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For information about Canadian E-2 investors (and Treaty Traders), check out the following web site, http://www.dfait-maeci.gc.ca/nafta-alena/temp_entry-e.asp
This article is general and is not intended to substitute for professional advice in specific situations. E-2 status is for those individuals (1) who wish to invest a "substantial amount" of capital in a business in the United States; (2) who are nationals of a "treaty country;" (3) whose investment is not merely "marginal," solely for earning a living; (4) who are in a position to "develop and direct" the enterprise; and (5) who are willing to state an intention to depart the United States once the E-2 status terminates. With these five prerequisites, and for a total of $5,000, (with $2,500 down, and $2,500 upon approval) in attorney's fees, excluding costs and filing fees, Tom Youngjohn can prepare and filing your E-2 Form I-129 application The $5,000 does not include any translation costs, business plans, incorporation, licensing fees, professional copying costs, mailing/delivery costs, etc.
The following information comes from the United States Department of State Foreign Affairs Manual. The subject is the E-2 treaty investor.
A foreign national is classifiable as a nonimmigrant treaty investor (E-2) if foreign national qualifies under the provisions of INA 101(a)(15)(E)(ii) and that the foreign national: (1) Has invested or is actively in the process of investing a substantial amount of capital in a "bona fide" enterprise in the United States, as distinct from a relatively small amount of capital in a marginal enterprise solely for the purpose of earning a living; and (2) Intends to depart from the United States upon the termination of E-2 status. To be a qualifying enterprise, the enterprise must be a real and active commercial or entrepreneurial undertaking, producing some service or commodity. It cannot be a paper organization or an idle speculative investment held for potential appreciation in value, such as undeveloped land or stocks held by an investor without the intent to direct the enterprise.
As in the case of any visa application, the burden of proof to establish status rests with the foreign national. If the foreign national's qualification for E-2 classification is uncertain, the consular officer may request whatever documentation is needed to overcome that uncertainty.
In evaluating E-2 applications, United States government officials must determine whether the:
Requisite treaty exists;
Individual and/or business possess the nationality of the treaty country;
Applicant has invested or is actively in the process of investing;
If investing in an already existing enterprise, whether the enterprise is a real and operating commercial enterprise;
Applicant's investment is "substantial;"
Investment is more than a "marginal" one solely for earning a living;
Applicant is in a position to "develop and direct" the enterprise;
Applicant, if an "employee," is destined to an executive/ supervisory position or possesses skills essential to the firm's operations in the United States; and
Applicant intends to depart the United States when the E-2 statues terminates.
A foreign national seeking investment in the United States which would qualify the foreign national for status as an E-2 investor is precluded from performing productive labor or from actively participating in the management of the business prior to being granted E-2 status.
The concept of "investment" connotes the placing of funds or other capital assets at risk, in the commercial sense, in the hope of generating a financial return. (E-2 investor status shall not, therefore, be extended to nonprofit organizations.) If the funds are not subject to partial or total loss if business fortunes reverse, then it is not an "investment" in the sense intended by INA 101(a)(15)(E)(ii). If the funds' availability arises from debt, these criteria must be followed:
debt such as mortgage debt or commercial loans secured by the assets of the enterprise cannot count toward the investment, as there is no requisite element of risk. For example, if the business in which the foreign national is investing is used as collateral, funds from the resulting loan or mortgage are NOT at risk, even if some personal assets are also used as collateral.
To be "in the process of investing" for E-2 purposes, the funds or assets to be invested must be committed to the investment, and the commitment must be real and irrevocable. As an example, a purchase/sale of a business which qualifies for E-2 status in every respect may be conditioned upon obtaining E-2 status. Despite the condition, this would constitute a solid commitment if the assets to be used for the purchase are held in escrow for release/transfer only on the condition being met. The point of the example is that to be in the process of investing the investor must have, and in this case would have, reached an irrevocable point to qualify.
In calculating whether the investment amount is "substantial," payments in the form of leases or rents for property or equipment may be calculated toward the investment in an amount limited to the funds devoted to that item in any one month. However, the market value of the leased equipment is not representative of the investment and neither is the annual rental cost (unless it has been paid in advance) as these rents are generally paid from the current earnings of the business.
