Doing Business in Saudi Arabia: Public Bidding on Lucrative Government Contracts

Saudi Arabia Wassem Amin Business

By Wassem M. Amin, Esq., MBA

The record FY2013 and FY2014 budgets announced by the government of the Kingdom of Saudi Arabia have received much media attention. The FY2014 budget of Saudi Arabia, for example, sets a record U.S. $228 Billion (SAR 855 Billion) in government expenditures. Foreign companies and businesses who do business with the Saudi Government quickly discover a very rewarding and lucrative market.

Overview

Key expenditures, as announced in a press release by the Saudi Government, will focus on “infrastructure, education, health, social services, security services, municipal services, water and water treatment services, and roads and highways. Moreover, the budget gives particular emphasis to science and technology projects and e-government.”

Specifically, key expenditures have been allocated in the budget for the following major sectors:

  • Education: US $56 Billion – approximately 25% of the budget. This will be used to finance the construction of 539 new schools and 1,900 existing school-construction projects as well the refurbishment of thousands of present educational facilities.
  • Health and Social Affairs: US $28.8 Billion.       This will be used to finance the construction of dozens of new hospitals throughout the Kingdom.
  • Infrastructure and Transportation: US $17.8 Billion – Key planned projects in this sector include finishing work on existing projects, completing construction on highly publicized economic cities, and construction of new sea ports and a cross-country railway service.

U.S. and foreign based companies who are unfamiliar with doing business in Saudi Arabia generally are advised to seek the assistance of a legal advisor who is familiar with the region’s unique laws and culture. Moreover, companies wishing to do business with the Saudi Government should be aware that, as with any national government, it may be a complicated and time-consuming process.   However, with the right guidance, those willing to invest the time and effort will find that there are no shortage of very financially rewarding opportunities – in both the public and private sector.

Rules and Regulations Governing Saudi Public Contracts

Generally speaking, public or government contracts in Saudi Arabia are governed by the Government Tenders and Procurement Law and its implementing regulations (the “Law”). With few exceptions, the Law requires Saudi government entities to procure products and services through a public bidding process. A government agency is required to prepare and advertise a Request for Tenders (“RFT”) and advertise it in the Saudi Official Gazette and in at least two local newspapers for a minimum period of either 30 or 60 days–depending on the value of the project.

The exceptions to the public requirement are relatively few. Exempt from the public bidding requirement, direct procurement applies to the following sectors: military and defense equipment; consultancy services; unique products or services; and urgent medical supplies in a response to an epidemic.

To be eligible to enter the public bidding process, the bidder must post a bank guarantee equal to 1% of the project’s value. Within ten days of being awarded the project, the winning contractor must provide the respective government agency with an unconditional performance bond equal to 5% of the contract’s value. Usually, the performance is issued by a Saudi bank and must be valid for the duration of the project.

Who is Eligible to Submit Bids?

The Law indicates that any bidder licensed to do business in Saudi Arabia is eligible to participate in the process. At first glance, it may appear that a foreign company that has undergone the licensing process in Saudi Arabia (discussed in previous posts) is technically eligible to bid on public projects. However, a thorough reading of the Law and its implementing regulations proves otherwise. The Law and its implementing regulations require the bidder to hold a variety of certificates that can only be held by a Saudi business – such as, but not limited to, a commercial registration certificate, a classification certificate, a tax certificate, a Saudization certificate, and a foreign investment license if the bidder has any foreign capital. Many of those required licenses and certificates can only be obtained if the bidder is at least partially-owned by a Saudi national.

Selecting a Local Agent or Partner

Therefore, the most common, and effective, way for a foreign company to bid on public projects is by establishing a partnership or agency agreement with a local business. A key issue for foreign companies then becomes how to identify a local business partner that, not only adds value, but meets the various requirements of the Government Tenders and Procurement Law. In our experience, identifying the right partner is oftentimes detrimental to a foreign company’s success or failure in Saudi Arabia. Substantial due diligence and vetting is a critical component of this process. Generally speaking, a local partner should have prior experience and a successful track record working with the government agency that is awarding the contract.

