Immigration Issues Involved with Doing Business in the USA, Part II: Treaty-Investor Visas

In our June 2015 article titled “Immigration Issues Involved with Doing Business in the USA, Part I” (see Law News Issue 17, 2015), we provided a general overview of visas available to New Zealand citizens wishing to temporarily visit the United States for business or wishing to transfer there to work for a US business as a skilled employee or as part of an international group of companies which has a branch in the US and New Zealand (either as a parent, affiliate or subsidiary).

Immigration

However, the work visas previously discussed are all tied to employment and do not necessarily address the needs or business objectives of many investors with their eye on the US markets. In addition to the employment-based visas discussed in Part 1 of this article series, the US provides visa options to high-net worth investors who are business-savvy entrepreneurs wishing to either start a business or buy into a business in the US.

In this article, we will briefly address the Treaty-Investor Visa, a particular type of investor visa which is available to New Zealanders who have dual citizenship in certain countries.

The Treaty-Investor Visas (referred to as the “E-2 Treaty Visa” by US government officials and US immigration law attorneys, and herein referred to as “E-2”) are encouraged by the US government, as they are a primary source of foreign direct investment. There are no numerical caps on the number of E-2 visas granted each year. Furthermore, the US Department of Commerce assists foreign investors through its “SelectUSA” programme, which connects foreign investors to significant business resources in the federal, state and local governments, a large network of US Economic Development Agencies (EDOs), and a vast network of US businesses and US investors. Nevertheless, E-2 visas are not a simple matter and require the assistance of experienced US business immigration attorneys, a large amount of supporting documentation and strategic business planning.

The E-2 visas are based on rights granted by the US to citizens of countries with which it has a Treaty of Friendship, Commerce and Navigation; certain Bilateral Investment Treaties; or certain Free Trade Agreements. These treaties grant the right to citizens of the treaty countries to obtain a non-immigrant visa to the US to oversee and direct certain qualifying US businesses in which a direct foreign investment has been made. At this time, New Zealand does not have a treaty with the US which grants investor visa rights. However, many New Zealanders have dual citizenship in treaty countries and can use this as a basis to claim E-2 visa rights. The countries with qualifying treaties with the US can be seen in the table below (compiled from http://1.usa.gov/TreatyCountriesChart and 9 FAM 41.51, Exh. I).

The E-2 visa category is domestically enacted in the US Immigration and Nationality Act §101(a)(15)(E)(ii), as follows:

“An alien entitled to enter the United States under and in pursuance of the provisions of a treaty of commerce and navigation between the United States and the foreign state of which he is a national, and the spouse and children of any such alien if accompanying or following to join him … solely to develop and direct the operations of an enterprise in which he has invested, or of any enterprise in which he is actively in the process of investing, a substantial amount of capital.”

To be entitled to an E-2 visa, the investor must demonstrate:

• that he/she has citizenship in a treaty country;

• that he/she has invested his/her own money into a US business of which he/she is at least a fifty percent owner;

• that he/she is going to direct and develop the investment;

• that the investment is substantial;

• that the business is not marginal;

• that the business is a commercial enterprise; and

• that the business is in operation.

Whether an investment is “substantial” is relative to the type and value of the business in which the investment is made. The investment must be enough to ensure that the investor is committed to the successful operation of the enterprise and that the investment will be successful when viewed in light of the total cost of purchasing or creating the enterprise. Experience shows that amounts over USD $100,000 are more likely to be approved. Further, the money itself must come directly from the investor’s personal funds and must be fully at risk in the investment.

Whether a business is “marginal” requires a demonstration of the likelihood of success of the business. Specifically, the investor must demonstrate that the business will not merely support the investor and his/her family.

The business must be a real and operating commercial enterprise. This means that it cannot be a passive investment, like a real estate investment or purchase of stocks on the stock market. It also means that the business must be in current operation. The visa will not be granted in relation to a business which has not started operations. For example, an investor who wishes to invest in a new business which manufactures widgets will not be granted a visa where the business entity has not yet been organised, commercial spaces have not yet been leased or acquired, and for which the start of manufacturing is not imminent.

Finally, the investor must be going to the US to develop and direct the investment. This requires showing what the investor will be doing for the business and a demonstration of the investor’s business qualifications. The investor must demonstrate that he or she has control of the business, either through voting power or by appointment in an executive position. Further, establishing that the investor has prior executive or business experience will support a finding that this element is met, and will also weigh in favour of finding that the business will be successful. Finally, the role the investor will fill must not be one which is considered as mere skilled or unskilled labour. It must be in an executive/managerial role with the investment business.

The E-2 visa is a temporary non-immigrant visa and is generally granted in two year blocks. It can be renewed an indefinite amount of times as long as the investor continues to show that the business is successful and continues to need the investor to oversee it. However, the investor cannot transition from this visa to permanent residency, and dual-intent is not allowed. Finally, the E-2 investor may also bring his/her spouse and any children under the age of 21. The investor’s spouse will have the right to obtain an employment authorization card and the children will be eligible to attend US public schools.

The E-2 visas are a great avenue for qualifying New Zealanders to make and manage a business investment in the US without going through the rigorous structuring required to set up an international business to support an L-1 visa. While it is understandably disappointing to learn New Zealand has not yet obtained E-2 visa rights for its citizens (the TPPA unfortunately did not grant such rights), our understanding is that there is an active lobby by New Zealand business interests seeking E-2 visa rights from the US Congress. Nevertheless, it is surprising how many New Zealanders qualify for these visas, and it is important to understand the potential availability of the E-2 visa for New Zealand clients.

Zachary Norris is a native of Texas who embarked upon his legal career in 2002 and practised commercial and personal injury litigation in the Texas State Courts and in the US Federal District Courts. After 11 years in the courtroom, Mr Norris now focuses on international transactions and contract negotiations for foreign businesses (especially New Zealand businesses) doing business in the United States, business organisation/ structuring, commercial litigation, arbitration and immigration. He is a Qualified Member of ADLS.

Ada Echetebu has practised in the US since 2003 and has been practising US law in Auckland since 2011. She has a strong background in international commercial law (with a focus on New Zealand-US commerce) and US immigration law, and has experience as outside general corporate counsel. Ms Echetebu is qualified to practice at the bar of the State of Texas, USA and the Federal District Courts of the United States and is a Qualified Member of ADLS.

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