The investment must be "substantial." No set dollar figure constitutes a minimum amount of investment to be considered "substantial" for E-2 visa purposes. This requirement is met by satisfying the "proportionality test". The test is a comparison between two figures: The amount of qualifying funds invested, and the cost of an established business or, if a newly created business, the cost of establishing such a business. The cost of an established business is, generally, its purchase price, which is normally considered to be the fair market value. The cost of a newly created business is the actual cost needed to establish such a business to the point of being operational. The enterprise must be a real and active commercial or entrepreneurial undertaking, producing some service or commodity. It cannot be a paper organization or an idle speculative investment held for potential appreciation in value, such as undeveloped land or stocks held by an investor without the intent to direct the enterprise.
An indication of the nature and extent of commitment to a business venture may be provided by: invoices or contracts for substantial purchases of equipment and inventory; appraisals of the market value of land, buildings, equipment, and machinery; accounting audits; and records required by various governmental authorities. If the United States government official adjudicating the E-2 application questions these figures, he or she may seek additional evidence to help establish what would be a reasonable amount. Such evidence may include letters from chambers of commerce or statistics from trade associations. Unverified and unaudited financial statements based exclusively on information supplied by an applicant normally are insufficient to establish the nature and status of an enterprise.
The value (cost) of the business is clearly dependent on the nature of the enterprise. Any manufacturing business, such as an automobile manufacturer, might easily cost many millions of dollars to either purchase or establish and operate. At the extreme opposite pole, the cost to purchase an ongoing commercial enterprise or to establish a service business, such as a consulting firm, may be relatively low. As long as all the other requirements for E-2 status are met, the cost of the business by itself is not independently relevant or determinative of qualification for E-2 status.
The amount invested in the enterprise should be compared to the cost (value) of the business by assessing the percentage of the investment in relation to the cost of the business. If the two figures are the same, then the investor has invested 100% of the needed funds in the business. Such an investment is substantial. The proportionality test can best be understood as a sort of inverted sliding scale. The lower the cost of the business the higher a percentage of investment is required, whereas, a highly expensive business would require a lower percentage of qualifying investment.
The following examples are provided only to demonstrate the concept of the test and are not to be viewed as brightline requirements. Assessing proportionality requires the use of judgment that takes into account the totality of the factors involved; it is not a simple arithmetic exercise.
A newly created business, e.g., a consulting firm, might only need $50,000 investment to be set up and to become fully operational. As this cost figure is relatively low, a higher percentage of investment is anticipated. An investment approaching 90 - 100% would easily meet the test.
A business costing $100,000 might require an investment of 75-100% to meet the test.
A small business costing $500,000 would demand generally upwards of a 60% investment, with a $375,000 investment clearly meeting the test.
In the case of a million dollar business, a lesser percentage might be needed, but 50-60% investment would qualify.
The foreign national must not be investing in a marginal enterprise solely for the purpose of earning a living. An applicant is not entitled to E-2 classification if the investment, even if substantial, will return only enough income to provide a living for the applicant and family. There are various ways to help in determining whether an investment is marginal, in the sense of only providing a livelihood for the applicant. In other words, the foreign national probably needs to show other sources of income, independent of the USA investment. The following methods are employed by US government officials in determining whether the investment is "marginal."
First, look to the foreign national's income or financial situation. If the applicant has another source of income or other financial means to support him or herself and the family, then the business is not deemed to be established for the sole purpose of earning a living. Furthermore, if the income derived from the business exceeds what is necessary to support self and family, then this, too, meets the test.
If the first test is not met, and it becomes necessary to consider other factors, one can look to the economic impact of the business. An applicant may show, for instance, that the investment will expand job opportunities locally and/or that the income or return from such a business will have a positive significant impact on the local economy. Such a business would likewise not be considered to be marginal.
