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How can I receive dividends and maintain compliance with EB-5?

I would like to invest in a Texas business and use the investment to apply for EB-5. I understand that the $500,000 in EB-5 funds must be “at-risk” before and during the conditional permanent residency period. However, can I receive dividends every month from the business before I get a permanent green card or do I have to wait until the end of the EB-5 process?

Answers

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    Whether you can receive dividends or not depends on the subscription agreement. However, it is very rare to receive a dividend at the part of an investment such as EB-5, considering the fact that the business in which the fund is invested is at its early stage. Advisably, prior to entering any investment agreement, consult an EB-5 attorney and other professionals for further analysis of your investment objectives.

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    Phuong Le

    Immigration Attorney
    Answered on

    So long as the dividends are from actual profits and not a return of investment capital, it may be possible. In other words, return on investment is not illegal, but return of investment is.

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    Marko Issever

    EB-5 Broker Dealer
    Answered on

    You can certainly receive "dividends" while the EB-5 application is being processed. But make sure that what you are receiving is "dividends" and not "interest". Lending funds, buying notes and bonds are not eligible investments for EB-5. Common and preferred stock that distribute dividends are.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    You are permitted to get dividends, provided you have already invested the requisite amount.

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    Marisa Casablanca

    Immigration Attorney
    Answered on

    As a shareholder of the business you can receive dividends through the K form that is prepared by the company to submit with the tax return to IRS. You can collect these dividends while your investment is at-risk in the EB-5 project.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    You can receive dividends from profits generated by the business but not from EB-5 capital invested into the business for EB-5 job-creation purposes.

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    Stephen Berman

    Immigration Attorney
    Answered on

    I am not aware of any rule prohibiting receipt of dividends.

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    Vaughan de Kirby

    Immigration Attorney
    Answered on

    You can realize income from your EB-5 investment, but you should not withdraw your original investment funds.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    If the business is making money and creating jobs, there is nothing prohibiting the investors from getting a return on their investment. Putting the money at-risk does not mean you have to lose money or no earnings. In fact, the very definition of putting at-risk mean you could make or lose on the money you invested. There must be nothing in your agreements that specifies that you are guaranteed certain a return or dividend, however.

  • Avatar

    Debbie Klis

    Securities Attorney
    Answered on

    Regarding your question about a potential investment in a business as the basis of an investment to apply for EB-5, and whether you can receive dividends every month from the business before you receive a permanent green card, the short answer is yes, absolutely! By definition, a dividend is a distribution of a portion of the company's earnings among its shareholders. Companies distribute a dividend in the form of a periodic payment (monthly, quarterly, etc.) paid to shareholders for each share owned to provide investors with a stream of income. In order to receive the dividend, you must have the shares of the company before it declares a dividend. The payment of dividends is never deemed a return of equity or a guarantee of a return on investment because a dividend should not be declared unless profit is earned.

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    Belma Chinchoy

    Immigration Attorney
    Answered on

    As long as the business has profits from which to issue dividends, as opposed to pay dividends out of your investment capital, it is OK.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    Dividends can be paid out of profits at any time.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    There is no prohibition as to receiving a salary or if there are profits from obtaining lawful dividends. However, the government wants to see the full amount deployed into a job-creation role, so make sure you can prove the $500,000 was fully deployed into job creation.

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    Charles Foster

    Immigration Attorney
    Answered on

    As long as you maintain your minimum investment of $500,000 and the funds are "at-risk," there would be no reason why you could not receive dividends from the business every month until you receive your lawful permanent residency on a conditional basis. You only have to keep your $500,000 investment at-risk.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    It looks like two issues: using the returns from one investment to fund the EB-5 investment, and can the EB-5 investment itself pay dividends. EB-5 investors usually do receive some kind of a return on their investment during the entire period the funds are invested (or at least until the EB-5 loan is repaid). Some projects hold it and make a final lump sum payment. Depends on the project. Using returns on an earlier investment to pay for an EB-5 investment may be possible, depending on the documentation. Funds used for EB-5 need to be "personal" immediately preceding the EB-5 investment.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    Receiving dividends from an EB-5 investment does not affect the "at-risk" requirement of EB-5 processing; however, you cannot just be a passive investor in the business for the EB-5 purposes. You need to either be involved in the day-to-day operations of the business or in policy formation of the company/business.

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