The challenge is that public information on private businesses in Saudi Arabia is rare, if not impossible, to find. Therefore, utilizing a legal or advisory firm that has first-hand experience in the region is oftentimes critical. An experienced advisor would be able to identify, and vet, potential partners in the region and assist the foreign company with negotiations and legal registration requirements.

Saudi Arabia has pursued an open and liberal investment policy by welcoming and encouraging both domestic and foreign investment. The objective of Saudi Arabia’s policy is to achieve diversification by gradually reducing dependence on one source of income. The massive infrastructure and expenditure projects announced by the Saudi government present opportunities for foreign companies in virtually every major sector. However, the cultural, political, and legal landscape is complex and varies dramatically from that of countries such as the USA or in Europe. Unaccustomed foreign companies or investors should seek out advisory or legal firms who are proficient and have expertise in Saudi Arabia.

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Disclaimer: These materials have been prepared by Wassem M. Amin, Esq. for informational purposes only and are not legal advice. The material posted on this web site is not intended to create, and receipt of it does not constitute, a lawyer-client relationship, and readers should not act upon it without seeking professional counsel.

Wassem M. Amin, Esq., MBA is an Associate Attorney at Dhar Law LLP in Boston, MA and is the Vice Chairman of the Middle East Committee as well as the Islamic Finance Committee of the American Bar Association’s International Law Section. Wassem has extensive experience in the Middle East region, having worked as a consultant in the area for over 10 years. Wassem currently focuses his practice on International Business Transactions and Business Immigration (EB-5 Regional Center and Investor Representation). For more information, please visit the About Us page or http://www.dharlawllp.com.

EB-5 Chinese Quota Retrogression: Analysis of Potential Impact and Recommended Solutions

Amin-Wassem-China-US-EB-5

By Wassem M. Amin, Esq., MBA

(Visit our Publications Page for a FREE PDF Download of this Article)

Over the past few years, the skyrocketing popularity of the EB-5 Immigrant Investor Visa program has fueled record demand from foreign investors.  The EB-5 Immigrant Visa allows foreign investors and their immediate family members to obtain permanent residency, providing an eventual path for citizenship, in exchange for a $500,000 to $1,000,000 investment in a job-creating enterprise.  The overwhelming majority of EB-5 foreign investors, over 80%, have come from China.  Allotted a maximum quota of 10,000 visas per year, the EB-5 Immigrant Visa is further subject to a numerical per country limit in the event that quota is met.   Known as “retrogression,” this limitation essentially works by creating a backlog in visa availability for immigrant investors from oversubscribed countries.

The U.S. Department of State cautioned in a December 2012 bulletin that projected demand of EB-5 Visas in that fiscal year may subject Chinese immigrant investors to retrogression.  Although that never came to fruition (not due to demand, but primarily caused by slow processing times), the Department of State renewed its caution alert again in December 2013.  Although the 10,000 visa-quota has never been met since the inception of the EB-5 Program, based on new statistics recently released by the United States Citizenship and Immigration Service (“USCIS”), it is now evident that the demand will surpass the available quota inevitably, perhaps as soon as this Fiscal Year 2015.  This no longer makes the likelihood of Chinese quota retrogression a question of “if,” but rather “when.”

The implications of Chinese quota retrogression are far-reaching and affect not only potential Chinese investors but the entire EB-5 industry, including Regional Centers, project developers, agents, and professional service providers such as attorneys.  This article will begin with a brief overview of the EB-5 program and how visa retrogression works.  It will then assess the potential ramifications of Chinese EB-5 visa retrogression for investors and the EB-5 industry.  Finally, it will propose solutions to alleviate the potential impact of Chinese quota retrogression on project developers and Regional Centers.

