EB-5 AND REDEMPTION AGREEMENTS

Foreign nationals may seek an immigrant visa based on their investment in a new commercial enterprise in the United States if they meet certain related job creation requirements (EB-5, investors visa, etc.)

To make a qualifying investment, the immigrant investor must contribute the minimum investment amount in a manner that does not constitute a debt arrangement.

Relevant precedent provides that a redemption agreement is a debt arrangement if the petitioner enters into the agreement knowing that he or she has a willing buyer at a certain time and for a certain price. Recently, two federal courts have addressed the issue of redemption agreements in the context of options exercisable by the new commercial enterprise.

This update to Volume 6 of the Policy Manual clarifies which redemption agreements are considered debt arrangements. This policy guidance is controlling and supersedes any prior
guidance on the topic.

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