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As you might already know, the EB-5 program allows foreign nationals to acquire a U.S. green card through investment in a new American business. EB-5 investors can invest their capital directly, starting a business themselves in the United states, or they can utilize a regional center. Regional centers create new commercial enterprises (NCE) that those interested in EB-5 visas can invest in; In return for the investment capital the regional center will then provide investors assistance with obtaining their EB-5 visa and U.S. green card. One of the EB-5 program’s requirements is for investors to be involved in the NCE they are investing in. For those who are interested in the direct investment route this won’t be a concern, as they will likely plan on managing their NCE directly. However, those who invest through a regional center, as most EB-5 applicants do, may be worried about having to take on a time consuming managerial role. So what exactly is the level of engagement required of EB-5 investors investing in a regional center?
REgional center management
Typically, investors utilizing regional centers are primarily concerned with obtaining permanent residency for themselves and their family. While the potential for a return on investment and passive income is one draw of the EB-5 program, investors priority is usually to acquire their green card. They may already have employment in the U.S. and can’t focus on managing a new business, or simply not want to deal with the hassle of managing day-to-day operations.
These investors have a more limited role in the management of the regional center’s NCE designed to ensure they meet the EB-5 requirements of being “active” in the management of their NCE. This is by design, as regional centers are aware of their EB-5 investors priorities and the roles they take on in the NCE reflect this. As per EB-5 regulations, an investor will qualify as “active” if they are a “limited partner” and the limited partnership agreement provides the investor with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act.
EB-5 investors typically take on these “limited” partner roles, voting on major business matters and involving themselves in policy decisions. These investors won’t have to concern themselves with day-to-day management and decisions.
Benefits for Investors
This limited partnership also has other benefits for the EB-5 investor. Since the investor won’t need to be involved in day-to-day management, they won’t need to reside close to their EB-5 project. For example, an EB-5 investor could be a limited partner in an EB-5 project located in New York City, but live in California without worrying about day-to-day management obligations. Additionally, this limited partnership structure protects investors liability, as they are only liable to the partnership to the extent of their investment.
EB-5 investors will need to carefully review their contract with their chosen regional center to ensure that the management rights fulfill the EB-5 program’s requirements. Your I-526 petition will need to include proof that you are sufficiently involved in the NCE you’re investing in and mistakes could result in your petition being denied. An experienced immigration attorney will be an invaluable resource to navigate this stage of the process.
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