When advising foreign investors on setting up business in the Commonwealth of the Northern Mariana Islands (the “CNMI”), the topic of investment visas often comes up. The CNMI is subject the immigration laws of the United States. What visa programs will work in the mainland United States will also work in the CNMI. There are a number of options for the foreign investor when it comes to an investment visa. This article will present a very simple overview of two of the most popular options, the E Visa and the L-1 Visa.
This article is no substitute for consulting with a lawyer. Immigration law is very complex and determining how to apply the law is dependent on the facts of the particular visa applicant’s situation. Talk to a lawyer about your particular situation.1
The E Visa
The E Visa allows, with certain exceptions, a company established outside the United States (a foreign company) with an office or branch in the CNMI, to send its employees to the CNMI to work.
There is a significant limitation on E Visas: the applicant must be from a country that by treaty, has agreed with the United States to allow for the E Visa program.2 The Republic of China has NOT entered into such a treaty with the United States. Most of the foreign investors coming to the CNMI now are from China, and the E Visa program is not be available for them.
There is a long list of countries that do have the required treaties with the United States.3 The treaties are referred to as “Treaties of Friendship, Commerce, and Navigation.” The signatory countries with the United States to these treaties are referred to as “Treaty Countries,” or “Treaty Nations.” The Treaty Countries that have the most impact on the CNMI are:
- South Korea;
- Republic of China (Taiwan);
- Philippines; and
The E Visa can be used for employees coming from all five of these countries.
There are two types of E Visas, the E-1 and the E-2. The E-1 and the E-2 are similar, with some overlapping requirements, but there is a significant difference. The E-1 Visa is referred to as the “Treaty Trader” Visa and involves trade. The E-2 Visa is referred to as the “Treaty Investor” Visa and is focused on investment.
The E-1 Treaty Trader Visa
The E-1 Treaty Trader Visa allows a person who undertakes a significant amount of trade with the United States to work legally in the United States, travel freely in and out of the United States, and to stay legally in the United States for the length of the term of the Visa.4 The Treaty Trader Visa is a nonimmigrant visa, meaning it will not lead to United States citizenship. The Treaty Trader Visa can be used by foreign investors interested in investing in the CNMI if all of its requirements are met.
The requirements for the Treaty Trader Visa are the following:
- The applicant5 is a citizen of a Treaty Country;
- The applicant will be entering the CNMI solely for the purpose of conducting trade;
- The trade to be conducted is substantial and is principally between the CNMI and a Treaty Country (usually the Treaty Country of the applicant);
- The applicant is a key employee (executive, manager, or specialist); and
- The company that employs the applicant is 50% owned by nationals of a Treaty Country (again, usually the Treaty Country of the applicant).
Although the Treaty Trader Visa application process mandates compliance with the above requirements, in applying the requirements the Consular Officers have a great deal of discretion. In reviewing applications they tend to be flexible and fair, and the definitions of the requirements allow them that discretion.
“Trade,” for purposes of the Treaty Trader Visa application, is broadly defined. Trade includes good, services, international banking, insurance, transportation, communications, data processing, accounting, management consulting, design and engineering, some news gathering activities, and most important for the CNMI, tourism. “Goods” are tangible items such as food products and merchandise, having a value. “Services” are economic activities and are interpreted in an expansive fashion.6
An issue often arises as to how “substantial” the trade will be. In short, the amount of trade must be sufficient to ensure a continuous flow of international trade between the CNMI and the Treaty Country. The trade cannot be a single transaction, no matter how long it will take, nor the dollar amount involved. The volume of the exchanges is more important in the E Visa consideration than the value of the exchanges. Future contracts (that are binding) will be considered. There is no minimum requirement for either volume or value.
An issue can also arise over the requirement that the trade be “principally” between the United States and the Treaty Nation. To meet this requirement more than 50% of the total volume of the trade must be with the United States. Domestic trade (trade within the United States) is not counted.
