E-2, L-1 and EB-5 Ownership and Control

Treaty-country nationals generally must own at least 50 percent of the enterprise.

E-2 ownership rules serve both nationality and control functions. For the enterprise to have treaty nationality, nationals of the treaty country generally must own at least 50 percent of the business. The principal investor must also be able to develop and direct the enterprise. Control is commonly shown through at least 50 percent ownership, but Department of State guidance also recognizes operational control through other qualifying arrangements. Corporate records should therefore establish both the nationality of the ownership chain and the investor's actual ability to direct the US enterprise.

Parent, subsidiary, affiliate, and branch relationships are analyzed under L-1 definitions.

L-1 ownership and control are used to determine whether the US and foreign organizations have a qualifying parent, subsidiary, affiliate, or branch relationship. The beneficiary does not personally need to own either entity. Instead, the corporate record must establish the required common ownership or control between the organizations and show that the qualifying relationship will continue during the L-1 employment. Stock records, operating agreements, voting rights, organizational charts, and acquisition documents should be consistent with the relationship claimed in the petition, especially when ownership is divided among several persons or entities.

A sole proprietorship cannot petition for its owner because they are not separate legal entities.

Entity separateness is particularly important when an owner is also the proposed L-1 beneficiary. USCIS policy provides that a sole proprietorship cannot file an L-1 petition on behalf of its own proprietor because the business and owner are not separate legal entities. A separately organized legal entity, including an otherwise qualifying limited liability company, is treated differently because it is distinct from its owner. Business owners planning multinational expansion should therefore review entity form and qualifying relationship before relying on prior sole proprietor activity as the basis for an L-1 strategy.

The investor must make a qualifying investment in the NCE and satisfy the engagement-in-management requirement.

EB-5 does not impose the E-2 treaty nationality ownership requirement and does not require the multinational corporate relationship used for L-1. The investor instead must make a qualifying capital contribution to the new commercial enterprise and satisfy the EB-5 management participation requirement. The governing documents should give the investor the management or policy rights relied on in the petition, but majority ownership of the enterprise is not itself required. Ownership percentage should therefore be analyzed separately from whether the investor has made the qualifying investment and holds the required management role.

An E-2 50-50 structure may establish control in some circumstances, while L-1 requires control sufficient for the qualifying relationship.

Equal or divided ownership can produce different results depending on the classification. Department of State guidance recognizes that an equal two-party joint venture or partnership can, in appropriate circumstances, give each party control when both retain full management rights and responsibilities. L-1 instead asks whether ownership and control establish the required relationship between organizations. EB-5 focuses on the investor's capital contribution and qualifying management participation. A 50-50 structure that works for E-2 control should therefore not be assumed to establish an L-1 qualifying relationship or any separate EB-5 element.

• Stock ledger
• Operating agreement
• Share certificates
• Corporate registry
• Voting rights
• Parent-subsidiary records
• Partnership agreement
• Organizational chart

The evidence should establish the ownership and control theory without requiring the adjudicator to reconstruct it from inconsistent records. Useful documents can include stock ledgers, share certificates, operating agreements, partnership agreements, corporate registries, organizational charts, voting provisions, acquisition records, capitalization tables, and parent-subsidiary documentation. For E-2, the evidence should also establish treaty nationality through the ownership chain. For L-1, it should establish the qualifying organizational relationship. For EB-5, the governing documents should support the investor's capital contribution and claimed management or policy rights.