Doing Business in Saudi Arabia: Options and Overview for Foreign Investors and Companies

Wassem Amin SAUDI

(Note: This Article was originally published the American Bar Association, Section of International Law Quarterly Newsletter in March 2014.  For a downloadable copy of the newsletter, click here.)

By: Wassem M. Amin, Esq. MBA*

The Kingdom of Saudi Arabia is one of the fastest growing economies in the Middle East. In 2013, the government increased its budget by more than 20% than the previous year, to approximately 820 Billion Saudi Riyals ($219 Billion). Additionally, Saudi’s King Abdullah pledged more than $500 billion on social welfare and infrastructure projects over the next few years. Saudi Arabia’s increased spending is part of its policy to create economic diversification and reform, in turn decreasing their dependence on oil revenue and creating new jobs for the local population.

A large proportion of the Government’s spending, approximately 300 billion Riyals, has been allocated to capital expenditures on investment projects and social infrastructure. Ambitious plans include building 539 new schools and universities, as well as the development of several new cities in the sprawling desert kingdom.
The biggest beneficiary of this expansionary policy is the construction industry. Demand in the construction and associated sectors, such as residential and commercial real estate development, will increase exponentially, representing an excellent market opportunity for foreign investors and international corporations seeking to enter the Saudi market.

Applicability of Islamic Finance

Construction projects in Saudi Arabia are typically either public or private. The governing law which applies to all contracts, including construction, is Shari’a, or Islamic, law. General principles of Islamic Finance are applicable, such as the duty to act reasonably, in good faith, and to mitigate losses.

In the private sector, within the construction sector specifically, the Islamic Finance principle that applies is the “istisna’a” contract, which is a contract for the sale of an asset that is yet to be constructed or manufactured. Using this structure, the party providing capital, the financier, enters into a contract with the purchaser of the building to be constructed. Usually the financier, whether a bank or investor, will then enter into a back-to-back construction contract with a general contractor for the project. The financier realizes a profit from the spread between the cost of the construction contract and the price of the purchase contract.

Public Works Contracts

However, in the public sector, specific regulations and a complex legal framework govern bidding for public works, as well the interpretation and enforcement of underlying contracts. While still generally subject to Islamic Law principles, public works contracts are considered administrative contracts and are subject to the Government Bids and Procurement Law, implemented with associated regulations.

Establishing a Foreign Presence in Saudi Arabia

Recent amendments in the law and a shift in policy by the government to attract foreign direct investment have made it easier than ever for a foreign company or investor to establish business operations in Saudi Arabia. Although there are a variety of business organizations in Saudi Arabia, the most commonly used by foreign companies in undertaking construction projects are Limited Liability Companies (LLCs). That is due to the relative ease of incorporating an LLC (as opposed to, for example, a Joint Stock Company), minimal capitalization requirements, and the requirement of less corporate governance formalities.

The actual procedure of establishing an LLC in Saudi Arabia is typically a two-step process: (1) First, the foreign partner applies to the Saudi Arabian General Investment Authority (SAGIA) for a foreign investment license; (2) Second, once SAGIA issues the license, the partners in the proposed LLC apply to the Ministry of Commerce and Industry in order to incorporate the company. Once approved, the Ministry will certify the formation documents of the LLC and issue a commercial registration certificate–which permits the LLC to begin operating in the Kingdom legally.

Saudi Arabia’s Foreign Investment Regulations give foreign investors a variety of options in determining how to conduct business operations in the Kingdom. However, regardless of the option chosen, if a physical commercial presence is established, foreign investors must first obtain a foreign capital investment license from the Saudi Arabian General Investment Authority (SAGIA). The following section gives an overview of the other options that may be feasible

Overview of Saudi Arabian Business Entities and Markets

Investments in Saudi Arabia may be through the formation of a new business entity or through the acquisition of assets or equity in an existing company. Commercial enterprises by foreign companies may be structured as any of the following: (1) joint ventures, (2) wholly owned subsidiaries, (3) local branches of a foreign company; or (4) representative or agent offices.

The principal body of law governing commercial enterprises in Saudi Arabia is the Companies Regulation, which is enforced and regulated by the Ministry of Commerce and Industry. In some circumstances, an enterprise may be subject to the rules and regulations of additional regulatory bodies such as the Saudi Arabian Stock Exchange (Tadawul), the Saudi Arabian Monetary Agency (SAMA), or the Capital Market Authority (CMA).

