The term "New Commercial Enterprise" refers to any for-profit business entity that is established after 1990, to create jobs in the United States through investments made by foreign nationals under the EB-5 Immigrant Investor Program. The NCE, also known as the EB-5 fund, can be structured in various forms, including a sole proprietorship, partnership, corporation, holding company, joint venture, business trust, or other publicly or privately owned entity.
Role of NCE in EB-5 Investments
The NCE (New Commercial Enterprise) manages and operates the business in which EB-5 investors invest their funds. The NCE company management is responsible for ensuring that the business operates in compliance with all relevant laws and regulations, managing the funds invested by the EB-5 investors, and creating jobs in accordance with the requirements of the EB-5 program.
Given the importance of job creation to the EB-5 program, the NCE company management plays a crucial role in ensuring that the business is structured in a way that maximizes job creation and meets the job creation requirements set forth by USCIS. Furthermore, the NCE company management is responsible for providing the necessary documentation and evidence to USCIS to demonstrate that the job creation requirements have been met.
Therefore, the proper management of the NCE company is crucial to the success of an EB-5 project and to the ability of EB-5 investors to obtain permanent residency in the United States.
Allowable Uses of Investor Capital by the NCE
In the Regional Center Program, the EB-5 investor capital must be deployed from the NCE to the JCE. This capital cannot be used for the NCE's expenses, such as legal, tax, or accounting charges. However, interest or other returns that the NCE may receive from the JCE as part of the loan or preferred equity may be used to pay NCE expenses.
Investor Management of an NCE
USCIS requires that an investor be engaged in the management of the new commercial enterprise; this may be done through day-to-day managerial responsibility of the business or simply through policy formulation and voting rights; the latter is the preference of many regional center investors who don’t want to actively manage a business.
Contrary to popular opinion, USCIS has exactly the same NCE management requirements of EB-5 investors whether they are invested in a Regional Center sponsored business or a direct (or standalone) investment.
The NCE has several obligations to EB-5 investors, including providing relevant documentation for I-526E petition, access to books and records, mailing of Schedule K-1s, voting rights regarding dissolution, and providing direction concerning the use of EB-5 capital.
NOTE: The NCE must be established after November 29, 1990, and it can either be a different entity from the job-creating entity (JCE) or the same entity as the JCE.