AMERICAN JOB CREATION AND INVESTMENT PROMOTION REFORM ACT OF 2015
Foreign investors with significant assets can apply for the EB5 investor visa program and US lawful permanent residency (green card) for themselves, their spouse and unmarried children under 21. The EB5 program requires the investor to make the necessary investment in a commercial enterprise in the United States that creates at least 10 full time jobs for qualified U.S. workers. Investors must be able to clearly show that the capital invested is lawfully obtained and completely at risk in the commercial enterprise.
Amidst growing concerns with the EB5 program, Congress enacted the American Job Creation and Investment Promotion Reform Act of 2015. The amendments are an overhaul of the EB5 program and to promote significant reform. Its enactment, however, has been delayed for further consideration. The current EB 5 Pilot program remains in play without change through September 30, 2016.
The proposed changes to the EB5 Investor Visa Program include:
● Increasing the minimum amount of capital from $500,000 to $800,000 for targeted areas and $1 million for non-targeted areas
● Substantially increasing filing fees
● Background checks for all applicants
● Compliance with U.S. securities laws
● Limiting the source of funds for investment
● The creation of an EB-5 integrity Fund
● Substantially restricting targeted employment areas
Compliance with US Securities Law: The US would has jurisdiction over the purchase or sale of any security being offered or sold by any regional center or any party associated with the regional center. Participating regional centers would be required to provide certification that after a due diligence investigation the regional center is in full compliance with US Securities law. When there are any violations, the certifier would be required to describe the noncompliance and actions taken to remedy such noncompliance. Ultimately, the Secretary has the discretion to suspend or terminate the regional center’s designation or impose sanctions.
Increased Filing Fees: Current filing fees are $6,230 under the EB5 Pilot Program and the changes propose an increase of $10,000 making the total filing fee $16,230 per I-924 application. Criminal background checks: Any individual involved in crimes of deceit or fraud, trafficking of any illicit or controlled substance, espionage, sabotage, intellectual property theft, money laundering, terrorist activities, facilitating human trafficking and human rights offenses or violating any foreign financial regulation would not be admissible.
Premium processing: Premium processing of the I-924 application would be made available for an additional filing fee of $1,000.
Creation of an Integrity Fund: Each regional center petition would be required to pay $2,000 toward the newly created Integrity Fund which would be used toward conducting site visits and audits, investigating fraud, determining regional center compliance and conducting interviews with affiliated parties in the regional center program.
Source of Funds: Only gifted funds from the immigrant’s spouse, parent, son or daughter would be counted toward the minimum qualifying capital investment. Capital from loans would be counted only if the loan was secured by assets owned by the immigrant and issued by a bank or lending institution that is properly chartered or licensed, verified by the Secretary. No foreign government would be allowed to provide capital or be directly or indirectly involved with the administration of a regional center in any way, commercial enterprise or job-creating entity.
Redefining Targeted Employment Areas: Upon establishment of a process by the Secretary, regional centers would be able to request designation as a targeted employment area, renewable in 2 year periods as long as the area continues to meet the appropriate definition of targeted employment area. Under the Act, the definition of “rural” area would be narrowed to an area outside the outer boundary of a town or city with a population of at least 20,000 and within any census tract greater than 100 square miles with a population density of less than 100 people per square mile. Visas for immigrants who invest in rural areas would be limited to 2,000 and 2,000 for immigrants who invest in priority urban areas.
Criminal background checks: All applicants are required to pass a background check to verify there are no criminal or civil violations within the previous 10 years involving fraud or deceit, civil liability in excess of $1 million involving fraud or deceit, or resulting in a criminal conviction with a term of imprisonment for 1 year or more. Additionally, those subject to a certain final SEC securities orders, engaged in trafficking of any illicit or controlled substance, espionage, sabotage, theft of intellectual property, money laundering, human trafficking, terrorism, or other human rights offenses among others would be inadmissible. The Secretary is empowered to terminate the designation of any regional center found to have engaged such a person in violation of the program based on the named bars.
This only article only provides an overview of the new changes in the Act. As more information becomes available, we will be posting it to our blog.