In terms of the legal type of entity established, foreign investors have several options to consider–depending largely on the scope and type of the proposed enterprise as well as the investor’s exit strategy. The types of entities are: (1) Joint Stock Company; (2) Limited Liability Company; (3) Joint Venture; (4) Branches of foreign companies; and (5) Technical and Scientific offices of foreign companies.

Joint Stock Company (JSC): JSCs are the most analogous entity to a C-Corporation in the United States. They may be wholly foreign owned and are typically established with the intent towards a future public offering and listing on the Saudi Stock Exchange (Tadawul). A minimum of 5 shareholders and 3 directors on the board of directors is required. The minimum initial capitalization required is 2 Million Saudi Riyals (SR), which rises up to SR10 Million if the JSC will issue publicly traded shares.

Limited Liability Company (LLC): As with JSCs, Saudi law permits an LLC to be wholly foreign owned and managed. LLCs must have at least 2, but not more than 50, member-investors. Each member owns a pro-rata equity share equal to the uniform nominal value. Liability of individual members, under most circumstances, is limited to the member’s paid-in capital. Minimum initial capitalization for an LLC with any foreign members is typically SR500,000. However, for certain industries, such as agricultural or industrial projects, the minimum capital may be much higher. Unlike JSCs, LLCs do not issue shares and cannot be publicly traded on the Saudi Arabian Stock Exchange.

Joint Ventures – LLCs and JSCs may both be wholly owned or established with a Saudi business partner. The decision to establish a Saudi partner may be mandatory in some fields, such as establishing a branch of international law firm. However, in other cases, a foreign investor may benefit from a Saudi partner’s expertise and familiarity of the local market, customs, and traditions. The risks and benefits of doing so must be carefully analyzed after thorough due diligence is conducted.

Branches of Foreign Companies – Branch offices are set up to represent foreign companies in Saudi Arabia. Similarly to JSCs or LLCs, branch offices are allowed to engage in direct business activities. However, their scope of business is limited to that of the parent company.

Technical and Scientific Offices (TSOs) – TSOs are easily set up in Saudi Arabia and are usually established when a foreign company enters into long-term distribution or agency arrangements with local companies. However, their scope of allowed commercial activity is limited to providing technical support and assistance to local distributors, agents, and consumers. TSOs are prohibited from engaging in any direct business activities.

Other Commercial Arrangements – Distribution arrangements may be done through a joint venture with a Saudi partner or by appointing a local distributor or agent on your behalf. Other options, such as franchising or a direct international sale, may also be available, depending on the type of service or product the foreign company offers.

Saudi Arabia is a lucrative market for foreign companies and investors. At a time when the market in the United Arab Emirates is beginning to get stagnant and saturated, Saudi Arabia remains ripe with opportunities. 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.

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 9 years. Wassem currently focuses his practice on Business Immigration (EB-5 Regional Center and Investor Representation) and International Business Transactions. For more information, please visit the About Us page or

USCIS to Reopen Unlawful Presence Waiver Applications Denied Due to Criminal Offenses

Provisional Unlawful Presence Waivers

In March of 2013 the United States Citizenship and Immigration Services (“USCIS”) implemented a program where relatives of U.S. citizens could apply for unlawful presence waivers if they met certain requirements. While the USCIS created these waivers, they also limited the applicants by listing circumstances that would render an individual ineligible for a provisional unlawful presence waiver. The USCIS can deny a waiver application if the USCIS has reason to believe that the individual is subject to another ground of inadmissibility, in addition to the unlawful presence ground that is the subject of the I-601A waiver application.

Prior to the USCIS release, waiver applications were being denied if an applicant had any criminal history. The sentence imposed was irrelevant and it was not controlling whether or not the offense was a crime involving moral turpitude. On January 24, the USCIS issued guidance relating to applicants who had a criminal record. The USCIS field guidance provided that if the applicant’s criminal offense fell within the petty offense or youthful offender exception then USCIS officers should not find a reason to believe that the individual may be subject to inadmissibility at the time of the immigrant visa interview solely on account of that criminal offense.

Reopening of previous applications

Starting on March 18, 2014, the USCIS began the process of reopening all I-601A waiver applications that were denied prior to January 24, 2014, solely because of a prior criminal offense, in order to determine whether there is reason to believe the prior criminal offense might render the applicant inadmissible. For more information, you can view the USCIS website here.

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

Amin-Wassem-China-US-EB-5By 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.


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.

