E-2 Visa Joint Venture Structure: Requirements and Pitfalls

Under 9 FAM 402.9-4(A)(2) and 8 CFR 214.2(e)(12), the enterprise in which the treaty investor places capital must be at least 50 percent owned by nationals of the investor's treaty country. In a joint venture this means the equity ownership percentages in the LLC operating agreement, partnership agreement, or corporate shareholder records must be examined nationality by nationality, not just investor by investor.

If a Mexican national and a U.S. citizen form a 50/50 LLC, Mexican nationals collectively hold exactly 50 percent, which meets the threshold under the Department of State's reading of the treaty. If the split is 49 percent Mexican national and 51 percent U.S. citizen, the enterprise does not qualify and the application must be denied regardless of how substantial the investment is. The rule applies to ultimate beneficial ownership, so a holding company interposed between the treaty investor and the U.S. enterprise must itself be traced to determine what percentage of the enterprise is ultimately owned by treaty-country nationals.

In multi-party joint ventures involving nationals of more than one treaty country, each co-investor's nationality is counted separately. A German national and a Turkish national who each hold 25 percent of an LLC alongside a U.S. citizen holding 50 percent cannot combine their treaty nationalities to satisfy the 50 percent rule. Each investor qualifies or fails to qualify the enterprise for their own nationality independently.

• Exactly 50 percent treaty-national ownership satisfies the rule; 49 percent does not
• Ownership is measured at the level of ultimate beneficial control, not just the direct entity
• Nationals of different treaty countries cannot pool their percentages to satisfy the 50 percent threshold for a single E-2 applicant
• Lawful permanent residents are not treaty-country nationals for purposes of the 50 percent rule, even if they hold a qualifying nationality
• U.S. citizens who also hold treaty-country nationality are counted as U.S. nationals, not treaty nationals, for ownership purposes under most consular posts' practice

The treaty investor must be entering the United States to develop and direct the investment enterprise, as required by INA 101(a)(15)(E)(ii) and interpreted in 9 FAM 402.9-4(B)(5). In a joint venture, this requirement raises a question that does not arise in a wholly owned enterprise: if a U.S. citizen co-owner is also active in management, does the treaty investor still satisfy the develop-and-direct test?

The answer turns on whether the treaty investor holds a controlling ownership interest or, absent majority ownership, can demonstrate through an irrevocable provision in the operating agreement that they have operational control over the enterprise. Controlling interest is most clearly demonstrated by majority ownership: an investor who owns 51 percent or more of the equity presumptively has the authority to direct the company. For investors who own exactly 50 percent alongside a single co-owner, the analysis shifts to the operating agreement.

A treaty investor who owns exactly 50 percent of an LLC must show, through the express terms of the operating agreement, that they hold the day-to-day management authority and cannot be removed from that role unilaterally by the co-owner. The 50/50 deadlock problem is real: an operating agreement that grants each member equal voting rights on all decisions means neither member controls the enterprise. Officers look for provisions that designate the treaty investor as the managing member with exclusive authority over hiring, vendor selection, pricing, and operations, while limiting the co-owner's rights to major structural decisions such as dissolution or amendments to the agreement itself.

Because USCIS and consular officers review the operating agreement as primary evidence of both ownership and control, the document needs to be drafted with E-2 eligibility in mind from the outset. Several provisions are particularly important.

First, the agreement should clearly state each member's ownership percentage and confirm that those percentages represent both economic interest and voting authority, or alternatively separate the two and grant the treaty investor controlling voting authority regardless of economic split. Second, the agreement should designate the treaty investor as the sole managing member or as the member holding managerial authority, using language that makes clear the investor has authority over day-to-day decisions without co-owner approval. Third, any provisions that allow the co-owner to remove the treaty investor from the managing member role should require supermajority vote, and the treaty investor's veto right over such a removal should be stated explicitly.

Agreements that grant both parties equal say in all decisions, or that allow either party to call a special meeting and override the other, undermine the develop-and-direct argument. Officers will not accept a declaration from the investor stating they will control the business in practice if the operating agreement grants the co-investor legal authority to intervene.