Background

In 1990, the U.S. Congress created the employment-based fifth preference (“EB-5”) immigrant visa category for immigrants who invest in and manage U.S. commercial enterprises that benefit the U.S. economy and create jobs. Allotted 10,000 immigrant visas annually, the EB-5 immigrant visa was designed to attract foreign direct investment into projects that would directly impact the economy, i.e., not merely passive investments.

Immigrant investors can apply for an EB-5 visa through two primary routes. The first route is through a direct investment into a qualifying “new commercial enterprise.” The second is through the Regional Center Pilot Program. The Regional Center Pilot Program allows USCIS to designate private or public entities as so-called Regional Centers to function as conduits or administrators of large or medium-scale projects funded, at least in part, by EB-5 investors. Regardless of which route is selected, the EB-5 Investor Visa allows foreign investors to obtain permanent residency in the United States conditioned upon an investment of a minimum of $1,000,000 (or $500,000 in a high unemployment or rural area) in a project which creates and sustains at least 10 full-time jobs for U.S. workers.

How Does Visa Retrogression Work?

Congress sets limits on the number of immigrant visas that can be issued each year. In order to adjust status to that of legal permanent resident, an immigrant visa must be available to the applicant both at the time of filing and at the time of adjudication. Visa retrogression occurs when more people apply for a visa in a particular category or country than there are visas available for that month. Retrogression typically occurs toward the end of the fiscal year as visa issuance approaches the annual category, or per-country limitations.  When an applicant files an immigrant petition, he or she is given a “priority date.”  The priority date is the date when the immigrant petition is properly filed with USCIS.  If, at the time of adjudication, an applicant’s priority date no longer meets the cut-off date published by the Department of State, due to retrogression, his or her case must be held in abeyance until a visa once again becomes available.

The EB-5 Program is allotted 10,000 annual immigrant visas.  However, that number is misleading because the quota counts an investor as well as  his beneficiaries, i.e.,if an average investor is married and has two children, the total number of visas counted towards the quota will be four.  In reality, the average number of actual EB-5 principal investors is around 3,000, substantially lower than the available quota.

Once that annual quota is met, the per country limitations on EB-5 visas will be imposed, creating a waitlist for applicants from oversubscribed countries.  Since Chinese applicants account for the substantial majority of EB-5 visas, they will be the ones directly impacted.  This backlog would essentially delay an investor’s ability to obtain an immigrant visa by a year or more, in addition to normal USCIS processing times for an I-526 (the Immigrant Investor Petition).  Therefore, if, for example, an I-526 petition normally takes 6-9 months, a backlog due to visa retrogression would extend processing times to an average of two years, if not more.

 What is the Likelihood of a Chinese Visa Retrogression?

In FY2013, 8,567 EB-5 visas were issued.  In the first two months of FY2014, over 6,700 EB-5 petitions are already pending with USCIS.  Absent Congressional action, the prospect of EB-5 petitions exceeding the annual 10,000 allotment is inevitable.  Once that quota is met, the per country limits will result in visa retrogression for Chinese investors, delaying their ability to obtain an immigrant visa by at least a year or more, in addition to the time it takes to process the I-526.

Potential Implications

In the long-term, the delay and complications of EB-5 processing will result in Chinese investors looking to other countries that actively compete for foreign investors, including Australia, Canada, and the United Kingdom.  Retrogression adds further strains on the EB-5 program which has already been plagued by extraordinarily slow processing times and delays by USCIS.  Faced with the prospect of waiting two or more years before being able to immigrate to the United States, a Chinese investor may decide to immigrate elsewhere.  Other countries will surely capitalize on visa retrogression to draw away potential investors.

In addition, the Chinese retrogression creates a significant conflict of interest between project developers, Chinese investors and immigration agents.  It also raises new ethical issues for an attorney representing the project developer or the Chinese investor.