MA Top Court Raises Safeguards Against Police Home Intrusion When Serving an Arrest Warrant

By Dorian Page, Law Clerk, Dhar Law LLP

      On January 14th, 2014, the Massachusetts Supreme Judicial Court issued an opinion reaffirming the Court’s commitment to safeguarding the sanctity of the home against illicit government intrusion.  The case, Commonwealth v. Conan GentileSJC-11372, clarified further the meaning of the terms “reasonable suspicion” and “reasonable belief” as they relate to the degree of knowledge that the police must have before a person’s home can be entered while the police execute an arrest warrant.


      On June 24th, 2010, troopers of the Massachusetts State Police, along with three Leominster police officers, went to an apartment in Leominster to execute two arrest warrants for driving-related matters for the defendant.  One of the troopers had encountered the defendant one week earlier on an unrelated issue and had noted that the defendant possessed a state identification card listing his home address as being at the apartment.

      A trooper knocked on the rear door of the apartment, which was answered by a teenage girl who then called her mother to the doorway.  The mother was asked if the defendant was in the apartment, and she replied twice that the defendant was not there.  After speaking with the mother briefly, the trooper entered the apartment and pushed open a bedroom door, where he found the defendant.  The trooper also noticed the end of an antique musket protruding from underneath the defendant’s bed.  The trooper then searched under the bed and found two shotguns in gun cases.  While the trooper searched under the bed, the defendant was screaming that the police were illegally searching his bedroom.  The defendant was arrested and the firearms were seized.

     After being taken to the State Police Barracks and interrogated by the troopers regarding recent burglaries from which firearms and a sword had been stolen, the defendant told the police that the stolen items were in his apartment.  He told the troopers that he had received the items from someone else, who had committed the burglaries.  The defendant then gave consent for the police to return to his apartment to search for the stolen items, which they did.

      The defendant was charged with five counts of receiving stolen property, one count for each item seized from the defendant’s apartment.


     By August of 2010, the defendant was facing five indictments in superior court for the stolen goods.  He filed a motion to suppress all of the evidence taken from his home, as well as the statements he made during custodial interrogation at the State Police Barracks.  The judge denied the defendant’s motion and allowed the evidence to be introduced at trial.  The defendant was convicted by a jury of two counts of receiving stolen property.  The defendant appealed and the Supreme Judicial Court transferred the appeal directly to itself, bypassing the intermediate Appeals Court.


      The defendant’s appeal was based on the trial judge’s denial of the motion to suppress evidence.  The defendant argued that the police never had a “reasonable belief” that he was present in the apartment, as required to enter the home while serving an arrest warrant.  Although the police may have had a reasonable belief that the defendant lived at the apartment, more is required to “reasonably believe” that the defendant was present in the apartment at the time the police entered for the purpose of arresting him.

      The Commonwealth responded by arguing that the evidence heard by the original judge was enough to conclude that the police did, in fact, reach reasonable conclusions that the defendant was in the home.  The Commonwealth argued that while the trooper was at the back door, he heard sounds of movement coming from elsewhere in the apartment.  The trooper had stated that while he was speaking with the mother, she had replied twice that the defendant was not present, while turning her head to look at the bedroom door each time.  The trooper also said that he had developed a sense of when people were lying to him about the presence of those being sought.

      The Supreme Judicial Court (“SJC”) looked to their previous holdings in Commonwealth v. Grandison and Commonwealth v. Silva, which required that the police have “specific articulable facts” from which to conclude that the person sought is actually at the place the police enter, at that time, to arrest the person.  The SJC stated that, while the belief need not rise to the level of probable cause, the belief cannot simply be a hunch or an ambiguous suspicion that is not based on valid reasons.

The SJC concluded that the simple fact that the police were aware that the defendant usually resided in the apartment was insufficient to believe he was physically present when they executed the warrant.  The trooper’s conclusion that he could sense when someone was lying was likewise not a valid reason to believe the defendant was there.  The Court said that if the trooper’s “sense” was enough to be an objectively “reasonable belief”, then the privacy of people in their homes could be violated by the police every time the police had a subjective feeling that crime was occurring in any house.  The trooper never asked the mother if there was anyone else besides the defendant in the home, which could have provided an innocent explanation for the “sound of movement” that the trooper heard.  Nor did the troopers conduct any form of surveillance on the apartment prior to knocking on the door, which could have either confirmed or denied the defendant’s presence.  The SJC noted:

Because the trooper arrived at the residence after the commencement of the normal work day and had obtained no information that the defendant was there, any information supporting a reasonable belief that the defendant was inside the residence only could have been obtained after the trooper knocked on the door and before he entered the residence.

