Timing for the Return of an EB-5 Investment

Contractual Obligation v. Changed Immigration Policy

By Evelyn Hahn, Esq., Evelynh@hirson.com

One of the requirements of the EB-5 Investment Program is that the EB-5 investment be sustained at-risk in the new commercial enterprise (“NCE”). Prior to June 2017, it was not clear as to what this sustainment requirement exactly means as there was no mention in the statute or the regulations that the investment must be maintained for a certain period of time. As the most conservative approach, EB-5 projects used to indicate in the offering documents that the NCE would issue capital repayments to investors only upon final adjudication of I-829 Petition to Remove Conditions on Permanent Resident status (the “Form I-829”).

However, in June 2017, USCIS finally updated its Policy Manual to clarify that an EB-5 investor must sustain his/ her investment “at risk” throughout the 2-year period of conditional permanent residence (the “Sustainment Period”) to be eligible for removal of conditions on his/her permanent resident status. This means that the EB-5 projects can now safely return the EB-5 capital to the investors upon “filing” of the Form I-829, instead of waiting until the Form I-829 is finally adjudicated.

While the updated Policy Manual tremendously helped the entire EB-5 industry move forward with the EB-5 program with much greater clarity, it still raises a question as to whether the investors who signed their offering documents prior to June 2017 before USCIS updated its Policy Manual, can also request for a return of EB-5 capital after they meet the “Sustainment Period” requirement. These investors must still consider the following additional factors before they make a final decision on this issue:

1) The EB-5 investors are still contractually obligated to abide by the terms of the EB-5 offering documents they signed initially, regardless of the updated changes in the Immigration Policy;

2) In case the EB-5 investors made an investment prior to June 2017 and have now met the sustainment period requirement by maintaining their conditional resident status by filing their Form I-829, it is important to carefully review the terms of the offering documents and other related documents signed at the time of the investments were made, especially the provision pertaining to the exit strategy, dealing with the return of investments. Such documents include, but not limited to: the Private

Placement Memorandum, Subscription Agreement, NCE’s limited partnership agreement or an operating agreement, and other related project documents containing the exit strategy; and

3) If the original terms of the offering documents clearly state that the investor’s capital can be returned only upon final adjudication of the Form I-829, without any flexibility to cater to changing circumstances, the EB-5 investors will likely be bound by the original contractual agreements and therefore wait until the Form I-829 is finally adjudicated before they can receive their capital back.

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In case an EB-5 investor wishes to explore whether it is still possible to request for an early return of the capital, contrary to the originally signed offering documents, it is important that the EB-5 investor directly communicate with the project representative to see if the project is willing and able to issue repayments to investors earlier than the originally agreed date in the offering documents. Here, depending on the circumstances, the project might not yet be financially ready to issue the full return of investor’s capital at the time, and as a result of the earlier return, the investor might not be able to receive back 100% of their original investment. For the investors who have already met the sustainment requirement and yet still are bound by the original term of the offering documents, requiring them to wait until final adjudication of the Form I-829 before repayment of capital can be issued, it is important to carefully consider all the relevant factors and carefully weigh the risks and benefits of early return of the EB-5 capital before making a final decision.

EB-5 Green Cards by Country, Comparison of FY 2009 and FY 2019:

2009: China 47%, South Korea 21%, Great Britain & N. Ireland 8%, Taiwan 4%

2019: China 46%, India 8%, Vietnam 8%, and South Korea 7%

About the Author

Evelyn Hahn is a compassionate immigration attorney and a Managing Partner at David Hirson & Partners, LLP.

Her passion in immigration law deeply ingrained in her because she was one of them and personally underwent the same immigration process herself. Having a full understanding of how difficult, challenging and complex the entire immigration process can be based on her personal experience, her goal is to help each of her clients, both corporate and individual clients, to expand into new opportunities, overcome obstacles, and ultimately achieve their immigration goals in the U.S. She truly believes in helping her corporate clients move around/hire talented foreign national employees to work on their critical projects in the U.S. as well as individual clients achieve their American Dream just like she did. She represents both corporate/ business clients and individual clients on all aspects of immigration law, including business, investment, and family immigration as well as immigration litigation.

Evelyn represents small, midsize and large companies, both domestic and multinational companies, hospitals and other healthcare-related facilities, entertainment companies, as well as non-profit and religious organizations and successfully filed hundreds of employment-based non-immigrant visas, including E-2, H-1B, J-1, K-1, L-1, O-1, R-1, and TN visas as well as immigrant visas, including PERM labor certifications, and EB-1 (EB-1-1, EB-1-2, and EB-1-3), EB-2 including the National Interest Waivers, EB-3, and EB-4 immigrant petitions. She also advises her corporate clients about the immigration consequences of mergers, acquisitions, corporate restructuring, employer sanctions, and immigration law audits including labor condition applications and I-9 verification.

Evelyn has spoken at several conferences, seminars, and other speaking engagements, covering various immigration topics. She is licensed to practice law in California and District of Columbia. She is fluent in English and Korean.

She also focuses her practice on EB-5 investment immigration, representing both individual investors on I-526s and I-829s and regional centers and project developers on all aspects of the EB-5 program, including regional center creation, establishment of new EB-5 projects by filing the Form I-924s, and the EB-5 program compliance in general.