An E-2 visa has a number of requirements including investing money and hiring U.S. workers. The visa is only available to nationals from certain countries and in order to get an E-2 visa, the U.S. entity must be at least 50% owned by nationals from the Treaty country. The question often arises of whether the required percentage of ownership of the E-2 entity is 50% or 51%. Based on the regulations, the clear answer to the question is 50%.
Do I have to own 50% or 51% of the E-2 Entity?
In order to obtain an E-2 visa as an investor, the investor must show that he/she controls the U.S. entity. Control is usually demonstrated by showing that the investor owns the majority of an entity, such that he/she can vote and direct the entity based on that vote. While owning 50% does not give one absolute control, the regulations are clear that a concept of “negative control” still meets the E-2 visa requirement of control. That is, if 2 parties each own 50% of a company, one (or both) could qualify for an E-2 investor visa based on control. You can see the other E-2 visa requirements by clicking here.
Can my ownership percentage in the company change? Can my ownership in an E-2 company drop below 50%?
Let us look at the following example: A company’s ownership split is 60% owned by a U.K. national and 40% owned by a national from the U.S. The U.K. national applies for an E-2 as an investor and the visa is granted. One year later, the company ownership flips (sale, transfer or by other means) and becomes 60% owned by the U.S. national and 40% owned by the U.K national. What happens when the E-2 investor ownership drops below 50%?
The E-2 business must always be at least 50% owned by nationals from the Treaty country to maintain E-2 status. If the ownership percentage drops below 50%, anyone who has an E-2 visa in the company would lose that status. There is a 60-day grace period that applies but the E-2 investor or E-2 employee would not be able to work during that period.
You can set up a consultation by clicking the link below.
To find out more about our services and fees contact Scott Legal, P.C.
This website and blog constitutes attorney advertising. Do not consider anything in this website or blog legal advice and nothing in this website constitutes an attorney-client relationship being formed. Set up a one-hour consultation with us before acting on anything you read here. Past results are no guarantee of future results and prior results do not imply or predict future results. Each case is different and must be judged on its own merits.