E-2 nationality and ownership: the 50 percent rule, dual nationals, company owners and control

Who needs a treaty nationality: the person, the business, or both?

Both. The Foreign Affairs Manual (FAM), the State Department’s guidance to consular officers, says the treaty trader or investor must possess the nationality of the treaty country “whether an individual or business”. The person applying must be a national of a country on the E-2 treaty list, and the US enterprise (the business the investment is in) must have that same country’s nationality.

An individual’s nationality is decided by the authorities of the country concerned, so a passport or citizenship certificate is the normal proof. A business has no passport. Under 8 CFR 214.2(e)(7), its ownership is traced, as far as practicable, to the individuals who ultimately own it, and their nationality becomes the business’s nationality.

Sources: 8 CFR 214.2(e)(7); 9 FAM 402.9-6(F)(a)

What is the 50 percent rule?

In every treaty investor case, nationals of the treaty country must own at least 50 percent of the enterprise. Exactly 50 percent is enough; less than half is not. Shares held by people of other nationalities, including US citizens, simply do not count toward the treaty share.

Green card holders are treated differently. Shares owned by US lawful permanent residents (green card holders) cannot be considered in deciding the business’s nationality, even if the holder also has a treaty passport, and a treaty national who holds a green card cannot be the treaty owner who brings in E employees. An owner who becomes a permanent resident can therefore affect a company’s E nationality without any shares changing hands.

Sources: 9 FAM 402.9-6(F)(a); 9 FAM 402.9-4(B)(e)

Does it matter where the company is incorporated?

No. The FAM says the country of incorporation is irrelevant. A Florida LLC owned by French nationals has French nationality for E visa purposes; a UK company owned by US citizens does not have UK nationality, however British its registration.

There is one presumption for listed companies. Where a corporation’s shares are traded exclusively on a stock exchange in its country of incorporation, the officer can presume the corporation has the nationality of that exchange’s country, though the applicant should still provide the best evidence available. A multinational traded on exchanges in several countries has to show its treaty nationality in some other way, and the FAM tells officers to ask the State Department for an advisory opinion in complex structures.

Sources: 9 FAM 402.9-4(B)(b)

What if the business is owned by another company?

Then you look through it. If a business is owned by another business, the officer reviews the ownership of each layer until reaching the people who ultimately own the parent, and asks whether treaty nationals hold at least 50 percent at that level. A US company held through a holding company in a non-treaty country can still have treaty nationality if the individuals at the top are treaty nationals; a company held through a UK parent that is itself mostly owned by non-treaty nationals does not have UK nationality.

A foreign corporation can itself be the treaty investor. If it owns at least 50 percent of the US enterprise and wants to send employees, the foreign corporation must show that it develops and directs the US enterprise. The people it sends are E-2 employees, not investors; the employee rules are covered in the guide on E visa employees.

Sources: 8 CFR 214.2(e)(7); 9 FAM 402.9-6(F)(c)

What about dual nationals?

A business can have only one E nationality, with one exception. If a dual national owns it, the owner must choose which nationality the business will use. The owner and every E employee of the company must then hold that nationality and present themselves as nationals of that country for all E visa purposes involving the company, even if they also hold another treaty nationality.

The exception is a business owned and controlled equally, 50/50, by nationals of two different treaty countries. Employees of either nationality can then obtain E visas to work for it.

Sources: 9 FAM 402.9-4(B)(d)

Citizenship by investment: the three-year domicile rule

If you acquired your treaty nationality through a financial investment, such as a citizenship-by-investment program, and have never held E status before, the statute adds a condition: you must have been domiciled in that country for a continuous period of at least three years at some point before applying for the E visa. A passport alone does not meet it. Domicile means more than a visit; the statute does not define it further, so how a particular residence history is assessed depends on the facts.

Sources: 8 U.S.C. 1101(a)(15)(E) (INA 101(a)(15)(E))

What does “develop and direct” require?

Separately from nationality, the investor must be coming to develop and direct the enterprise, which means controlling it. Control is normally shown by owning at least 50 percent. It can also be shown through operational control, for example through a managerial position or another corporate device, or by other means. Holding a management title is not enough if you do not and will not actually control the business.

This creates two separate tests that are easy to blur. The 50 percent nationality test asks whether treaty nationals, taken together, own at least half. The control test asks whether this particular investor runs it.

Sources: 9 FAM 402.9-4(B)(c)

Joint ventures and equal partners

An equal share in a joint venture, or an equal partnership between two parties, generally gives each a controlling interest if both keep full management rights and responsibilities. The FAM calls this “negative control”: each partner can make decisions that bind the other. Two treaty-national partners at 50/50 can each show control on that basis.

The State Department has decided that an equal partnership with more than two partners gives none of them control through ownership; the control is too remote. Three partners at a third each cannot rely on ownership alone, although the FAM accepts that control by management can still satisfy the test, and leaves room for business structures it does not list.

Sources: 9 FAM 402.9-6(F)(b); 9 FAM 402.9-4(B)(c)

When ownership is too spread out for any one investor

Sometimes treaty nationals own at least half the business together, but no single owner controls it. The owners must then show that together they own at least 50 percent and that, at least collectively, they can develop and direct it. In that case no owner can receive an E visa as “the investor”. Anyone who goes to the United States in E status must be an employee of the US enterprise in an executive, supervisory or essential-skills role.

Sources: 9 FAM 402.9-6(F)(d) and (e)

Evidence that usually shows nationality and ownership

Because ownership is traced to individuals, the evidence follows the chain: the US company’s formation and ownership records (articles, share certificates or ledgers, operating agreements); the same records for each parent company in between; and passport pages or other nationality evidence for the individuals at the top. For a company traded on its home exchange, the applicant can rely on the stock-exchange presumption but should still provide the best evidence available. Embassies and consulates publish their own document lists, and they vary.

Sources: 8 CFR 214.2(e)(7); 9 FAM 402.9-4(B)(b)

Common problems

• Counting a co-owner’s shares after they became a green card holder.
• Assuming a company registered in a treaty country has that country’s nationality.
• Splitting a business equally among three or more founders and expecting each to qualify as the controlling investor through ownership.
• A dual national using one nationality for the business and another for employees.
• Relying on a manager title without real control over the business.

Sources: 9 FAM 402.9-4(B)(e); 9 FAM 402.9-4(B)(b); 9 FAM 402.9-6(F)(b); 9 FAM 402.9-4(B)(d); 9 FAM 402.9-4(B)(c)

How Visa Trouble can help

Free route discovery at Visa Trouble covers the E-2 treaty investor route, including the treaty-country check. We’re building application preparation for E-2 investors; it is planned, not open yet. Visa Trouble is not a law firm and does not give legal advice.

You can begin free route discovery at visatrouble.com.