Summary of E-1/E-2 Regulations

The following information is provided regarding U.S. regulations for foreign investors. Status as either a nonimmigrant (E-1/E-2) or lawful permanent residency (green card) can be obtained based on direct investment of funds in the U.S. This letter provides a general outline of the nonimmigrant visa procedure as well as the permanent residency application based on investment.

Nonimmigrant Visas for Investors (E-1/E-2)
An E-1 (trader) or E-2 (investor) nonimmigrant visa is especially useful for business owners, managers and employees who need to remain in the U.S. for extended periods of time in order to oversee or work in an enterprise engaged in trade between the U.S. and a foreign state or to manage a major investment in the U.S. 'E' visas are generally issued for five years; extensions may be granted as long as eligibility continues.

Eligibility Requirements of the Investor Seeking a Nonimmigrant Visa
To qualify for an E-1 or E-2 visa, the individual must meet the following requirements:

• Be a national of a foreign state with which the U.S. has a treaty.
• e coming to the U.S. solely to develop and direct an enterprise.
• Be in the process of investing or already have invested a substantial amount of capital.

Eligible Nationals
The E-1/E-2 nonimmigrant category is available only if a treaty of commerce and navigation or a "bilateral investment treaty" providing for nonimmigrant entry is in existence between the United States and the foreign state. Please refer to the attachment to see the countries which currently have treaties.

A passport issued by one of the listed countries is generally sufficient to demonstrate nationality for the principal beneficiary. Eligible family members would include a spouse and/or children under 21 (there is no nationality requirement for the spouse or child). It should also be noted that the individual's employees (e.g., executives, managers, or employees with special skills essential to the company) may also accompany him or her.

Also, the general rule is that the principal E-1/E-2 treaty alien and employee seeking entry as E-1/E-2 employee must have the same nationality as the treaty enterprise. A determination as to nationality of certain foreign corporations may be complex. The nationality of the company engaged in trade or investment is the nationality of those persons who own at least 50 percent of the stock of the corporation. Under this definition, INS does recognize 50/50 joint-venture companies as qualifying for E-1/E-2 status.

Treaty Trader (E-1 Visa)
A treaty trader is an individual who is temporarily seeking entry to the U.S. solely "to carry on substantial trade, including trade or services or trade in technology, principally between the United States and the foreign state of which he is a national." INS has not yet defined "trade" for E-1 purposes; however, it has previously been interpretted liberally so as to encompass the wide-ranging type of transactions in the business world. Firms which are generally considered as trading services include those engaged in data processing, advertising, accounting, design and engineering, management consulting and law. Businesses participating in a technology transfer are also considered to be engaged in trade for E-1 purposes.

INS has not yet set a dollar value to define what it considers "substantial" trade. INS examines three in determining whether or not the trade is substantial: (1) volume of trade, (2) number of transactions, and (3) the continued course of trade. To qualify for an E-1 visa, more than half of the total volume of trade conducted by the U.S. employing entity must flow between the United State and the treaty country.

Treaty Investor (E-2 visa)
A treaty investor is in individual who is temporarily seeking entry to the U.S. solely to develop and direct the operations of an enterprise in which he has invested (or is in the process of investing) a substantial amount of capital. The investor must meet the following requirements:

Investment Must Be Active. The investor must make an irrevocable commitment of funds that represent an actual, active investment. A paper organization or passive speculative investment like stocks, undeveloped land, or uncommitted funds in a bank account would not qualify as they do not require the intent to direct or develop a commercial enterprise. On the other hand, an active real estate development project such as a residential building, industrial park, or shopping center would qualify as an active commercial enterprise.

Investment Must Be Substantial. The investment must be substantial, taking into account all those financial transactions in which the investor's own resources are at risk. There is no absolute test to be applied in determining whether or not an investment is substantial. The essence of the requirement is that the alien invest an amount of capital which equates to a significant commitment by the alien to ensure success of the business and, implicitly, contribute in a substantial way to the U.S. economy. In order for an investment to be considered substantial, it immediately must meet one of two tests: (1) it must be proportional to the total value of the particular enterprise in question, or (2) it must be an amount normally considered necessary to establish a viable enterprise of the type contemplated. In a significant decision the court ordered the INS to accept an E-2 application based on a $50,000 investment in a service business -- an automotive design firm that supplied skilled designers to U.S. auto manufacturers on a consultancy basis. While this may represent the extreme low end of the investment scale, past practice supports a finding of best results with investments of at least $150,000.

Jobs Must Be Created. The investment cannot be marginal in nature, that is, one which will only support the investor, and his or her family, in most cases it should create job opportunities for U.S. workers.

Investor Must Play Essential Role. The person for whom treaty-investor status is sought must fill a key role with the company, either as the principal investor who will develop and direct the investment, or as a qualified manager or specially trained and highly qualified employee necessary for the development of the investment.

The two most significant items in the E-2 investor application are to demonstrate that an active investment in a commercial enterprise has been made and that substantial monies have been put at risk.

Immigrant Visas (Green Cards) in the EB-5 Category
The Immigration Act of 1990 created a procedure for investors of all nationalities to obtain permanent residency in the U.S. based on an investment of sufficient funds. The EB-5, generally referred to as the "employment creation" visa, was designed to enhance employment opportunities for U.S. workers. The following is a summary of the key elements:

Eligibility Requirements of the Investor Seeking Permanent Residency

Investment Must Be $1 Million. The investor must invest or be actively in the process of investing at least $1 million dollars in a U.S. enterprise. Certain target areas based on high unemployment will support an application based on $500,000 investment.

Investment Must Be Made After November 19, 1990. The enterprise or investment must have been made after November 29, 1990, the effective date of the new legislation.

Investment Must Create Jobs for at Least Ten Workers. The enterprise must benefit the U.S. economy and must create full-time employment for not less than 10 U.S. workers. This includes citizens, permanent residents or other immigrants lawfully authorized to be employed in the U.S. but would not include family members of the alien investor.

Investment Must be Made in New Business or "Troubled" Business. The investment must be made in a new commercial enterprise or in a "troubled business." The INS set forth a definition that a troubled business is defined as a business that has been in existence for at least two years and has incurred a net loss of at least 20 percent of the company's net worth. If the acquisition will save jobs. Investors in a troubled business do not have to create ten new jobs but instead must show that the number of existing employees is or will be maintained at the pre-investment level.

Investor Must Be Involved in Management of Investment. The investor must be engaged in the management of the enterprise, either through day to day managerial control or through policy formulation.

More than one foreign investor can qualify for EB-5 status based on the same enterprise. But each must meet the $1 million investment requirement.

Conclusion
Investment of substantial capital in the U.S. provides a vehicle for obtaining either nonimmigrant or permanent residency in the U.S. Careful planning must be made and the application procedure must be followed prior to investment of monies. Close analysis must be made of both the E-1/E-2 nonimmigrant investor visa versus the EB-5 permanent resident investor option. Much will depend on the long-range plans of the alien investor along with the tax implications that will follow.

Upon your request, a petition will be made available for you to examine the actual application procedure. There is currently a different petition for each country; the INS has announced plans to develop a single uniform application but it has yet to introduce the new form.

Treaty Countries
The listing of countries that have applicable treaties with the U.S. is constantly changing. Currently, the following countries have treaties with the U.S.:

Treaties conferring only E-1 treaty-trader status exist with the following countries:

Treaties conferring only E-2 treaty-investor status exist with the following countries:

Bilateral investment treaties conferring E-2 status have also been negotiated with Congo, Haiti, Poland, and Russia. The State Department will announce when those treaties go into effect.

Also, note the following special conditions with regard to certain treaties: