eb 5 program legal issues
DESCRIPTION
Legal and practical issues for developers, consultants, and realtors who work with EB-5 and other entrepreneurs seeking US visas by making qualifying investments in new or rescued US businessesTRANSCRIPT
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EB-5 Program• 10,000 visas per year available
without reference to national quotas• Minimum investment required is $1
million if not through a regional center serving an economically depressed population/$500,000 if through a center
• Decision Times Are Long: 16 months as of September 2013
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EB-5 Statistics, 2005-12
2005 2012Applications 322 6041
Approvals 179 3677
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EB-5 Benefits
• Conditional Visa On Initial Approval And Investment
• Permanent visa for self, spouse, and children under 21 if job and other conditions still in place after 2 years
• Return On Investments If Investment Produces Profits
• US Citizen if permanent resident 5 years
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EB-5 Requirements• Basic Program: $1 million minimum
investment, 10 jobs directly created• Regional Center “Pilot” Program:
$500,000 minimum investment in “Targeted Employment Area”, 10 jobs directly or indirectly created (e.g., each mfg. job may result in 3 more community jobs)
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EB-5 Process
• Initial application with I-526: 16 month wait for decision even after package complete, conditional visa if approved
• Permanent visas if jobs and investment happened per approved I-526, I-829 application possible after 2 years
• I-924 is application to become a regional center
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EB-5 Fees• I-526: Lawyer time, economic impact
study (with business plan), realtor and other professionals, and Department of State application fee of $1,500
• I-829: Lawyer and certifying accountant or other professional fee plus Department of State application fee of $3,750 plus $85 biometric
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Follow-On Employment
• Note that EB-5 investment creates an employer, which can apply for admission of additional persons under employment categories (H1-B or L1) or business visitor categories (Miscellaneous, includes B-1 business visitor, F1-OPT Optional Practical Training, 01-A Extraordinary Ability/Achievement)
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Securities Law Issues• Full Investor Disclosure, Updated:
“All Issues Material To Investment”, Or Securities Fraud (10b-5 or state)
• Limited Exceptions To Public Offering Registration: Accredited Investors, Regulation D and JOBS Act apply
• Persons Selling Must Be Broker-Dealers if receive contingent compensation, or officers of company
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Securities Documentation
• Accredited Investor Questionnaire (and proof funds are legally gained, investment suitable for investor(s))
• Subscription Agreement (control, reporting, and return rights of investors and promoters, Reg D reports after sale)
• Disclosure Documentation: financial, legal PPM or Prospectus
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Company Documents• Articles of Organization (create
entity)• Bylaws, Operating Agreement, Other
Internal Agreements ($$ contributions, management rights , tax duties, agency authority)
• Membership Interests/Shares
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Other Necessary Deals
• Franchisor/Franchisee disclosures and agreements/conditions, if applicable
• Real estate ownership or leasing documentation, including building/zoning
• Supplier and Customer contracts, credit terms
• Loans or other financing, if appropriate
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EB-5 Taxation Questions• US Residents taxed worldwide on all
income, whatever source, applies to all conditional and permanent residents
• Entity level tax is possible• If bank accounts and other corporate
interests outside US, reporting to IRS• Tax Treaties May Reduce entity taxes,
specify where taxed
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EB-5 Problems
• Deceptive Promoters: Note recent Cook County economic development where centers never built
• Problem locations: TSA’s not high job creation places, market risk for all products and services
• People: Operators need supervision, reporting, and encouragement/training, or replacement
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ANY QUESTIONS?
William A. Price
Attorney at Law
www.growthlaw.com
Tel/Fax 1-800-630-4780