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 businesses

1. EB-5 Legal Issues
William A.
Price, wprice@growthlaw.com

2. 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

3. EB-5 Statistics, 2005-12
Applications
2005 2012
322 6041
Approvals
179
3677

4. 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

5. 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)

6. 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 I526, I-829 application possible after 2
years
• I-924 is application to become a
regional center

7. 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

8. 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)

9. 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 BrokerDealers if receive contingent
compensation, or officers of company

10. 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

11. Company Documents
• Articles of Organization (create entity)
• Bylaws, Operating Agreement, Other
Internal Agreements ($$
contributions, management rights
, tax duties, agency authority)
• Membership Interests/Shares

12. 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

13. 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

14. 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

15. William A. Price
Attorney at Law
www.growthlaw.com
wprice@growthlaw.com
Tel/Fax 1-800-630-4780
ANY QUESTIONS?