Surviving the Economic Bust – Using U.S. Immigration Laws to Strengthen Your Business

I.  Introduction

Recent immigration raids targeting the furniture business in Arizona are proof that no industry is immune from scrutiny by U.S. immigration officials.  However, U.S. immigration law can also be a useful tool in your strategic business plan by attracting foreign investors.  When a foreign investor creates a legal relationship or affiliation with a U.S. manufacturer or retailer in the industry, you may be seeing the immigration machine at work.

There are several visa categories that can be used for foreign investors seeking to buy into or create a new U.S. business.  Visas give foreigners the ability to knock on the door at Immigration to request entry into the U.S.  Visas like the E treaty trader/investor visa or the L intra-company transferee visas allow foreign investors to come to the U.S. to run businesses.  For example, if an overseas entity and a U.S. entity have a qualifying “affiliation” – certain employees of the overseas entity can get L visas allowing them to work in the U.S. for the U.S. entity in as little as one month.  In a time when it is difficult to secure foreign investment in U.S. businesses, the benefit of U.S. visas to foreign nationals may give a U.S. business an attractive asset at the negotiating table.

II. E Visas

The E treaty visa category is limited to nationals of certain countries that have a treaty with the U.S. for trade and commerce.  An E-1 visa is available to a foreign national who wishes to come to the US to carry on substantial trade, principally between the US and his/her own country.  An E-2 visa is available to a foreign national who is coming to the United States to develop and direct the operations of an enterprise in which he/she has invested, or is actively in the process of investing, a substantial amount of capital.

III. L Visas

Unlike the E visa category, the L-1 “intra-company transferee” visa is not limited to a particular nationality.  The requirements are straightforward. First, the U.S. company and the foreign company must be affiliated in a qualifying corporate relationship.  A majority stock ownership is one of several ways of establishing affiliation. Ownership of stock by a common group also qualifies.  So can equity-based joint ventures where the financially contributing company owns 50% and exercises control.  Second, both the U.S. and foreign business entities must continue to be actively engaged in business.

Two types of foreign national employees of the overseas affiliate are eligible for L-1 visas, provided they have worked for the overseas affiliate for at least one year. First, there are visas for executive or managerial employees. They need to have supervised either personnel or a particular corporate function overseas and are coming to the U.S. to perform similar duties.   Second, there are visas for employees with specialized knowledge of a company’s proprietary product, research, equipment, or strategies.

IV. Other Benefit

Since certain foreign nationals with E or L visas may qualify for green cards (lawful permanent resident status which leads to citizenship) - there is a powerful incentive for this type of investment. When a foreign national comes to the U.S. on an E-1/E-2 or L-1 visa, the individual’s spouse is eligible for work authorization.

V. Conclusion

If your business has a long-standing relationship with an overseas supplier, you may want to consider corporate reorganization that creates an E visa relationship or L-1 visa affiliation and a concomitant cash investment. All the factors that must be reviewed in making a sound business deal need to be weighed with experienced professionals – financial consultants, accountants, and attorneys who understand the financial, corporate, multi-national tax, and immigration law components of the transaction.

The industry often looks at immigration laws as burdensome – requiring meticulous verification of work-authorization, exposing factories to raids by ICE (Immigration and Customs Enforcement), and setting onerous recruitment campaigns in order to sponsor foreign national workers for permanent employment.  Perhaps in this time of economic crisis, we can look to the U.S. immigration laws as a vehicle for corporate growth.