From an investor’s perspective, an investor with children who are reaching the age of 21 may have incentives to delay the approval of the I-526 as long as possible.  Under the Child Status Protection Act (“CSPA”), commonly known as the “age-out provisions,” a child can immigrate as a beneficiary of a parent’s immigration application until he or she turns 21.  The CSPA freezes the age of children who are derivative beneficiaries of an I-526 petition while the petition is pending, but not once the petition is approved and awaiting the quota to become available for an immigrant visa.  This benefits a Chinese investor whose children are close to aging out.  Thus, it will be their benefit to delay the I-526 approval as long as possible.

From a Regional Center or project developer’s perspective, job creation projections and capital redemption timelines will be directly impacted by retrogression.  Capital redemption, or the investor’s exit strategy, is, essentially, the time period before which the investor can have his capital returned.  A protracted visa immigrant visa availability will tie up the investment money for a longer period of time.  Although that may seem like a benefit to the project developer, most current EB-5 investments provide for an exit strategy in which the developer sells or refinances the business, using the proceeds to repay investors.  A delay in visa availability will delay the developer’s ability to do so–since an investor cannot redeem capital before the approval of an I-829, which is the petition to remove conditions on investor’s permanent resident card.

Another potential implication is whether such a delay would impact the developer’s ability to access investor funds.  In a typical investment through a Regional Center, the investor’s capital is held in an escrow account until the approval of the I-526, at which point the funds are released to the developer.  Previously, an I-526 approval typically meant that the investor would be able to immigrate to the United States (or adjust their status) shortly thereafter because an immigrant visa was always available.  However, visa retrogression will delay that process by a significant period of time.  An investor, therefore, may dictate that the funds be held in escrow until a visa becomes available, not simply until the I-526 is approved.  Without alternate financing, this delay could essentially result in an inability to proceed with a project’s development and, ultimate failure.

From an attorney’s perspective, counsel for a Regional Center must recognize the additional securities disclosures that may result from visa retrogression.  Specifically, new risk factors for offering documents or Private Placement Memoranda would need to be disclosed.  Similarly, counsel for an investor would need to highlight the possible implications to their client.

Solutions and Proposals

Bridge Financing

However, the growth in EB-5 financing market has the creation of spurred specialized loan companies that address this very issue.  There are now several companies that provide specialized EB-5 bridge loans which allow a developer access to all or some of its anticipated capital.

Bridge or interim financing provides the opportunity for EB-5 project developers to take out short term financing to help construct and develop the project, then the EB-5 capital, as it is received, may replace that short term financing yet still receive credit for job creation by USCIS.

Moreover, in its latest Policy Memorandum, USCIS has specifically indicated that such financial arrangements are allowed in the EB-5 context.  In a May 20, 2013 Adjudications Policy Memorandum, USCIS stated, in pertinent part:

It is acceptable for the developer or the principal of the new commercial enterprise, either directly or through a separate job-creating entity, to utilize interim, temporary or bridge financing – in the form of either debt or equity – prior to receipt of EB-5 capital. If the project commences based on the bridge financing prior to the receipt of the EB-5 capital and subsequently replaces it with EB-5 capital, the new commercial enterprise still gets credit for the job creation [arguably the main requirement of the EB-5 program] under the regulations….Developers should not be precluded from using EB-5 capital as an alternative source to replace temporary financing simply because it was not contemplated prior to obtaining the bridge or temporary financing.

Tapping Alternative Markets

Prudent project developers and Regional Centers should hedge the risk of any impact a shortage in Chinese investors may cause.  Since over 80% of EB-5 investors are from China, even a small decrease in the number of investors may have an significant impact.  Creating an alternative pipeline of EB-5 investors from different regions is the key to ensuring continued and sustained growth in the EB-5 Program.


