Types of Companies for L1 Visa
Posted on February 27, 2007 by Warren Wen | Category: Immigration
What Type of Companies Can Apply for L Visa?
In previous articles, we have addressed the advantages, qualifications and several other key issues concerning the L visa application. Many business owners and company executives in China and Korea have expressed their interests in investing in U.S. or in transferring their employees to explore the U.S. market since. A lot of readers had questions regarding the types of business that are qualified for the L visa application. In this article, we will address this particular concern.
Mr. Zhang asked:
I am the founder and the sole owner of medium sized manufacturing and trading companies in China. More than 50% of our products are exported to the U.S. market. In the past 3 years, our business in the U.S. has been growing steadily although the competition is getting worse and fiercer. Currently, we do not have any office or employee in the United States. Our business in the U.S. has been handled by our U.S. partner, a small trading company with about ten employees. In order to expand our products and the market share in the U.S. market and outgrow the U.S. competition, we are thinking about sending some of our executives from our China company to the U.S. Recently, our U.S. partner has proposed to us to invest in its company by buying 50% of its share. Our partner told us that by doing so, we would easily be able to transfer our employees to the U.S. My questions are: (1) whether this true; and (2) besides buying the shares of our U.S. partner, whether there be any other alternatives for us to transfer our employees to the U.S.
Answer:
According to the Immigration Law, the L visa is available only to the employees of companies that have related U.S. branches, subsidiaries, affiliates or joint venture partners. What does it mean by “related” U.S. branches, subsidiaries, affiliates or joint venture partners? They are as followed:
1. Branches
Braches are simply different operating locations of the same company. Regarding this, a foreign company can either set up a new branch office or acquire an existing business as the branch office in the U.S. It can be any kind of business, such as trading, food service, manufacturing, marketing, publishing business or others.
2. Subsidiaries
In a subsidiary relationship, generally, one company owns 50% or more percentage of the other company. In recent years, more and more Asian companies have entered into the U.S. market by acquiring existing U.S. companies. In this way, they have been able to have an immediate access to the U.S. customer base.
3. Affiliates
Affiliate business relationships are difficult to prove than those of branches or subsidiaries. Generally, they are companies controlled by a common third entity, a company, a group of companies, an individual or a group of individuals. Very few foreign companies use this type of business structure to get into the U.S. market.
4. Joint Venture Partners
A joint venture exists when two companies share no common ownership, but they have jointly undertaken a common business operation or a project. To qualify for L visa, each company must have veto power over decisions, take an equal share of the profits and bear the losses on an equal basis. Currently, this is mostly used by high tech companies to allow each other to share their new technologies and control marketing cost.
Regarding Mr. Zhang’s question, it is true that he could transfer employees from China to the U.S. by acquiring 50% or more shares of its partner’s company or by any other ways as illustrated above. For small and medium sized foreign companies, the most used business structure for the L visa purpose is to set up a new branch office in the U.S. or a subsidiary by merger and acquisition of an existing U.S. company.
This article is only for your reference. Please do not apply mechanically to any exact cases. You are welcome to consult our attorneys at Liu & Associates, P.C. For contact information, please click here.