When reviewing the technical details of the E-2 visa regulations, one specific phrase carries more weight than most: the mandate to “Develop and Direct.” By definition, a treaty investor must be coming to the United States solely to develop and supervise the operations of the enterprise. While this requirement may seem inherent to the act of starting a business, it has moved from a procedural formality to a central point of scrutiny in recent years. Understanding how to demonstrate investor control of enterprise is now a critical component of a successful application strategy.
Understanding the Legal Standard for Investor Control
To successfully navigate the application process, it is essential to understand that the “Develop and Direct” requirement is a two-pronged test. It is not enough to simply own a business; the investor must prove they have the specialized skills and the legal authority to grow the company and manage its daily affairs. This standard ensures that the E-2 visa is used by genuine entrepreneurs who will actively contribute to the American economy, rather than passive investors who remain disconnected from their U.S. operations.
The Legal Framework of the Department of State
According to the Foreign Affairs Manual (FAM), the core test for this requirement is simple yet strict. If an applicant is the investor, they must show that they control or will control the enterprise. The regulations explicitly state that merely occupying a managerial position is not sufficient if the applicant does not truly hold the reins of the company. This distinction is vital; holding a high-level title is meaningless if the underlying corporate documents do not grant the investor the actual authority to steer the business’s future.
Why This Requirement Was Historically Overlooked
For a long time, the Develop and Direct requirement was treated as a “check-the-box” item. A few years ago, if an applicant proved they owned 50% or more of the company shares, adjudicating officers rarely dug deeper. The logic was straightforward: ownership equaled control. Most applicants during this era were traditional entrepreneurs with a singular focus on business growth, so the intention to manage was rarely in doubt. In this environment, a USCIS Request for Evidence (RFE) focused on “Develop and Direct” was almost unheard of, as ownership documents like an LLC Operating Agreement were considered definitive proof of involvement.
The Modern Shift Toward Increased Scrutiny
The landscape has changed significantly. Today, we see a steady rise in focused E-2 visa interview questions and detailed RFEs targeting the investor’s actual role. This is not necessarily because the law has changed, but because the patterns of E-2 applicants have become more diverse. Officers are no longer satisfied with passive ownership; they want to see the “active” hand of the investor in every phase of the business plan.
Addressing the ‘Education-First’ Application Trend
One major factor driving this scrutiny is the rise of applications where the primary motivation is a family’s relocation for children’s schooling rather than the business itself. While wanting a better education for one’s children is a valid personal goal, it cannot be the primary legal justification for the visa. When an officer suspects the business is merely a vehicle for residency rather than a genuine commercial venture, they will use the “Develop and Direct” standard to test whether the investor truly intends to work. If the investor cannot articulate a clear vision for growth, the application faces a high risk of denial.
The Risks of Delegated Management Structures
Another common hurdle is the “absentee owner” model. Many modern investors prefer to hire professional managers to handle daily operations while they remain in their home country or take a back seat in the U.S. While delegating tasks is a normal part of business, the E-2 regulations require the investor to maintain ultimate control. If a third-party manager holds all the decision-making power, the investor fails the “Develop and Direct” test. Consular officers are increasingly asking for detailed breakdowns of who makes hiring, firing, and financial decisions to ensure the investor isn’t just a figurehead.
Initial Scrutiny for Long-Term Success
Finally, officers are now looking at initial applications through the lens of future extensions. In the past, extensions were often granted with minimal pushback. However, recent trends show that many businesses fail to hire U.S. workers or generate sufficient revenue by the time they need to renew. To prevent “marginal” businesses from entering the system, adjudicators now scrutinize the “Develop and Direct” plan at the very beginning. They want to ensure the investor has a proactive strategy that will lead to a viable, job-creating enterprise years down the road.
How to Securely Demonstrate Investor Control
Despite the increased attention, the Develop and Direct requirement is not an insurmountable obstacle for a good-faith investor. The key to overcoming this challenge lies in the preparation of your corporate governance documents. It is not enough to have a great business plan; your legal structure must reflect your authority in black and white.
Prioritizing Corporate Governing Documents
The most effective way to prove control is through the company’s “DNA”—its governing documents. For an LLC, this is the Operating Agreement; for a Corporation, it involves the Bylaws and Initial Board Resolutions. These documents must clearly outline that the investor holds the final authority over essential business functions. This includes the power to sign contracts, manage finances, and set the strategic direction of the firm. Reviewing these documents with an attorney is often more important than the business plan itself when it comes to satisfying this specific legal standard.
Defining Operational Authority and Strategy
To avoid a USCIS Request for Evidence, your application should clearly define the hierarchy of power. You must be able to explain exactly how you will supervise staff and what your day-to-day involvement will look like. If you have a manager, you must demonstrate that they report directly to you and that you retain the power to override their decisions. By clearly showing that you are the ultimate decision-maker regarding personnel and finance, you transform this requirement from a potential weakness into a testament to your professionalism and commitment.
Moving Your Business Vision Forward
The “Develop and Direct” requirement is not a new hurdle, but rather a classic rule that has found new relevance in today’s rigorous immigration environment. Applicants who truly intend to operate their businesses have nothing to fear as long as their legal and operational structures are sound. By taking the time to carefully review your role and your governing documents, you can turn a point of scrutiny into a clear demonstration of your business’s viability and your own good faith as an investor.
To ensure your application is fully prepared for this level of scrutiny, we invite you to download our free E-2 visa guide, which includes deep dives into investor requirements and document preparation. You can also sign up for our free webinar to learn more about common interview questions and recent USCIS trends. If you are ready to build a robust legal strategy for your U.S. venture, schedule a consultation with our legal team today to ensure your “Develop and Direct” plan is airtight.
