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SELLING TO FOREIGN INVESTORS:Immigration Rules Every Business Broker Needs to Know

Ann Massey BadmusCowles& Thompson, PC

IMMIGRANT ENTREPRENEURSHIP

Government Outreach to Entrepreneurs?

http://www.uscis.gov/portal/site/uscis/eir

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BASIC IMMIGRATION FACTS TO KNOW

• Visa (legal) status is not required to be a passive owner, as in buying stock, owning real estate, absentee ownership, or borrowing money.

• Need legal status to remain in the US.

• Self-employment requires work authorization from the U.S. Citizenship & Immigration Service (USCIS)

OPTIONS FOR LEGAL STATUS IN US

Nonimmigrant Temporary V isas

Immigrant V isa (Green Card)

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E-2 L-1 O-1 H-1B

•Treaty country

nationals (TN) only•Investors and

essential skills

employees•TN must own 50% of

business and

•Indefinite duration

•Spouse can work•No visa quota

•Existing foreign

business and “affiliated” US

business

•Managers(L-1A) & Specialized

Knowledge workers

(L-1B)

•Five (L-1B) to 7 (L-1A) duration

•Spouse can work

•No visa quota

•People in the arts,

sciences or business who are at the “top of

their fields”

•Indefinite duration•Spouse cannot work

•No visa quota

•Professional Workers

in “Specialized Occupation”

•Foreign National

must have a Bachelor’s Degree in

the occupational field

•Six year duration

•Spouse cannot work•Annual quota of

65,000 with 20,000

master degree

exemptions

Non-immigrant Visas

• Nationality – must be citizen of treaty country

• Investment must be substantial in a real, operating enterprise

• Investor must have control of the funds, and

investment must be “at-risk”

• Investor must have controlling interest (50% or more), and intend to develop and direct the enterprise

• Enterprise must be more than marginal

Treaty Investor (E-2) Visa Program

Ownership may be as:

•an individual proprietor,

•majority partner, or

•majority corporate shareholder.

Investor must possess the nationality of the treaty

country (list of countries found at www.travel.state.gov)

Treaty Investor (E-2) Visa - Ownership

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Substantial investment - sufficient funds to ensure a financial

commitment to the successful operation.

No minimum dollar amount to qualify

Proportionality test - compares the total amount

invested in the enterprise with the cost of establishing or buying a business

• Smaller business = higher % of investment

• Large business = lower % of qualifying investment.

Treaty Investor (E-2) Visa - Investment

In general, a buyer will have a

substantial investment if:

• Cost = $100K - $500K and

investment is at least 75%

• Cost = $500K - $1M and investment is at least 60%

• Cost = $1M - $3M and

investment is at least 50%

Treaty Investor (E-2) Visa - Investment

• Temporary transfer of business owner to the US to continue employment with parent, branch, or subsidiary of foreign business.

• Must be qualifying relationship (control/ownership) between the Foreign Co & US Co.

• Investor must have been employed with foreign business for continuous period of at least 1yr within the last 3yrs.

• Must operate both U.S. and foreign business for entire term of L-1 visa.

L-1 Transferee Visa Program

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• No minimum investment requirement but show sufficient funds to operate business

• Need to have employees or expectation of employees within one year

• Must show sufficient staff in foreign country to run operations while investor is in U.S.

• U.S. business can be in different industry than foreign business

L-1 Transferee Visa Program

• Can invest in an existing business or a new business.

• Minimum investment $1,000,000 ($500,000 in certain targeted areas).

• Must create at least 10 full-time jobs for U.S. workers.

EB-5 Immigrant Investor Program

Investor must establish a new commercial enterprise by:

• Creating an original business;

• Restructure or reorganize an existing business;

• Expanding an existing business by 140%; or

• Reviv ing a “troubled business” that has lost 20% of its net worth

EB-5 Immigrant Investor Program

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Investment by EB-5 application must be:

• At risk in the commercial enterprise,

• Fully committed, and

• Immediately available.

Investment defined as “capital”: cash and cash equivalents, loans, equipment, inventory, and other tangible property.

EB-5 Immigrant Investor Program -Investment

NO GUARANTEES!

• Facts of each case are different.

• Other options may be available depending upon the investors circumstances.

• The information provided here is general in nature and should not be relied upon for specific situations and is not legal advice.

• Consult with an experienced immigration attorney to get the right advice and direction for your investor.

FOREIGN INVESTOR TEAM

Immigration Attorney Business Attorney Tax Attorney Estate Planning Attorney Real Estate Agents Accountants Bankers Payroll Specialist Insurance Agents

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QUESTIONS?

FOR FURTHER INFORMATION

Ann Massey Badmus901 Main Street

Suite 3900Dallas, Texas 75202

214-672-2161

abadmus@cowlesthompson.comwww.badmuslaw.com