In many EB-5 projects, the EB-5 fund is structured as a limited partnership, and all EB-5 investors who subscribe to the project purchase partnership interests and become limited partners. The EB-5 project’s new commercial enterprise (NCE) constitutes the limited partnership.
Every limited partnership will have a general partner in charge of overseeing day-to-day operations. An EB-5 fund’s general partner may be affiliated with the project’s regional center or developer. If so, the EB-5 investors would have to be notified of any affiliation and be aware of potential conflicts of interest. The investors would have to waive the general partner’s conflicts of interest. In other cases, general partners are fully independent.
EB-5 funds can also be structured as limited liability companies (LLCs). A manager or managing member is in charge of administrating an LLC’s finances, and EB-5 investors purchase equity rights to become members.
Foreign nationals interested in making an EB-5 investment should note that the level of involvement for limited partners may vary depending on the nature of the investment and the project’s structure. The responsibilities assigned to a project’s EB-5 investors may range from minimal involvement to active voting duties on policy and managerial issues. United States Citizenship and Immigration Services (USCIS) dictates that all EB-5 investors must have at least some level of involvement in managing their projects.
Of course, regional center investors, who typically sign on to their projects as limited partners, are generally given very light managerial duties pertaining only to important decisions. This is part of the reason why regional center projects are the most popular EB-5 investment options. In contrast, direct EB-5 investors are generally expected to be involved in the project’s day-to-day management. They are also given much more control over the EB-5 project. Therefore, investors with managerial skills or experience who want to gain major profits from their EB-5 projects may prefer the direct investment route.