USCIS is revising policy guidance in the USCIS Policy Manual to clarify its policy on debt arrangements.
Foreign nationals may seek an immigrant visa based on their investment in a new commercial enterprise in the United States if they meet certain related job creation requirements.
To make a qualifying investment for EB-5, the immigrant investor must contribute the minimum investment amount in a manner that does not constitute a debt arrangement.
The new policy clarifies which redemption agreements are debt arrangements and therefore are not qualifying investments where the investor holds a redemption right or the new commercial enterprise is otherwise obligated to redeem the investor’s equity interest.
The following table describes certain characteristics that might be present in agreements and explains whether their inclusion creates an impermissible debt arrangement.
| Characteristics of Redemption Provisions | ||
| Type of Provision | Description | Impermissible Agreement? |
| Mandatory redemptions | Arrangements that require the new commercial enterprise to redeem all or a portion of the petitioner’s equity at a specified time or upon the occurrence of a specified event (for example, once the conditions are removed on the petitioner’s permanent resident status) and for a specified price (whether fixed or subject to a specified formula). | USCIS considers this an impermissible debt arrangement. Such impermissible obligations are not subject to the discretion of the new commercial enterprise (although it may have some discretion regarding the timing and manner in which the redemption is performed). |
| Options exercisable by the investor | Arrangements that grant the petitioner the option to require the new commercial enterprise to redeem all or a portion of his or her equity at a specified time or upon the occurrence of a specified event (for example,once the conditions are removed on the petitioner’s permanent resident status) and for a specified price (whether fixed or subject to a specified formula). | USCIS considers this an impermissible debt arrangement. |
| Option exercisable by the new commercial enterprise | A redemption agreement between the immigrant investor and the new commercial enterprise that does not provide the investor with a right to repayment.
One example of such an agreement is a discretionary option held by the new commercial enterprise to repurchase investor shares. These options are typically structured similarly to options exercisable by the investor,except that the option is held and may be exercised by the new commercial enterprise. When executed, these options require an investor to sell all or a portion of his or her ownership interest back to that entity. |
USCIS generally does not consider these arrangements to be impermissible debt arrangements.
However, such an option may be impermissible if there is evidence the parties construct it in a manner that effectively converts it to a mandatory redemption or an option exercisable by the investor(considered a debt arrangement). For example, an arrangement would be impermissible if ancillary provisions or agreements obligate the new commercial enterprise to either (a) exercise the option (at a specified time, upon the occurrence of a specified event, or at the request of the investor) or (b) if it chooses not to exercise the option, liquidate the assets and refund the investor a specific amount. |
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