[1] Wassem M. Amin, Esq., MBA is an Associate Attorney at Dhar Law LLP in Boston, MA and is the Vice Chairman of the Middle East Division of the American Bar Association.  Wassem has extensive experience in the Middle East region, having worked as a consultant in the area for over 9 years.  Wassem currently concentrates his practice on Corporate Law, Business Immigration and International Business Transactions.  He has advised countless Eb-5 Investors and assisted developers in structuring USCIS-compliant EB-5 Regional Centers as well as sourcing investors throughout the Middle East.  For more information, please visit the About Us page or request more information on our Contact Us page.

Disclaimer: These materials have been prepared by Wassem M. Amin, Esq. for informational purposes only and are not legal advice.  The material posted on this web site is not intended to create, and receipt of it does not constitute, a lawyer-client relationship, and readers should not act upon it without seeking professional counsel.

EB-5 Regional Centers in Project Finance: Using EB-5 Capital in lieu of Mezzanine Financing

By Wassem M. Amin, Esq., MBA

The EB-5 program — which was created in 1990 but has grown in popularity only over the past few years — allows overseas investors to obtain a green card in exchange for providing a minimum of $500,000 in financing for qualified projects.  The explosive growth of the EB-5 program has caught the attention of real estate and project developers nationwide.  Developers have been using the program to establish so-called EB-5 Regional Centers, which are essentially entities, approved by the United States Citizenship and Immigration Service (“USCIS”) that allow a developer to raise capital from foreign immigrant investors for a specific project or projects.  The total capital raised per project has ranged from $1,000,000 to over $300,000,000.  As the use of EB-5 Regional Centers has expanded, the structure of EB-5 Regional Centers and underlying investments has also increased in complexity–which has allowed EB-5 capital to be used in increasingly diverse types of projects.

Of course, at the outset, it is critical to ensure that any contemplated EB-5 financing meet the stringent requirements set out by USCIS for the program.  The details of the program, and the differences between EB-5 financing through a Regional Center, are discussed in prior posts, here and here (each post includes downloadable PDFs, as well).

EB-5 Financing as an Alternative to Real Estate Mezzanine Capital

A potential, and increasingly popular, use of EB-5 funds in Real Estate finance is as a source of capital in lieu of traditional mezzanine loans.  In the context of real estate finance, mezzanine loans are typically used by developers as a source of supplementary financing for development projects.  Unlike a traditional mortgage, real estate mezzanine loans are collateralized by equity (such as stock or other ownership interest) in the development company rather than the property itself.  To account for the higher risk, lenders of mezzanine capital typically charge interest rates and fees that range between 12-20%, a substantial cost for the developer.

This is where EB-5 financing shines -  EB-5 cost of capital is one of the primary reasons the program has become very popular with developers.  EB-5 financing, whether structured in a debt or equity model (more on EB-5 financing structures, here), typically cost around 1-2%.  For example, in a debt model, an EB-5 loan from the foreign investor would carry an interest rate of 1%–significantly lower than traditional mortgage-backed loans, and exponentially lower than the cost of mezzanine financing.

EB-5 Financing as an Alternative to Mezzanine Capital in Leveraged Buyouts

In a leveraged buyout (“LBO”), mezzanine capital may be used in conjunction with other forms of financing and equity as part of the capital stack to fund the purchase price of a company being acquired.  In LBOs, Private Equity firms or an acquiring company often use mezzanine capital to lower the amount of capital invested.  Since Private Equity firms typically have higher target rates of returns than a mezzanine lender, use of mezzanine loans may increase the rate of return on an investment.  EB-5 Financing in the context of LBOs could replace the mezzanine loan in a capital stack and significantly enhance the rate of return on an investment or acquisition.  For example, in an LBO, if the capital stack of a purchase includes $50 million in mezzanine financing, at a cost of 15% to the borrower, using a simple interest rate calculation, the cost of capital to the purchaser is at least $7.5 million.  The significant cost of a mezzanine loan may have the effect of not only reducing the value of an LBO target, but also greatly diminishing the rate of return on an investment.