MATTER OF WALSH AND POLLARD, Int. Dec. 3111 (BIA 1988) the main Board of Immigration Appeals case on "substantiality" shows a continuing flexible approach, based on the realities of the business world, rather than the setting of any artificial minimal investment amount. Walsh and Pollard received E-2 visas, boarded a plane for the U.S. When they arrived, they were denied entry. Instead, they were placed in exclusion proceedings by the Immigration and Naturalization Service. A United States Immigration Judge heard the case and ordered that Walsh and Pollard be allowed into the USA on their E-2 visas. The Immigration Service appealed, and the Board of Immigration Appeals dismissed the Immigration Service's appeal after a discussion of "substantiality" of investments.
Walsh and Pollard were automotive engineers, and received E-2 visas to come to the U.S. as employees of the British-owned company, IAD Modern Design, Ltd. Walsh and Pollard came to the U.S. under a contract with General Motors to redesign cars. The British-owned company's presence in the U.S. consisted of: $15,000 in a bank account; a leased office with some furniture; a telephone; and a plastic plant. The company's purpose was to bring qualified automotive engineers under contract with U.S. car manufacturers. The Board of Immigration appeals held that the investment in question was "substantial." It was sufficient merely to establish a profitable and viable business of the nature contemplated. However, it should be noted that Walsh and Pollard's strong design credentials were emphasized by the Board. Walsh and Pollard were considered "essential employees" of the company.
A foreign national employee of a treaty trader may be classified E-1 (call me about engaging in substantial trade, primarily between your country and the USA), and a foreign national employee of a treaty investor may be classified E-2 if the employee is or will be engaged in duties of an executive or supervisory character, or, if employed in a minor capacity, the employee has special qualifications that make the services to be rendered essential to the efficient operation of the enterprise. The employer must be: a person having the nationality of the treaty country, who is maintaining the status of treaty trader or investor if in the United States; or an organization at least 50 percent owned by persons having the nationality of the treaty country who are maintaining nonimmigrant treaty trader or investor status if residing in the United States.
Dependants: the spouse and children of a treaty foreign national accompanying or following to join the treaty foreign national are entitled to the same classification as the principal foreign national. The nationality of a spouse or child of a treaty foreign national is not material to the classification of the spouse or child under the provisions of INA 101(a)(15)(E).
Normally, E-2 visa holders travel to their home country at least once a year, and thereby avoid the need of applying to the Department of State for reissuance of the E-2 visa. A new E-2, good for one year, is normally issued by the US consular officials upon each request entry. However, if the foreign national does not return to his or her home country within one year, he or she will need to apply to Washington D.C. for reissuance of the E-2 visa under 22 CFR 41.111(b)(2). Such application must include the following:
The original Form I-94 issued when the applicant last entered the United States;
The applicant's passport, valid for at least six months and containing a previous visa bearing the same classification as that which the applicant is seeking. As each visa applicant will receive an individual visa, the passport must contain an unmarked page for each U.S. visa that will be placed in the passport. (For example, if a parent and two children included in the same passport will all receive visas, the passport must contain three unmarked pages.);
A properly executed, typed, Form DS-156E, Nonimmigrant Visa Application, and a passport size photo for each visa applicant, regardless of age. (Group photos are unacceptable.);
The processing fee(s) for each applicant.
A self-addressed, postage prepaid envelope or properly prepared courier pack for return of the passport(s)/request.
A comprehensive letter addressed to Visa Services, Department of State, describing in detail the nature and function of the investment and the extent of the principal foreign national's participation in the investment. The letter should also contain a statement of the applicant's unequivocal intent to depart the United States when the E status ends.
A copy of the investment's most recent financial statement.
In short, E-2 status is for those individuals (1) who wish to invest a "substantial amount" of capital in a business in the United States; (2) who are nationals of a "treaty country;" (3) whose investment is not merely "marginal," solely for earning a living; (4) who are in a position to "develop and direct" the enterprise; and (5) who are willing to state an intention to depart the United States once the E-2 statues terminates. The $5,000 does not include any translation costs, business plans, incorporation, licensing fees, professional copying costs, mailing/delivery costs, etc.
Here is a link to my own personal "wish list" of requested documents. This article is general and is not intended to substitute for professional advice in specific situations.
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