IMMIGRATION: Investor Visa

INVESTOR VISAS UNDER THE IMMIGRATION ACT OF 1990

The "Millionaire" Visa . . .

If you don't have a million dollars, or at least a half-million dollars, to directly invest in business in the United States, the Investor Visa is NOT for you. As an alternative, check out the E-2 Treaty Investor Visa that is available to citizens of some countries, and which does not require such a large investment.

"Millionaire Visas" directly result in the issuance of Permanent Residence for the investor and the investor's family.

The United States has an Investor Visa program that involves an investment of either US$500,000.00 or US$1,000,000.00, and the creation of at least ten jobs for U.S. workers over a two-year period.

Section 121(a) of the 1990 Act, entitled "Employment Creation" provides that 10,000 visas annually shall be available to qualified immigrants seeking to enter the United States for the purpose of engaging in a "new commercial enterprise", in which the alien has invested, or is actively in the process of investing, capital in the amount of US$1,000,000(or at least US$500,000 if invested in an area targeted by INS as being underdeveloped) and which will benefit the United States economy and creates full-time employment for not fewer than 10 (ten) United States citizens or permanent residents or other immigrants lawfully authorized to be employed in the U.S. (other than the immigrant's spouse, sons, or daughters).

A new commercial enterprise can be either a newly created business, the reorganization of an existing business, infusion of capital into an existing business which substantially changes it (by increasing its net worth or number of employees by 40%), or the salvaging of a "troubled" business (one that is at least two years old and has lost 20% of its net worth. Some factors to be considered are:

• All normal types of financing vehicles used in business transactions to capitalize the purchase of commercial enterprises should qualify as "capital", however, the alien applicant must be "at risk"for the capital.
  
  
• Debt may be used to secure capital provided the alien is personally and primarily liable and the debt is not secured against the assets of the new enterprise.
  
  
• Capital may come from abroad or the U.S.A.
  

Wholly-owned subsidiaries of holding companies
qualify as commercial enterprises.

The enterprise must employ at least 10 U.S. workers. Independent contractors do not qualify as employees. In order to qualify under the employment creation category, the new enterprise must have been:

• 1. Established by the alien applicant;
  
  
• 2. One in which the alien applicant has invested (or is in the process
  of investing) at least US $1 Million (or at least US$500,000.00 if
  investing in a "target area"); and
  
  
• 3. One which will benefit the U.S. economy and create full-time
  employment for not fewer than ten U.S. workers (not including the
  immigrant, the immigrant's spouse, sons, or daughters), and in which
  the alien takes at least a policy making role. In an effort to deter
  fraudulent applications, the act provides that the investor visa will
  be issued conditionally for a two-year period.

Initially, the investor is granted Conditional Permanent Residence, the condition being that after two years the applicant must affirmatively establish by documentary evidence that he is in compliance with the investment, control, and the job creation requirements of the Investor Visa Program. In order to meet the burden of proof, an applicant must file with the immigration service Application to Remove Conditions on Residence. The immigration service will then determine if the applicant has established a commercial enterprise complying with the investor/employment creation category guidelines before removing the conditional status. If the condition is not removed, the permanent residence will be lost.

Qualified Immigrants:

A new commercial enterprise may be used for the investor or employment creation category even though there are several owners of the enterprise, including persons not seeking classification, if

• the source(s) of all capital invested is identified; and
  
  
• all invested capital has been derived by lawful means.

Engaging in a New Commercial Enterprise.

The 1990 Act requires that a qualified applicant seek to enter the U.S. to engage in a "new commercial enterprise". To qualify, an alien investor must maintain more than a passive role in the new enterprise. The regulations require the investor to be involved in the day-to-day managerial control of the commercial enterprise, or manage through policy formulation.

New Commercial Enterprise. A new commercial
enterprise may be created in one of four ways:

• 1. Creating an original new business not previously in existence;
  
  
• 2. Purchasing and restructuring an existing business;
  
  
• 3. Expanding, and thereby substantially changing the net worth or number of employees in a business;
  
  
• 4. Investing in a financially troubled business, so that there is a forty percent change in net worth or number of employees. Investment. The term "investment" means to contribute capital. Capital exchanged for a note, bond, convertible debt, obligation, or any other debt arrangement between the alien entrepreneur and the new commercial enterprise does not constitute a contribution of capital and will not constitute an investment.

Capital:

Capital is defined as cash (and cash equivalents), equipment, inventory, and other tangible property. In addition, indebtedness secured by assets owned by the alien entrepreneur may also be considered capital.

The definition of capital also includes debt. The investor may include debts as capital provided he is personally and primarily liable for the debts and the assets of the enterprise upon which the petition is based are not used to secure any of the indebtedness. Debt on or secured by the business assets of the qualifying business may not be counted toward investment capital. Therefore, the alien investor cannot receive any bond, note or other debt arrangement from the enterprise for the capital contributed to it. This includes any stock redeemable at the holder's request. All capital is valued at fair market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means (such as criminal activities) shall not be considered as capital.

If the enterprise is located in a target or rural area, as defined in 8 CFR § 204.6(j)(6)(i), the Act requires investment of only US$500,000, otherwise, the Act requires a US$1,000,000 minimum investment.

Benefiting the U.S. Economy:

The Act requires the investment in the new commercial enterprise to "benefit the U.S. economy" to qualify for the investment visa. Therefore, a consulting firm exclusively serving customers abroad with no return benefit to the U.S. economy (other than employing the requisite number of workers), may not support the visa application. In contrast, showing that the new enterprise provides goods or services to U.S. markets should satisfy the requirement.

Creating Employment:

The Act permits the investor employ his spouse and children in the enterprise, but they do not count toward the ten employee minimum. However, conditional residents, temporary residents, asylees, refugees, and recipients of suspension of deportation may be considered employees.

An "employee" is defined as an individual who (1) provides services or labor for the new commercial enterprise and (2) receives wages or other remuneration directly from the new commercial enterprise. This definition does not include independent contractors.

Qualifying Programs:

Certain investment programs which are designed to comply with the provisions of the immigration investment law are designed to offer qualifying investment to aliens seeking permanent residence under this provision, by offering an investment opportunity without going out-of-pocket for the entire qualifying amount of investment. Not all of these plans have been approved by the immigration service, and therefore caution should be used in participating in such an investment program.

There has been a lot of fraud, and substantial case law, over the years since inception of the Investor Visa, resulting in a severe restriction on some types of "investment schemes" from participating in the Investor Visa Program. Be wary of proposals concerning investment of a fraction of the required million dollars, with money loaned by the investment organization, or their authorized bank.

We advise consulting competent legal counsel before becoming involved with any company that claims they will qualify you under Investor Visa Program. Legal counsel can guide you through all aspects of investing, entity creation and paperwork to qualify you in a legitimate investor business.

Note: Do not confuse the Investor Visa Program, established under the Immigration Act of 1990, with the long standing E-2 Treaty Investor Visa. While the terminology is similar, they are totally different programs.

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