The total trade of the business is what is considered in determining if the required 50% of the total volume is reached. What this means in part is that if the business meets the 50% or more requirement, then each owner can receive a Treaty Trader Visa.
The E-2 Treaty Investor Visa
The E-2 Treaty Investor Visa, as the name suggests, requires the foreign national to invest substantial capital in the United States economy, rather than engaging in substantial trade.7 The E-2 Treaty Investor Visa is a nonimmigrant visa, like the E-1 Treaty Trader Visa, and can be used by foreign investors interested in investing in the CNMI.8
The basic requirements for eligibility for an E-2 Treaty Investor Visa are:
- The applicant is a citizen of a Treaty Country;
- The applicant has invested or is actively in the process of investing a substantial amount of capital in a CNMI company;
- A clear source of the funds must be provided; and
- The applicant is either a 50% owner of the CNMI business, or a key employee with supervisory or executive control within the business that is 50% owned by nationals of the Treaty Country.
This requirement that the applicant has “invested or is actively in the process of investing” can be a challenge to meet. The applicant may not want to fund operations in the CNMI before they have a Treaty Investor Visa, yet the regulations require them to be “actively in the process of investing.”
The phrase, “actively in the process of investment,” means “more than just an intention to invest.”9 Depositing money into a CNMI bank account is not enough to qualify as “actively…investing.”10 Loans to the CNMI business can be considered “actively investing,” but the loans may not be secured by the assets of the business. The loans, if they are secured, need to be secured by the personal assets of the applicant for the Treaty Investor Visa, so that the Treaty Investor has undertaken risk.
The term “actively in the process of investment,” “means more than just an intention to invest.”11 The investor must be close to the start of actual business operations, not simply in the stage of signing contracts or scouting for suitable locations. Mere intent to invest, or possession of uncommitted funds in a bank account, or even prospective investment arrangements without commitment is not enough.12 In addition, the capital must be at risk to generate a profit.13 Further, the principal investor in the business (and the applicant for the E-2 Treaty Investor Visa), must manage the business.14
The requirement that a “substantial” amount of capital be invested can also cause problems for some applicants. What is a “substantial amount” is not defined in terms of a minimum dollar amount by the regulations. However, the United States Citizenship and Immigration Services (“USCIS”) uses $100,000 as a rule of thumb. If the investment is less than $100,000 USCIS may still approve the petition, but will conduct a closer review.
There is also a principal referred to as “marginality.” A marginal business is one that will not provide more than enough income to allow a minimal living for the applicant and the applicant’s family, or that will not make a significant economic contribution. A marginal business will not allow for the grant of E-2 Treaty Investor Visas. A business is not considered “marginal” if it has a present or future capacity to make a significant economic contribution within five years of the time it begins operations.15
Being able to show the source of the investment funds is critical. Money laundering is a concern of the United States and the fund must not be derived from criminal activity.16 The recent legalization of a casino in the CNMI has made money laundering a serious concern on USCIS and other agencies involved with law enforcement in the CNMI.
The L-1 Visa
The L-1 Visa program allows a foreign company, or an affiliate of a foreign company, to send employees to the CNMI to work for a specific period of time.
The L-1 Visa is a temporary, nonimmigrant visa, which allows a foreign company (the “transferring employer”) to relocate its qualified non-US citizen employees to its United States subsidiaries or parent company. The qualified employee applicant must have worked for the transferring employer for at least one year out of the last three years. The company in the CNMI receiving the employee (the “receiving employer”) must be the parent company, a subsidiary, or otherwise affiliated with the transferring employer.17
The L-1 Visa is often used by small or start-up foreign companies to expand their businesses into the United States. The L-1 Visa program allows for the transfer of managers or executives who have the most knowledge of operations, allowing for the efficient expansion of the business.
L-1 Visas are also popular with multi-national companies developing new markets, or ensuring that the same management practices occur worldwide. When developing a new market the L-1 Visa can be used to send employees with specialized knowledge and experience to a newly established office so that the local personnel can be trained. The rotation of managerial level personnel across borders helps ensure consistent management practices, helps ensure global uniformity of products and services, and also provides the management level employees who go to the foreign country with career development opportunities.