As in Real Estate finance, use of EB-5 capital in an LBO can have significant advantages.  For example, in the above scenario, if the LBO uses EB-5 capital in lieu of its mezzanine financing, the cost of capital would be around 1-2%, or between $500,000 to $1,000,000 in a $50 million capital raise–that is a savings of over $6,500,000.  In other words, using EB-5 capital just increased the return on the investment by an additional $6,500,000!

Making EB-5 Financing Work: Bridge Loans

Assuming the underlying project meets the requirements of the EB-5 program, many project developers or companies are still reluctant to use EB-5 financing simply because of the length of USCIS processing times.  Although USCIS has made significant strides over the past few years to address that issue, the fact remains that structuring an EB-5 financing takes a significant amount of time.  It may take anywhere from 6 months to 2 years before a developer is able to have funds from an EB-5 financing at its disposal.  The delay in access to these funds can prove fatal to a project.

However, the growth in EB-5 financing market has the creation of spurred specialized loan companies that address this very issue.  There are now several companies that provide specialized EB-5 bridge loans which allow a developer access to all or some of its anticipated capital.  Moreover, in its latest Policy Memorandum, USCIS has specifically indicated that such financial arrangements are allowed in the EB-5 context.  In a May 20, 2013 Adjudications Policy Memorandum, USCIS stated:

“It is acceptable for the developer or the principal of the new commercial enterprise, either directly or through a separate job-creating entity, to utilize interim, temporary or bridge financing – in the form of either debt or equity – prior to receipt of EB-5 capital. If the project commences based on the bridge financing prior to the receipt of the EB-5 capital and subsequently replaces it with EB-5 capital, the new commercial enterprise still gets credit for the job creation [arguably the main requirement of the EB-5 program] under the regulations….Developers should not be precluded from using EB-5 capital as an alternative source to replace temporary financing simply because it was not contemplated prior to obtaining the bridge or temporary financing.”

The increasing popularity and exponential growth of the EB-5 market has expanded the possibilities in which EB-5 capital can be used.  More than ever before, EB-5 capital can be used in a variety of flexible financing structures to fund increasingly diverse projects.  The key to successfully raising EB-5 capital is proper planning with the assistance of attorneys and professionals who, not only have expertise in Securities, Corporate, Immigration and, if applicable, Real Estate Law, but are also well-versed in the unique requirements the EB-5 program.  Finally, proper and extensive due diligence and risk analysis on the underlying project and the overall financing should also be completed contemporaneously.

If you would like more information about the EB-5 Visa or Regional Center development and investment offerings, please contact Wassem M. Amin, Esq., at wassem@aminconsultingllc.com.

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Wassem M. Amin, Esq., MBA is an Associate Attorney at Dhar Law LLP in Boston, MA, a Managing Director of Amin Consulting LLC and is the Vice Chairman of the Middle East Division as well as the Islamic Finance Committee of the American Bar Association’s International Law Section.  Wassem has extensive experience in the Middle East region, having worked as a consultant in the area for over 9 years.  Wassem currently concentrates his practice on Corporate Law, Business Immigration and International Business Transactions.  He has advised countless Eb-5 Investors and assisted developers in structuring USCIS-compliant EB-5 Regional Centers.  For more information, please visit the About Us page or request more information on our Contact Us page.

Disclaimer: These materials have been prepared by Wassem M. Amin, Esq. for informational purposes only and are not legal advice.  The material posted on this web site is not intended to create, and receipt of it does not constitute, a lawyer-client relationship, and readers should not act upon it without seeking professional counsel.

Using EB-5 Regional Centers to Raise Capital for Non-Real Estate Projects

 EB-5 Immigrant InvestorBy Wassem Amin, Esq., MBA

Many people wrongly assume that the EB-5 Regional Center program is only feasible for real estate developments.  While it is true that the majority of Regional Center projects have been real estate developments, the program has also been successfully used to raise EB-5 capital for projects in diverse industries such as biotech, manufacturing, clean energy, and franchises.  This article examines the various ways, outside of the real-estate-development context, that an EB-5 Regional Center can be structured.  The EB-5 Visa category allows a foreign investor to become a permanent resident in the United States if they invest either $500,000 or $1,000,000 and meet other requirements.  A Regional Center is an entity approved by USCIS that is established to develop a commercial enterprise using EB-5 capital.

