General Requirements for E-2 Treaty Investor Status

The Nationality of the Business and the Visa Applicant Must Match That of a Country That Has a Qualifying Investment Treaty with the United States

The U.S. Company that serves as the sponsor of the E-2 visa application of the investor (or other E-2 visa applicant) must be at least 50% owned by nationals of the treaty country.  As noted earlier, the United States must have an E-2 investment treaty with that treaty country.  The investor must check if the country of the investor or other visa applicant’s nationality matches a country on the U.S. Department of State (DOS)’s list, which changes from time to time.  There can be a variety of deceptively complex issues that present themselves in determining if this requirement is met, such as:

1. While determining nationality can be straightforward in many cases, where dual nationality exists, a business may only have one qualifying nationality so the investor must make an election as to nationality.
2. Once an investor obtains permanent resident status, his or her ownership percentage towards the 50% requirement does not count.  For example, let us say that the U.S. Company is owned by three citizens of the Netherlands, one who owns 51% of the company, and the two others who collectively own the other 49%. The principal investor (who owns the 51%) is working in the United States on an E-2 visa, as are the other two Netherlands nationals. The principal investor obtains a permanent resident card. Unless the principal investor were to sell at least 1% of the company to the other Netherlands nationals, the E-2 visa status of the other Netherlands nationals would no longer be valid since the nationality of the business would no longer be that of the Netherlands.  In some cases, a sale of at least 1% of the business may be necessary; and in other cases a transition to L-1 status, if possible, may be a solution to protecting the work visa status of the other staff.
3. The nationality of the company must be adequately traceable and the company filing the E-2 visa registration has the burden of proof.  For publicly traded companies where the shares are exclusively sold on a stock exchange, the nationality of the corporation is that of the location of the exchange.  Where the stock is traded in multiple countries, the business must provide proof of the stock ownership and structure. Private companies must generally prove nationality through a combination of organizational charts, stock transfer ledgers, and stock certificates that trace ownership all the way to the ultimate owners. This can pose a challenge to some companies that do not maintain up-to-date, thorough corporate ownership records.

The Applicant has invested or is actively in the process of investing

The E-2 visa applicant who is an owner must present documentation showing the source of the funds for the investment and the he or she has control of the funds.  The source of the investment can include various assets or funds such as the investor’s savings, gifts, inheritance, loans collateralized from the investor’s own personal assets and other legitimate sources. Purchasing machinery, equipment or equipment to be used by the U.S. enterprise may also count. Other assets do not count such as mortgage debt or commercial loans secured by the assets of the U.S. enterprise.  The key concept is that the investment must be at risk, meaning the investor must have a stake in the outcome of the business. 

The funds must be irrevocably committed to the U.S. enterprise, although the purchase of a business may be conditioned upon the issuance of the E-2 visa.  Different escrow arrangements may work.  This area often requires some coordination between the investor’s corporate counsel, tax counsel, and our office.  An assessment about what funds are deemed at risk and what are not, and what qualifies towards the investment are key issues that require careful consideration.  Also deciding when to file the E-2 case in juxtaposition to the commitment of capital is also often a key decision on which we advise our clients. 

The enterprise is a real and operating commercial enterprise

The investor has the burden of proving to the U.S. consular officer that there will be a real and active commercial business that will operate if the visa if issued, and that the U.S. enterprise is not a “paper” or speculative organization.  Again, while not legally required, it is best if the U.S. operations are already initiated and doing business and have U.S. workers on staff before the E-2 registration is filed with the U.S. Embassy.  Further, the U.S. enterprise must be a for-profit commercial enterprise and not a non-profit organization. 

The Applicant’s investment is substantial

This is a critical requirement that is intended to ensure that your investment is significant enough to ensure a successful business venture. There is no set dollar figure that constitutes a minimum amount of an investment to meet the “substantial” test.  The key is that the at-risk investment is substantial enough to ensure successful operation of the enterprise.  The U.S. government uses a proportionality test that at its essence involves weighing the amount of qualifying funds invested against the cost of the business.   The higher the percentage; the stronger the argument is that the investment meets the “substantial” test.  Evidence of the valuation of the enterprise, the commitment of “at risk” funds, and whether such investment is sufficient to establish a viable entity of that type is critical to the success of an E-2 case.  In some cases, chamber of commerce and trade association statistics or opinions may help to support your case.

