Do I have to run my E-2 Company? What does it mean to “Develop and Direct” the E-2 Enterprise?

Do I have to run my E-2 Company? What does it mean to “Develop and Direct” the E-2 Enterprise?

The E-2 visa allows foreign nationals from certain countries to buy or start a for-profit business in the U.S. that meets certain requirements. The E-2 classification is a great option for certain individuals who want to live and working in the United States by starting or purchasing a business. To qualify for the E-2 visa, you must spend money on qualifying purchases, hire US workers, and be in a position to “develop and direct” the E-2 company.  This article addresses some of the considerations related to developing and directing the E-2 business.

To view the full set of E-2 visa requirements, click here.

The “develop and direct” requirement

To qualify for the E-2 visa, the applicant must demonstrate that he/she is in a position to “solely direct and develop” the E-2 enterprise. Put simply, the government requires that you own the company and actively participate in the running of the E-2 company.   To show that you are “in the position” to develop and direct the business, you should be able to demonstrate that you own at least 50% of the company. You should also be able to demonstrate prior experience in running a business or experience in the same industry as the E-2 company to show that you are in the position to develop and direct the business.

Activity that falls under the develop and direct category typically involves business management activities such as the daily management of personnel and business operations, the training and hiring of employees, and the management of the company’s finances. Business development activity, such as direction of marketing activities, pursuing and closing client leads, and meeting with prospective clients, also qualify as directing and developing the business.  Passive investments are not E-2 eligible.

Can I perform “hands-on” work or Perform Services at my E-2 company?

In some service oriented or small businesses, demonstrating that you are performing work that is “solely” focused on developing and directing the E-2 company may be difficult. Managers for small businesses often perform various roles, where some of the activity may be focused on providing goods and/or services to customers (i.e. working a cash register during a sale or consulting with a client during a meeting).

However, it is important to note that the activities of the E-2 investor applicant should be primarily focused on business management and development. Thus, an investor will not qualify for the E-2 visa if he/she plans on engaging primarily in “hands-on” work, such as manning the cash register or stocking shelves at a convenience store, or working primarily on consulting projects as the service provider. However, the applicant can perform such duties if they are incidental to their job developing and directing the business. For example, an E-2 investor can review subordinate’s work or assist with a client need, so long as these are not the investor’s primary activities.  Also, a service oriented business is E-2 eligible but the applicant must demonstrate that they will ultimately perform managerial and strategic functions (rather than being the service producer at the firm) over time.  USCIS in particular has been known to issue RFE’s in cases where service oriented businesses (eg. a consulting firm) has the investor as one of the primary service providers.  This appears to be an increasing trend so something that requires careful consideration.

To find out more about our immigration and business services, contact Scott Legal, P.C.

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June 16th, 2017|2 Comments

2 Comments

  1. Rand June 16, 2017 at 2:56 pm - Reply

    Hi Scott, related with this matter I wonder whether a E-2 visa holder could set-up other independent business entities in the US in addition to the E-2 business; it could be a natural pattern for a successful serial entrepreneur, as (s)he acquires reputation and capitalize new business opportunities. This, of course, assuming the original E-2 business is continuing operations and developing accordingly.

    Thanks

    • IanScott June 21, 2017 at 12:10 am - Reply

      Hello, you are only permitted to work at the E-2 enterprise. Please contact us if you would like to set up a one hour consultation. Kind regards,

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