The L-1A and the L-1B
There are two different L-1 Visa classifications: L-1A and L-1B.
The L-1A Visa was designed for intra-company executive transferees coming to work in the United States.18 The L-1A Visa applicant must have been employed in an executive or managerial capacity for the foreign company at an overseas location continuously for at least one year out of the past three years.
An “executive employee” generally refers to the employee’s ability to make decisions effecting the company without much oversight. A “managerial employee” generally refers to the ability of the employee to supervise and control the work of professional employees and to manage the organization, or a department, subdivision, function, or component of the organization. A “managerial employee” also has the ability to manage an essential function of the company at a high level, without direct supervision of others. The education and experience of the employee will be relied on by USCIS to determine if the employee is qualified as an executive or managerial employee.
An important feature of the L-1A Visa is that it allows a company that does not currently have a CNMI office to send an executive or manager to the CNMI to establish one. But for foreign employers who want to send an L-1 Visa holder to the CNMI for the purpose of establishing a new office, the company must have first secured a sufficient physical presence in the CNMI. Basically there must already be the new office, and the new office must be able to support the executive, managerial, or person with specialized knowledge in their work within one year of receiving petition approval.
The L-1A visa is granted initially for one year for a new company, or for three years if the United States parent or subsidiary company has been in existence for more than one year. Extensions are available in two-year increments, with a total term not to exceed seven years.
Summary of Requirements for the L-1A Visa:
- The employee must have worked abroad for the overseas company for a continuous period of one year during the preceding three years before admission to the CNMI;
- The employee must have been employed abroad in an executive or managerial position or otherwise qualified position;
- The employee must be coming to the CNMI company to work in an executive or managerial position;
- The employee must be qualified for the position by virtue of his or her prior education and experience; and
- The L-1 visa holder must intend to depart the CNMI upon completion of his or her authorized stay.
The L-1B Visa was designed for professional employees with specialized knowledge.19 The intent is for the employee with specialized knowledge to be able to travel to the United States to impart their knowledge to United States employees.
“Specialized knowledge” is knowledge beyond the ordinary, and not commonplace within the industry or the petitioning organization. In short, the L-1B Visa employee must be more than simply skilled or familiar with the employer’s interests. This specialized knowledge can refer to the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application in international markets. Or, it can refer to an expertise in the organization’s processes and procedures. The employee must possess the specialized knowledge by virtue of their prior education or experience.
Similar to the L-1A, the L-1B can be an assistance to a company that is establishing a new office. The L-1B allows the transferring employer to send an employee with specialized knowledge to help train the local employees of the receiving employer and to set up specialized systems.
An L-1B Visa holder is to some extent able to work away from the main office of the receiving employer if in connection with the provision of a product or service for the receiving employer. However, they will be in violation of their status if they are primarily at the worksite of an employer other than the receiving employer, and if either: (1) they will be principally under the control and supervision of the unaffiliated employer; or (2) the placement at the non-affiliated worksite is essentially an arrangement to provide labor for hire to the unaffiliated employer.
The L-1B Visa is issued initially for three years with one, two-year extension, for a maximum term of five years.
Summary of Requirements for the L-1B Visa
- The employee must have worked abroad for the foreign company for a continuous period of one year during the preceding three years before admission into the CNMI;
- The employee must be seeking to enter the CNMI to render services in a capacity requiring specialized knowledge to a branch of the same employer or one of its qualifying organizations; and
- The employee must intend to depart the CNMI and the United States upon completion of the authorized stay.
