Questions and Answers > EB-5 Requirements

Will placing investors on an advisory board satisfy the direct management EB-5 visa requirements?

We have an LLC that would qualify as a troubled business with just over 100 employees. If I received 10 investors, and set up an advisory board (separate from the board of directors) and had them advise on policy decisions would this satisfy the direct management requirements? Also are troubled business applications getting approved? I have seen conflicting information on this.

Answers

• Shahzad Q Qadri

  RC Creator

  Answered on January 28, 2013

  In an Regional Center context it would work but not in a direct EB5., where they would need to be on a W2.

• Ed Beshara

  Immigration Attorney

  Answered on January 24, 2013

  I believe so, and I believe so in answer to your questions. The same employee jobs have to be saved. The troubled business project can be very marketable if the documentation clearly shows the financial viability of the project as the jobs have already been created.

• Larry J Behar, Esq

  Immigration Attorney

  Answered on January 22, 2013

  It is doubtful that an advisory board has the legal or practical power to make managerial decisions of any consequence and thus may not be EB 5 compliant. The lists provided by USCIS do not provide specificity as to which business is troubled or not. It is thus very hard to establish a quantifiable trend ; we have won one troubled business application but it is very hard.

• Karen Weinstock

  Immigration Attorney

  Answered on January 22, 2013

  It probably would not work if advisory board just advising and the real board does not have to apply the recommendations. The investor needs to manage and control the entity.

• Jinhee Wilde

  Immigration Attorney

  Answered on January 22, 2013

  EB-5 rules require that the investors be in active management or policy setting role of the business in which they invest. Thus, a mere advisory board will not suffice. They could be limited partners of your LLC. As to approval of applications for troubled business, it all depends on how you follow the rules, but I have not heard any particular problems with these cases per se.

• Taher Kameli

  Immigration Attorney

  Answered on January 22, 2013

  I do not believe so.

• Stephen Berman

  Immigration Attorney

  Answered on January 22, 2013

  If they do work on the board, it should qualify. There need to be 10 new jobs created, it will not work to invest and supervise 10 existing employees each.

• Steven Anapoell

  Securities Attorney

  Answered on January 22, 2013

  No - Advisory board is not enough. To my knowledge their have only been a few troubled business applications. Most projects are new commercial enterprises.

• Jeffrey E Campion

  Immigration Attorney

  Answered on January 22, 2013

  Generally speaking, yes an advisory board will suffice. Re troubled business, as with an advisory board, it''s always a facts and circumstances test.

• Philip H Teplen

  Immigration Attorney

  Answered on January 22, 2013

  Troubled business applications are getting approved; but they require significant accounting and economic explanation. Regarding an advisory board, generally I am not happy with that approach as an advisory Board has no vote on management, either daily or strategic. There are other options such as Preferred stock or voting trusts that are better approaches. I am happy to discuss further.

• Boyd Campbell

  Immigration Attorney

  Answered on January 22, 2013

  No, it will not satisfy the direct management requirement.

• Michael E Piston

  Immigration Attorney

  Answered on January 22, 2013

  It appears that the answer to the question is yes, provided that the investor in his role as a member of the corporate board of directors actually engages in policy formulation, as opposed to maintaining a purely passive role in regard to the investment. Regarding troubled businesses, all I can tell is that I am aware of at least one appeal to the Administrative Appeals Office of the denial of an EB-5 petition based upon investment in a trouble business which was successful, which is remarkable in that approval by the AAO of appeals from the denial of EB-5 petitions is relatively rare even involving conventional EB-5 investments . Therefore I have no reason to doubt that EB-5 petition based upon investments in troubled businesses will be approved if (and only if) all legal criteria for such an investment is met, including, but not limited to, that the investment is in a business that has been in existence for at least two years, has incurred a net loss for accounting purposes (determined on the basis of generally accepted accounting principles) during the twelve or twenty-four month period prior to the priority date on the alien entrepreneur''s Form I-526, and the loss for such period is at least equal to twenty per cent of the troubled business''s net worth prior to such loss.

• Neville M Leslie

  Immigration Attorney

  Answered on January 22, 2013

  I would need more details to be able to answer. You do not need direct management. The way most docs are drafted, by virtue if investing, the investor is considered actively involved.