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 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. In addition, a “standalone” business allows for only one investor seeking EB-5 status. |
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 up to 90% of the jobs that have been indirectly created due to the business activities of the EB-5 enterprise. A regional center investor’s I-526E 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-526E 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 by a single EB-5 investor with or without other non-EB-5 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 |
| If the investment is made in a TEA, which includes rural areas or areas with high unemployment (at least 150% of the national average), the minimum investment amount is reduced to $800,000. Investments in infrastructure projects also qualify for the reduced minimum investment amount of $800,000. | For standalone projects not located in a TEA, the minimum investment amount is $1,050,000. This amount applies to investments made in areas that do not qualify as high-unemployment or rural areas. If the standalone project is located in a TEA, which includes rural areas or areas with high unemployment (at least 150% of the national average), the minimum investment amount is reduced to $800,000. |
Participation In Management |
Participation In Management |
| For regional center investments and direct investments alike, an EB-5 investor must engage in the management of the business of the commercial enterprise either through day-to-day managerial control or through policy formulation. To demonstrate involvement in the management of the enterprise, the petition may show that the investor is a corporate officer or a member of the corporate board of directors. If the commercial enterprise is structured as a partnership, the evidence may show that investor is engaged in direct management or policy-making activities. For limited partners or non-managing members in limited liability companies, the partnership or operating agreement must grant the investor certain rights, powers, and duties typically granted to these categories of equity investors in the jurisdiction where the business is established. | For regional center investments and direct investments alike, an EB-5 investor must engage in the management of the business of the commercial enterprise either through day-to-day managerial control or through policy formulation. To demonstrate involvement in the management of the enterprise, the petition may show that the investor is a corporate officer or a member of the corporate board of directors. If the commercial enterprise is structured as a partnership, the evidence may show that investor is engaged in direct management or policy-making activities. For limited partners or non-managing members in limited liability companies, the partnership or operating agreement must grant the investor certain rights, powers, and duties typically granted to these categories of equity investors in the jurisdiction where the business is established. |
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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