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EB-5 Question of the Week: Can funds from a shareholder distribution be used for an EB-5 investment?

Yes, funds derived from a shareholder distribution may be used to satisfy the minimum capital contribution requirement of the EB-5 Immigrant Investor Program.

The EB-5 program requires an investment of $800,000 in a government pre-approved real estate project in the United States. The program allows foreign investors to obtain U.S. Green Cards for themselves and their qualifying dependents (spouse and children under 21 years of age) by virtue of their investment.

One of the principal requirements of the EB-5 program is that both the source and path of funds used for the capital investment must be lawful. Accordingly, the United States Citizenship and Immigration Services (USCIS) requires proof of the lawfulness of the funds as part of the EB-5 application of a foreign investor. 

Many foreign investors use a shareholder distribution from their company for the purpose of their EB-5 investment. The following is a list of documentation that is required to demonstrate the source of funds derived from a shareholder distribution. The below is not an exhaustive list as the documents required vary on a case-by-case basis.

    1. Business organizational documents:
      • Trade license / professional license / commercial license
      • Articles of association / memorandum of association / articles of incorporation
    1. Background information on the company:
      • Marketing materials
      • Brochures
    1. Financial documents:
      • Tax returns
      • Audited financial statements for the past five years
      • Bank statements for the past five years
    1. Proof of ownership in the company:
      • Share certificates of the EB-5 applicant
      • Shareholder agreements
      • The source of funds used for the EB-5 applicant’s original investment in the company
    1. Consents and approvals:
      • Written resolution of the Board of Directors of the company showing approval of distribution of funds to the EB-5 applicant
    1. Other documents:
      • Evidence of transfer of shareholder distribution from company’s bank accounts to the EB-5 applicant for the purpose of showing the tracing of the funds
      • Evidence of payment of all applicable taxes
      • Business card of the investor
      • CV/resume of the investor
      • Sample contracts with suppliers and/or other third parties to demonstrate the business activities of the company
      • Sample invoices of the company

The above is a non-exhaustive list of the documentation required to demonstrate the source and path of funds in relation to a shareholder distribution. Given that the laws and regulations of each jurisdiction differ, it is crucial for EB-5 applicants to work with consultants with knowledge and experience of local nuances. For instance, a key nuance unique to companies in the United Arab Emirates is that companies are currently not required to file tax returns and therefore other supplementary documentation must be presented to USCIS.

With over ten years of experience in the EB-5 industry, we are ready to assist you with your U.S. golden visa application. If you are interested in finding out more about the EB-5 program and its source of funds requirements, contact our team today for a free consultation.

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