The Treaty Investor Category

Basic Criteria

In evaluating E-2 applications, consular officers determine whether the:

Nationality

The treaty trader or investor must, whether an individual or business, possess the nationality of the treaty country. The nationality of the individual is determined by the authorities of the country of which the alien claims nationality. The nationality of a Business is determined by the nationality of the individual owners of that business.

50% Rule

Nationals of the treaty country must own at least 50 percent of the business in question. In corporate structures one looks to the nationality of the owners of the stock. If a business in turn owns another business, then nationality of ownership must be traced to the point of reaching the 50 percent rule with respect to the parent organization. In most cases, this should pose no real problem but, in modern business structures and layered relationships, consular officers will have to rely heavily on the evidence presented to adjudicate whether the business entity in question possesses the requisite nationality.

Investment Requirement

To be considered for treaty investor status, the alien must have invested or must be actively in the process of investing a substantial amount of capital in an enterprise in the United States. The concept of investment connotes the placing of funds or other capital at risk in the commercial sense in the hope of generating a return on the funds risked. If the funds' availability arises from indebtedness, the following criteria must be followed: (1) indebtedness such as mortgage debt or commercial loans secured by the assets of the enterprise cannot count toward the investment, as there is no requisite element of risk. (2) loans secured by the alien's own personal assets, such as a second mortgage on the alien's home, or unsecured loans, such as a loan on the alien's personal signature, may be included, since the alien risks the funds in the event of business failure.

The alien must demonstrate possession and control of the funds invested. If the investor has received the funds by legitimate means, e.g., saving, gift, inheritance, contest, etc., and has control and possession over the funds, the proper use of the funds may constitute an E-2 investment. The funds for the investment must be committed to the enterprise and the applicant for treaty investor status bears the burden of proving irrevocable commitment. Other financial transactions, property or property rights may properly be considered as investments for eligibility as a treaty investor nonimmigrant. In addition, for the alien to be "in the process of investing," the alien must be close to the start of actual business operations, not simply in the stage of signing contracts or scouting for suitable locations and property.

The alien seeking treaty investor status must not be investing a relatively small amount of capital in a marginal enterprise solely for the purpose of earning a living. An alien is not entitled to treaty investor status if the investment, regardless of its substantiality, will return only enough income to provide a living for the applicant and the applicant's family. Several matters or criteria may help determine whether an investment is marginal, in the sense of providing only a livelihood for the applicant. If the income derived from the business exceeds that necessary to support the alien and the alien's family, then this meets the test. If the first test is not met, and it becomes necessary to consider other factors, the consular officer may look to the economic impact of the business. The business must have the capacity, present or future, to make a significant economic contribution. The projected future capacity should generally be realizable within five years from the date the alien commences normal business activities.

Documents Often used in Treaty Investor Cases