      The SJC pointed to the sheer lack of any objectively valid “specific articulable facts” for the police to believe the defendant was present when they entered the home.  The Court said that a “hunch is still a hunch, even if it turns out to be correct.  And if the belief were reasonable, it would remain so even if the defendant was not in the residence.”  The SJC ruled that the illegal entry by the troopers, in the absence of “reasonable belief”, so tainted the evidence obtained afterwards that all of the evidence should have been excluded from the trial.  The defendant’s convictions were reversed and the SJC ordered that the charges be dismissed.

EB-5 Investments in a Regional Center: A Due Diligence Guide for an EB-5 Immigrant Investor

eb-5-visa Wassem Amin

By Wassem M. Amin, Esq., M.B.A.

The EB-5 Visa program’s popularity has skyrocketed in the last couple of years.  A foreign investor can obtain permanent residency and, eventually, citizenship if the investment follows the United States Citizenship and Immigration Service’s (“USCIS”) guidelines of the EB-5 Visa Program.  The majority of EB-5 Investors invest through so-called Regional Centers.

A Regional Center is an entity, approved by USCIS, to develop projects that meet EB-5 guidelines.  The Regional Center could be the developer of the project or another entity that manages the project.  Obtaining the designation of an approved regional center from USCIS allows that entity to solicit foreign EB-5 Investors.    Although the program has been a huge success – generating billions of dollars in direct investment and creating tens of thousands of U.S. jobs – this success has attracted the attention of unscrupulous individuals.

A couple of recent high-profile examples include the Chicago Regional Center (discussed here) and, more recently, an individual who created a fraudulent regional center to solicit funds and divert them for his personal use.   Despite these unfortunate, the vast majority of EB-5 Regional Centers are legitimate.

If you are considering investing in an EB-5 Regional Center, it is important to conduct your own research and due diligence.  Although this should not be viewed as a comprehensive list, the following guide should be used to assess the viability of the Regional Center and feasibility of the underlying project.

EB-5 Investors: Due Diligence Guide

  1. The beginning step should be to always confirm that the Regional Center has been approved by USCIS.  Start by checking on  USCIS maintains an up-to-date list of Regional Centers across the country.
  2. After you have located a potential Regional Center, request a copy of their USCIS approval letter.  This will help ensure that you are not dealing with an imposter instead of the actual Regional Center.  Further, obtain copies of the actual filings with USCIS.  Regional Centers must file an application (Form I-924) to obtain initial designation and approval.
  3. Stay away from Regional Center projects that do not have clearly written and planned investment offering documents.  Reputable Regional Centers will usually have a Private Placement Memorandum (PPM), or similar, to send to an interested investor.  In addition to the PPM, investment documents for a typical Regional Center project include: Request the above investment information in writing.  If you do not have experience in evaluating the profitability or viability of a potential project, hire an experienced professional, such as a Corporate Lawyer or Business Consultant, to assist you.
    • Memorandum of Terms or Term Sheet;
    • Partnership Agreement or similar;
    • Investor Qualification Questionnaire;
    • Subscription Agreement;
    • Escrow Agreement;
    • USCIS Approval Letter
    • Investor Certificates;
    • Comprehensive Business Plan;
    • Economic Impact Plan by a qualified professional;
    • Wiring Instructions;
    • Disclosures of Administrative Fees;
    • Marketing Plan and Sample Marketing Material
    • Among others
  4. Consider the project developer’s involvement in the project.  A majority of EB-5 Regional Center developers often make significant capital investments in the project.  This would be a positive indication for the investor, because it means the developer’s own funds are at risk and they have their “skin in the game”–their financial return is linked to the success of the project.

Remember, although the EB-5 visa program has one of the highest USCIS approval percentages for individual investors, it is not “guaranteed.”  A telltale sign of potential fraud are promises of a conditional or permanent green card or citizenship.  In addition, be wary of promises of returns on the investment that are significantly higher than market rates.

Keep in mind that a requirement of the EB-5 investment is that the investor’s funds must be at risk–that means that the Regional Center or developer cannot even guarantee the return of your principal investment.  Although most reputable Regional Centers will in fact pay return the investment funds at the end of the agreed-upon period, a promise or guarantee at the outset is not feasible – and could even result in the denial of application with USCIS.

The EB-5 Regional Center program has been very successful and is gaining in popularity.  It has significant potential in generating foreign direct investment in rural and high unemployment areas.  It is also very popular with investors because of it has a track record of success and high rate of USCIS approvals.  However, a potential foreign EB-5 investor should always exercise caution when considering an EB-5 Regional Center investment.  Comprehensive due diligence and research, as with any other investment, is necessary and highly recommended.

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


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 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.