Understanding the Difference Between Regional Center and “Direct” or Investments

In both stand-alone and regional center investments, it must be shown that the investor will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation (as opposed to maintaining a purely passive role).

Under U.S. Citizenship and Immigration Services (USCIS) regulations, if the investor is a corporate officer or director or a limited partner in a partnership that provides the investor with rights, powers and duties normally granted to limited partners, he or she will be considered sufficiently engaged in the management of the new commercial enterprise. This limited “safe harbor” provision is also extended to similarly situated investors who are non-managing members of businesses established as limited liability companies.

Comparisons Between the Two Programs

Designated Regional Center Projects

Direct Program Investments

To encourage immigration through the immigrant investor category, Congress created the Regional Center Program in 1993. The Regional Center Program makes EB-5 visas available to immigrants who have invested the required amount of capital in a project established by or operating under the auspices of a designated regional center. A regional center is an entity, organization or agency that has been approved as such by USCIS, which:a)Focuses on a specific geographic area within the United States b)Seeks to promote economic growth through increased export sales, improved regional productivity, creation of new jobs or increased domestic capital investment. Amongst other requirements, a prospective investor seeking an immigrant visa under the Regional Center Program must show: a)The job-creating project is doing business within the approved area and under the auspices of a designated regional center; and b) investment will directly or indirectly create the required number of jobs for U.S. workers. Under the basic EB-5 program, which predates the Regional Center Program, an EB-5 investor may choose to invest in an enterprise that is not doing business as or operating under the auspices of a designated regional center. This involves the investment of capital with or without other investors into a “standalone” business that meets the EB-5 requirements. The principal distinguishing feature, compared to a Regional Center project, is the manner of satisfying the “job creation” requirement.

Employment Creation

Employment Creation

An investor in a designated regional center project may use reasonable economic methodologies to demonstrate job creation, counting the jobs of any people directly employed by the EB-5 enterprise as well as jobs that have been indirectly created due to the business activities of the EB-5 enterprise. A regional center investor’s I-526 petition will be accompanied by a job impacts report prepared by a professional economist. The job impacts report, market analyses and other documentation filed with the I-526 petition will seek to demonstrate that capital invested by EB-5 investors will result in the creation of the required number of direct and/or indirect jobs for all EB-5 investors in the specific regional center project. Under the basic EB-5 program, which predates the Regional Center Program, an EB-5 investor may choose to invest in an enterprise that is not doing business as or operating under the auspices of a designated regional center. This involves the investment of capital with or without other investors into a “standalone” business that meets the EB-5 requirements. The principal distinguishing feature, compared to a Regional Center project, is the manner of satisfying the “job creation” requirement.

Investment Amount

Investment Amount

The minimum qualifying amount required for investments in a designated regional center project doing business and creating jobs in a “targeted employment area” (TEA) is $900,000. A TEA is an area that, at the time of investment, is a qualified rural area or an area with unemployment at a rate of at least 150 percent of the national average. For investments in projects doing business outside of a TEA the minimum investment amount is $1.8 million. As in the case of a regional center investment, the minimum investment qualifying capital amount for a direct investment project is determined in the same manner as for an investment in a regional center project — $900,000 where the job creating enterprise is primarily doing business in a “targeted employment area” (TEA) and $1.8 million for non-TEA investments.

Participation in Management

Participation in Management

For regional center investments and direct investments alike, it must be shown that the investor will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation (as opposed to maintaining a purely passive role). For petitions filed on or after November 21, 2019, evidence that the petitioner is engaged in policy making activities, including evidence that the petitioner is an equity holder in the new commercial enterprise and the organizational documents of the new commercial enterprise provide the petitioner with certain rights, powers, and duties normally granted to equity holders of the new commercial enterprise’s type of entity in the jurisdiction in which the new commercial enterprise is organized. As in the case of regional center investments, for direct investments it must be shown that the investor will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation (as opposed to maintaining a purely passive role). For petitions filed on or after November 21, 2019, evidence that the petitioner is engaged in policymaking activities, including evidence that the petitioner is an equity holder in the new commercial enterprise and the organizational documents of the new commercial enterprise provide the petitioner with certain rights, powers, and duties normally granted to equity holders of the new commercial enterprise’s type of entity in the jurisdiction in which the new commercial enterprise is organized.

The EB-5 program requirements are complex and subject to evolving interpretation and policy changes. The information on this website is not intended to comprise a comprehensive review of all relevant laws, regulations and policy interpretations. Readers of this information are advised to obtain competent individualized advice from competent immigration counsel regarding any potential EB-5 investment matter.

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