• Designate the treaty investor as sole managing member with express day-to-day authority
• Limit co-owner voting rights to major structural decisions, not routine operations
• State that the managing member designation can only be changed with the treaty investor's written consent
• Include a provision that the treaty investor's role as managing member is a condition of the business arrangement recognized by both parties
• Avoid equal-vote provisions on operational matters; reserve them for dissolution, sale of substantially all assets, and constitutional amendments only

When the E-2 investment is made through an intermediate entity — for example, when the treaty investor contributes capital through a holding company that then purchases an interest in the U.S. joint venture — the treaty-nationality analysis must trace through the intermediate entity to the individual investors. Under 9 FAM 402.9-4(A)(2), an entity that is at least 50 percent owned and controlled by treaty-country nationals is itself considered to have the nationality of that treaty country.

This means a Peruvian national who owns 100 percent of a Peruvian holding company can invest in the U.S. enterprise through that holding company, and the holding company will be treated as a Peruvian national for purposes of the 50 percent enterprise ownership rule. The same tracing applies to Delaware or other U.S. holding companies: if a U.S. LLC is entirely owned by treaty-country nationals, it is treated as a treaty-country national entity for the enterprise ownership analysis.

Multi-layered structures are permissible but require careful documentation at each level. Each entity in the chain must be able to show its ownership and control to the officer reviewing the application, which means the petition or visa package should include formation documents, operating agreements, and ownership charts for each entity in the chain between the individual treaty investor and the U.S. enterprise.

The at-risk requirement under 8 CFR 214.2(e)(12) applies to the treaty investor's contribution to the joint venture, not to the total enterprise capitalization. If the treaty investor contributes $150,000 to a joint venture capitalized at $300,000, the officer evaluates whether the treaty investor's $150,000 is irrevocably committed to the enterprise and genuinely exposed to the risk of loss.

Funds contributed to the joint venture and then held in a joint bank account that either member can withdraw on demand are not at risk in the required sense. The investment must be traceable into enterprise assets — equipment, inventory, tenant improvements, franchise fees, or working capital deployed in operations — with documentation showing the funds have left the investor's personal control and entered the business.

Loans from one joint venture partner to another do not satisfy the at-risk requirement. If the treaty investor funds the business by lending money to the co-investor who then invests it, the treaty investor is a creditor of the enterprise, not an equity investor. The at-risk investment must come from the treaty investor's own lawfully obtained funds placed directly into equity, not indirectly through intrapartner loans.

The most frequent error is a 50/50 ownership split without a controlling-interest provision in the operating agreement. Applicants believe that 50 percent is sufficient because it meets the treaty-nationality threshold, without recognizing that 50 percent ownership alone does not demonstrate the control required by the develop-and-direct test. The solution is to draft the operating agreement so the treaty investor's managing-member authority is unambiguous, not to restructure the equity.

A second common error is failing to account for the nationalities of all co-investors. When the treaty investor is joined by a co-investor who is a lawful permanent resident of the United States, the application sometimes treats the LPR as equivalent to a treaty-country national because the LPR is originally from the same country. Under the regulations, LPRs are not treaty-country nationals regardless of their birth nationality. If the LPR's share pushes treaty-country national ownership below 50 percent, the enterprise fails the nationality test.

A third error involves the source-of-funds documentation for joint venture contributions. In a joint venture, both the treaty investor's funds and the co-investor's funds flow into the enterprise. The E-2 application must document only the treaty investor's contribution, but the bank records showing the commingled enterprise account sometimes make the source of the treaty investor's funds difficult to trace clearly. Separate capital contribution receipts, a use-of-funds memo, and a clear accounting of which deposits came from the treaty investor are necessary to satisfy the adjudicator's tracing requirement.

The E-2 business plan for a joint venture enterprise should address the ownership structure in a dedicated section that explains the role of each investor, states the nationality of each, and confirms that treaty-country nationals hold at least 50 percent of the equity. Attach or reference the operating agreement and include a simple ownership chart.

The business plan should also explain the treaty investor's specific operational role and why that role constitutes developing and directing the business. If the co-investor is also an active manager, the plan must explain how the treaty investor's management authority supersedes or complements the co-investor's role without undermining the investor's control. The distinction between the treaty investor's executive management functions and the co-investor's advisory or operational-support functions should be described specifically.

Financial projections must still satisfy the marginality test under 9 FAM 402.9-4(B)(6) for the enterprise as a whole. The joint venture entity's projected income — not just the treaty investor's share of distributions — must demonstrate the capacity to generate more than a minimal living. A joint venture in which the enterprise barely generates enough income to support both owners raises a marginality concern. The projections should show growth beyond the survival threshold, typically through hiring U.S. employees or expanding revenue streams.