The Investment is more than marginal solely for earning a living for the applicant and the applicant’s family

The purpose of the E-2 category is not so foreign investors and their families can come to the U.S. to live and make a living for themselves.  The concept instead is that while an E-2 investor can come to the U.S. with his or her family to direct and develop an enterprise, it is essential that the enterprise create jobs for U.S. workers – defined as U.S. citizens, permanent residents and others with indefinite work authorization like asylees.  A key part of any E-2 case filed by an entrepreneur is a showing that the business has hired U.S. workers who are on payroll or that such hiring is part of the U.S. business plan.  Hiring U.S. workers prior to case filing puts your case in a stronger stance because the U.S. Embassy or Consular officer deciding the case can see that some hiring has already taken place.  The business plan should reflect the plans to hire future or additional staff, outline what such staff will do, and ideally show projected compensation levels that rise with the anticipated growth of the enterprise.  We have worked with various consultants that have helped our clients to prepare business plans that have helped their E-2 and L-1 cases to gain an approval and can provide recommendations.

The applicant owner is in position to “develop and direct” the enterprise

A national or nationals of the treaty country who owns the enterprise and is applying for an E-2 visa must be in position to develop and direct the enterprise.  Normally, this aligns with the requirement that at least 50% of the sponsoring U.S. enterprise be owned by nationals of the treaty country.

The applicant, if an employee, is assigned to an executive/supervisor position or possesses skills essential to the company’s U.S. operations

One often overlooked dynamic in E-2 cases is the advisability of highlighting what education and experiential attributes the investor brings with him or her which would lead a U.S. Embassy or Consular officer to conclude that he or she is well qualified to successfully develop and direct the enterprise.  If the investor has no experience in managing an enterprise of the type contemplated, it may be a more challenging case to get approved.  If, by contrast, the investor has developed and directed past companies or business units, particularly in the industry, this will help meet the burden of proof on this key issue.

A separate issue is whether the investor will be deemed to be the “investor” by ownership percentage and control – via the proof of ownership and management structure evidence submitted – or will qualify as employee. Particular attention should be given to drafting employment agreements that align with the desired business objectives while meeting the employee test.  For example, an agreement for an executive should require that the Board of Directors review the executive’s performance.

Types of Workers Who Can Secure E-2 Visas

The types of workers who can apply for E-2 visas include:

1. Owner Who Develops and Directs. The owner who “develops and directs” the U.S. enterprise may qualify to apply for an E-2 visa if he or she is to be an employee of the sponsoring U.S. investment enterprise.
2. Executives and Managers/Supervisory Employees.  The U.S. Embassy or Consular officer will review the organizational structure, job title and job duties to see whether the job primarily involves oversight over other employees (which qualifies) or performance of hands-on duties (which does not qualify).  The size of the office and staff plays an important role in this determination by the U.S. government as to whether the job qualifies in the executive or managerial category.
3. Essential Employees.  One can qualify as an E-2 work visa holder even if one is not an owner, executive or manager/supervisor.  Those with special skills essential to the U.S. organization may qualify.  Key factors are the experience and training necessary to acquire the skills, how unique the skills are, the availability of U.S. workers with such skills, salary level, the degree of proven expertise, and the function of the proposed U.S. job.  The focus should be on why the U.S. company will need such workers, why U.S. workers are not available to fill the positions, and whether the E-2 essential skills worker can train U.S. workers before returning abroad. In some cases, if there is a long-term evolving need that is cutting edge (like research and development to continuously improve products), the E-2 essential employee may be granted a visa for a longer term, including renewals.

The E-2 visa holder intends to depart the United States when the E-2 status terminates.  

The E-2 is a nonimmigrant (temporary) work visa category.  However, while the E-2 visa holder must intend to depart the U.S. after the E-2 assignment is over, he or she need not maintain a home abroad and normally an expression of intent to return abroad is sufficient. The subsequent filing of an Immigrant Petition may trigger additional scrutiny in some circumstances.

Related: Insights into E-2 Cases