The L-1 Blanket Visa
The popularity of the L-1 Visa program has led USCIS to provide for a special set of procedures for companies that are frequent users of the L-1 Visa category and are large, multi-national organizations. This set of procedures is referred to as the “L-1 Blanket Petition Program”. Under this program, the approved company need only receive one approval from the USCIS to transfer multiple managerial, executive, and professional employees.20
General L-1 Visa Provisions
On completing the maximum allowable period, the L-1 Visa holder must exit the CNMI and remain outside the United States for minimum of one year. The L-1 Visa holder must also work for the foreign operation of the CNMI receiving employer before becoming eligible to reapply for another L-1 Visa.
Full-time employment is not required to maintain L-1 Visa status, but the employee “must dedicate a significant portion of time on a regular and systematic basis” to the company while in the CNMI. Even though the L-1 Visa holder needs to be employed by the receiving employer in the CNMI, they do not necessarily have to be working in the CNMI on a full-time basis. Foreign workers can be allowed to divide their work between the CNMI and their home country. In short, the foreign worker can be principally employed outside of the CNMI and still receive an L-1 Visa allowing them to work in the CNMI on a short-term basis.
The L-1 Visa is unique in that it allows the holder to apply for a Green Card. The L-1 Visa is referred to as being a “dual intent” visa: work and residency. L-1 Visa holders may file a petition for permanent residency status without jeopardizing their L-1 status or a pending L-1 Visa application.
The L-1 Visa holder does not have to maintain a foreign residence during their stay in the CNMI and they are eligible to seek permanent residency status if they wish.
A specific employment-based immigrant preference category (EB-1C) exists for managers and executives who meet the L-1 Visa standards and who are interested in becoming lawful permanent residents. These foreign workers are considered “priority workers” and are allotted 40,000 annual immigrant visas United States wide. The CNMI must compete with the rest of the United States for these spaces. Although L-1A status is not a prerequisite for immigrant benefits in this category, the applicant’s prior L-1A status supports the case for the EB-1C approval.
The L-1 Visa category allows for holders of the visa to bring their family to the CNMI with them. Family members of the L-1 Visa holder, (classified in the L-2 category), may be granted employment authorization to work in the CNMI. Spouses of L-1 Visa holders may apply for work authorization with USCIS to work in CNMI without restriction. The family member must apply for and be granted an Employment Authorization Document (an “EAD”) before engaging in employment. An EAD is a document that allows a foreigner to work in the United States for a specific time, usually one year.
The B-1 Visa
Another visa program used by investors to the CNMI is the B-1 Temporary Business Visitor Visa. The B-1 is used by foreign visitors coming to the CNMI for short business trips on behalf of an overseas employer. Generally speaking, a B-1 Visa can be used for some business activities such as the opening of bank accounts, acts of incorporation, signing of contracts and leases, and similar actions.21 In order to obtain a B-1 Visa, the applicant must be able to demonstrate all of the following:
- The purpose of the trip is to enter the CNMI for business of a legitimate nature;
- The applicant plans to remain for a specific limited period of time;
- The applicant has the funds to cover the expenses of the trip and their stay in the CNMI;
- The applicant has a residence outside of the CNMI and the United States that they do not intent to abandon, as well as other ties to their home country that will help ensure they return home; and
- The applicant is otherwise admissible to the United States.
A B-1 Visa may be particularly helpful during the early stages of setting up a new CNMI business. However, there are downsides to the B-1 Visa category that may make the L-1 Visa more preferable for most employers, especially if the foreign employee will need to stay in the CNMI for an extended period of time. Technically, the duration of authorized stay for a B-1 holder is up to six months, with an extension of the stay up to another six months, but in reality, most B-1 Visas are approved for less than six months. The duration of stay is decided by the Immigration Officer at the time of the applicant’s entry into the CNMI, and a period of entry of even six months may not be granted.
Most importantly, the B-1 visa is a temporary business visitor visa, and the visa holder cannot legally work in the CNMI during their stay. Doing anything more than the preparatory actions related to the establishment of the business while in the CNMI on a B-1 Visa is a violation of that status. If the actions of the B-1 Visa holder amount to what constitutes “employment,” the B-1 Visa holder will be at risk of violating their status, and a violation of B-1 Visa status may prevent the employee from obtaining an L-1 or other visa later.
