney how to properly structure your pooled investment direct EB-5 project.

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    The general rule is that multiple investors, in either direct investment or regional center structure, will participate in the policy-making roles in managing the business. The business plan should describe the scope and duties associated with the roles. Also, the investors' roles could also be described in the subscription agreement or similar agreements. The EB-5 multiple investors can set up the business in any way they deem fit, either as a limited partnership or limited liability company. Advisably, work with an EB-5 attorney who can work with a business plan writing professional in putting together a business plan that fits your planned business structure.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    For EB-5 purposes, the investor must be actively engaged in the company, either in a managerial or a policy-forming role. Passive investments do not ordinarily qualify for EB-5. This means the 20 investors should have some operational, managerial or policy-forming role for the business created with the investment. This could be listed in the business plan and the operating agreement (for LLC), etc.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    The immigration service has ruled that merely being a limited partner in a limited partnership under the Uniform Limited Partnership Act or similar state law is enough activity for an EB-5 investor. Your immigration lawyer should examine the partnership documents carefully to make sure it will comply. Let us know if we can assist you any way.

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    Belma Chinchoy

    Immigration Attorney
    Answered on

    Investors can have different roles in the business. This issue is generally addressed in the OA or bylaws.

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    Blake Harrison

    Immigration Attorney
    Answered on

    The EB-5 investors could qualify as limited partners, which would require minimal involvement in the managing of the business.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    Active involvement does not mean day-to-day management. The group could be part of the limited partnership or members of the board. Your EB-5 corporate lawyer should be able to advise on the structure of the entity formation and documentation.

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    Irina Rostova

    Immigration Attorney
    Answered on

    Voting rights on major decisions are usually enough to show an active role. So as long as the investors are partners in a partnership or are on the board of directors, the "active" requirement should be satisfied.

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    Robin J Gray

    Immigration Attorney
    Answered on

    The full answer to your question is actually quite complicated and extensive. It would require a consultation with an immigration attorney and securities attorney. In a nutshell, it first depends on the type of project you in which you wish to directly invest. You would initially need to show your corporate or partnership structure, the role of each investor, the source of funds for each investor, a feasibility and economic study, how the investment is set up to fund the direct investment, as well as placing the funds at risk and including all supporting documents, which are quite voluminous.

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    Raymond Lahoud

    Immigration Attorney
    Answered on

    It appears that your investment structure is more of a regional center investment, rather than a straight direct investment. More information is needed to better answer your question.

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