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[Q] What is the EB-5 requirement/obligation of investor-petitioner to participate in either management or policy-making decisions of the NCE involved in Regional Centers' EB-5 projects?
The investor must be "active" in the management of the investment by engaging in the management of the new commercial enterprise, either through day-to-day managerial control or through policy formation. However, the law does specifically allow that an investor will qualify as a "limited partner" as defined in the Revised Uniform Limited Partnership Act. The Limited Partnership (the "LP") meets all the regulation requirements by enrolling the investor in the investment as a limited partner. This role allows the investor to continue to engage in his or her own business without needing to participate in the day-to-day management operations. However, the limited partner is required to participate in the formation of policy activities for the Partnership. The limited partnership business structure allows the investor to live where he or she pleases, and gives him or her the option to enter and exit the U.S. without any obligation to manage the daily affairs of the investment. Most importantly, the limited partner, like the corporate shareholder, is only liable to the enterprise to the extent of the agreed-upon investment. The RCs uses this business structure to protect the investor.
Let's examine the controlling regulation:
(5) To show that the petitioner is or will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, as opposed to maintaining a purely passive role in regard to the investment, the petition must be accompanied by:
(i) A statement of the position title that the petitioner has or will have in the new enterprise and a complete description of the position's duties;
(ii) Evidence that the petitioner is a corporate officer or a member of the corporate board of directors; OR
(iii) If the new enterprise is a partnership, either limited or general, evidence that the petitioner is engaged in either direct management or policy making activities. For purposes of this section, if the petitioner is a limited partner and the limited partnership agreement provides the petitioner with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act, the petitioner will be considered sufficiently engaged in the management of the new commercial enterprise.
Note the key word "or" above, which implies that in a non-corporate NCE situation, such as LLC, "(i)" requirement will have to be met showing that the investor-petitioner "is engaged in either direct management or policy making activities" of the NCE.