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.
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