The "Treaty Investor" or E-2 Visa

The Treaty Investor, or E-2 visa, is available to the owner, director or key employee of an investor, who are nationals of the same country that has signed the relevant treaty of friendship and commerce with the United States, and that has invested, or is actively in the process of investing, a substantial amount of capital, in an active business in the United States.

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Let's analyze this definition of the E-2 Investor Visa, phrase by phrase

“..owner, director, or key employee….”

You can qualify for this visa if you are the owner, director, manager or key employee of a business considered a “treaty investor” by immigration authorities. 

“..available to nationals of countries….”

 

In practice, the “treaty investor” is an individual, whose citizenship (passport-issuing country) determines whether he or she is a national of the treaty country or not.

However, the Treaty Investor may be a foreign corporation or other “juridical person.” In which case the rules of nationality may be more complicated. 

You may look at this page if you want more information on nationality.

“…who have invested….

Franchises“Who have invested….” in English refers to an action completed in the past. That action may have taken the form of:

  • the purchase of an existing business, either by purchase of its assets, or purchase of its shares (if it was a company);
  • the creation of a completely new business;
  • the above includes the purchase of a franchise. 

That past investment may have taken place one month, one year, or theoretically at any time prior to visa application. 

“..or actively in the process of investing….”

It is not necessary that the investment be completed at the time the visa is applied for. However, if the investment is pending, you must show real facts that demonstrate your legal commitment to completing the investment. It is not sufficient that you have opened a U.S. bank account, to which you have transferred the funds necessary to make the investment.  Your investment must go beyond that. This can be done in at least two ways.

The first way is to sign legal contracts, for example, a contract to purchase an existing business, to enter into a lease, to purchase materials or inventory, and similar transactions. 

The second way is to enter into an “escrow” arrangement. This is a device common in the United States when buying real property, but perhaps not common or even known in your country. It is an agreement where the buyer gives the money to purchase a business to a third party rather than the seller. The third party holds the money and will transfer the money based strictly on the instructions of the escrow contract. In our case, the instructions are to give the money to the seller if the E-2 visa is issued. Otherwise, the money will be given back to the buyer.

For more information on escrows, please visit this page 

“..a substantial amount….”

The amount of capital needed to qualify for the investment is not quantified. It is only described as “substantial,” which does not mean very much. 

Among the more reputable immigration practitioners, the figure of $100,000 is considered to be “substantial,” unofficially.  We agree, if for no other reason than that a smaller amount would make it very difficult not only to acquire an active business in the United States, but to operate it until it became successful and self-sustaining. 

“..of capital….”

Capital does not mean just money. It can be machinery, equipment, inventory. 

Whatever it is, the capital invested in the business must be “at risk” to the treaty investor, that is, it must represent a personal loss to the owner in the event the business is not successful. One example of what this means: the investor borrows the desired amount of capital from a bank in the investor’s home country, using the investor’s personal credit, or providing collateral in the investor’s home country. The business fails. The investor must still pay back the loan to the bank. Or the bank forecloses against the personal property in the investor’s home country given as collateral. This represents a loss to the investor. 

Another example of what it does not mean. The loan is secured solely by the assets of the business in which the loan is invested. In legal parlance, this is known in the U.S. as a “purchase money security interest.” The business fails. The bank forecloses against the assets of the business to satisfy repayment. This does not represent any loss to the investor. 

We can also mention the source of the capital. In the above example, it came from borrowing money from a lender. It can also come from a gift, or an inheritance.  It should not come from illicit sources. 

“..in an active business….”

The policy behind the Treaty Visas, both E-1 and E-2, is to allow a business operator from one treaty country to operate his or her business in the other treaty country, and to live there while doing so. This policy is not truly served when the investment is made in an asset that does not represent an active business.  An easy example would be the following: an investor in 1000 shares of Apple stock does not need to come to the United States to “manage” its investment. On the other hand, a buyer of a controlling interest in Apple might definitely come to the United States to manage a very active business. These two examples describe the difference between a “passive” and “active” investment. 

The SIGNET Law Firm

We are dedicated to helping foreign business invest and operate in the United States successfully. As part of our services, we specialize in helping our clients procure the E-1 and E-2 visas, which enable them to live in the U.S. while they manage and operate their businesses. 


Thank you.

We hope you have found this information useful. If you would like to speak with us, we are available.