We are planning to establish a biotech start-up and use the company to support our EB-5 direct investment application. Is there a preferable company structure for EB-5 direct investments? What else should we consider when setting up our company structure?
Usually, the EB-5 company will be set up as a Limited Partnership or Limited Liability Company, but other company structures may also be possible.
Most common structures are Limited Liability Company or Limited Partnership. A corporation may also be an acceptable structure. You should hire an experienced EB-5 immigration attorney and he or she will be able to advise you based on your specific case scenario. There are various business and tax issues to consider as well.
There is no preferable company structure.
In most cases an LLP would work.
If you will be the only EB-5 investor who will be managing the company, then you should ask a qualified corporate and tax lawyer who can advise what is in your best interest. If you are going to be akin to a limited partner with no day-to-day management requirements, then usually a limited partnership or limited liability company (LLC) is recommended.
An LLC is commonly used as the new commercial enterprise for a direct EB-5 case. To address other related issues, you should seek legal advice from an immigration attorney and a corporate attorney who are both experienced with EB-5 matters.
On the selection and formation of appropriate corporate structure, it is advised you should consult an attorney for a host of reasons. First, there are many details that your group needs to consider such as liability, taxation and a host of other issues. Secondly, since it appears you are likely to have partners, there are a couple of corporate structures that are available to your group such as limited partnership, corporation and limited liability company. Finally, the law of the state where you want to incorporate and cost of incorporation may also affect your decision.
The normal corporate entity would be an LLC, but it really depends upon what would be best for your business structure. Your other considerations are whether or not the project is located in a Targeted Economic Area (TEA) and most important, whether you have a marketing plan and can actually attract prospective EB-5 investors.
Either LLC, LP or Corp should be fine.
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