Hiring a Lawyer to Help with a Visa Petition
Immigration law is complicated and changes quickly. A mistake on a petition can have serious consequences for the business. Hiring a lawyer to assist with the visa application or petition process to get it right is a good business decision to make.
The lawyers at O’Connor Berman Dotts & Banes assist foreign investors with all aspects of setting up businesses in the CNMI. Lawyers with O’Connor Berman Dotts & Banes have been involved in many aspects of immigration law, including removal proceedings, and appeals from removal proceedings, but generally will refer the client to an outside immigration attorney to assist with the visa application process as the process is so specialized. As part of assisting with incorporation and investing in the CNMI, the O’Connor Berman Dotts & Banes will work with you or your immigration lawyer on visa petitions.
1 The article was prepared in December, 2016, and Immigration Law changes constantly. This article may be out of date. Talk to a lawyer who practices Immigration Law and don’t rely on what you read on the Internet.
2 The statutory authority for the E Visa is found at Section 101(a)(15)(E). The finer points of the E Visa are set forth in regulations that can be found at 8 CFR §214.2(e).
3 The list can be viewed here: https://travel.state.gov/content/visas/en/fees/treaty.html
4 A good reference is found on the website of the Department of Homeland Security: https://www.uscis.gov/working-united-states/temporary-workers/e-1-treaty-traders
5 The article uses the term “applicant” for the person applying for the visa. The term “petitioner” is also commonly used in other articles and by immigration attorneys as the application for the visa is called a “petition.”
6 Further definitions are in the regulations at 8 CFR §214.2(e)(9), 22 CFR §41.51(h) and (i), and 9 FAM §41.51 N.4.
7 There were special regulations that applied to the CNMI and to the E-2 Treaty Investor Visa program during what was referred to as the “transition period” as the United States assumed full control over immigration to the CNMI. The transition period began on November 27, 2009, and with regard to the E-2B special provisions, ended on June 13, 2013. See, 8 CFR §212.2(e)(23). These special provisions, that were intended to prevent disruption to investors present in the CNMI before United States immigration laws applied, are no longer applicable.
8 A good overview of the E-2 Treaty Investor Visa can be found at the United States Department of Homeland Security here: https://www.uscis.gov/working-united-states/temporary-workers/e-2-treaty-investors
9 See, 9 FAM 41.51 N7.1-3b.
10 The capital must be at risk. See, 9 FAM 41.51 N11; Matter of Lee, 15 I N Dec. 187 (Reg. Comm’r 1975).
11 See, 9 FAM 41.51 N7.1-3b.
12 See, Matter of Kahn, 16 I & N Dec. 138 (BIA 1977).
13 See, 9 FAM 41.51 N7.1-2.
14 Unlike EB-5 Visa, the Treaty Investor Visa applicant cannot be a passive investor.
15 See, 9 FAM 41.51 N11; Matter of Lee, 15 I N Dec. 187 (Reg. Comm’r 1975).
16 More information on the requirements for the E-2, Treaty Investor Visa can be found here: https://www.uscis.gov/eir/visa-guide/e-2-treaty-investor/understanding-e-2-requirements
17 The L-1 visa may also include non-profit, religious, or charitable organizations.
18 The requirements for the L-1A Visa can be found on the website of United States Homeland Security here: https://www.uscis.gov/eir/visa-guide/l-1-intracompany-transferee/understanding-l-1-requirements
19 The requirements for the L-1B Visa can be found on the website of United States Homeland Security here: https://www.uscis.gov/working-united-states/temporary-workers/l-1b-intracompany-transferee-specialized-knowledge
20 A sample of the form provided by USCIS can be found here: https://www.uscis.gov/sites/default/files/files/form/i-129s.pdf
21 A summary of the B-1 Visa requirements can be found on Homeland Security’s website here: https://www.uscis.gov/working-united-states/temporary-visitors-business/b-1-temporary-business-visitor