The EB-5 Regional Center can also be structured to function as a holding company or a mutual fund, enabling the deployment of funds across many projects and even the reinvestment of funds from one project to another.  These structures are typically used by those in the financial services industry.  As discussed below, the only issue to keep in mind is the ability to track job creation to each investor.  Notwithstanding that, there is virtually no limitations on the structure of the Regional Center and the industry or project it is used for.

At the outset, no matter what structure is used, the basic requirements of a Regional Center and EB-5 Investment must be met (e.g., 500K or $1MM minimum per investor, 10 jobs per investor, etc.)  The benefit of using a Regional Center is the ability to meet the jobs requirement through not only direct (i.e., W-2) jobs, but also indirect and induced jobs, using an econometric forecast analysis.  This allows a prospective Regional Center flexibility in meeting that requirement.

In terms of structuring the Regional Center, it can be structured several ways.  First, it is possible to structure the Regional Center as a holding company, where the business plan would provide for investments in multiple job-creating businesses over time.  That structure would be allowed under current USCIS regulations and would also allow the commercial enterprise (the holding company) to move money from one job-creating business to another.  The key here is the business plan submitted to USCIS – it must sufficiently detail the proposed multiple investment activities and specifically provide for investments in multiple job-creating businesses over time.  The business plan must also demonstrate that the requisite jobs will be created through the succession of capital investments through the holding company.

Second, in the EB-5 Regional Center context, a “fund of funds” (mutual fund) model may be feasible where the EB-5 money is invested and disbursed across a number of projects.  In that structure, the business plan and documentation must be able to adequately track each individual EB-5 investor’s capital investment into the commercial enterprise (the fund) and then into the job-creating investment projects.  This is necessary because USCIS must be able to make a determination as to whether each alien’s investment was sustained and to determine the allocation of jobs among the multiple EB-5 investors.

Finally, a private equity strategy is also an acceptable fund structure, but, again, USCIS advises that the level of complexity needs to be well documented to include easily recognizable job creation estimates.

In any of these models, it is important to note that the start-up expenses incurred in establishing a holding company or mutual fund that will not create jobs but will rather invest in other entities that will create jobs for U.S. workers cannot be counted in determining whether the investor has made the minimum investment.  However, as with the case with any Regional Center structure, administrative fees that may be charged to each investor, which are in addition of the minimum investment, may be used to recoup start-up expenses and operating costs. These fees typically range from 35,000 to 65,000.

These are just a few of the different ways a Regional Center could be structured in order to make it feasible for use in various, non-real estate, industries.  The level of complexity is only limited by the project’s ability to track job creation to each investor throughout the period required by USCIS.

The EB-5 Regional Center program is a very attractive option to raise capital after, of course, determining the feasibility of the underlying project.  Past regional centers have raised anywhere from $1,000,000 to almost $300,000,000 in EB-5 Funds.
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Disclaimer: These materials have been prepared by Wassem M. Amin, Esq. for informational purposes only and are not legal advice.  The material posted on this web site is not intended to create, and receipt of it does not constitute, a lawyer-client relationship, and readers should not act upon it without seeking professional counsel.

Wassem M. Amin, Esq., MBA is an Associate Attorney at Dhar Law LLP in Boston, MA and is the Vice Chairman of the Middle East Division as well as the Islamic Finance Committee of the American Bar Association’s International Law Section.  Wassem has extensive experience in the Middle East region, having worked as a consultant in the area for over 9 years.  Wassem currently focuses his practice on Corporate Law and International Business Transactions.  For more information, please visit the About Us page or request more information on our Contact Us page.