In this podcast, attorney Jacob J. Sapochnick discusses the all new International Entrepreneur rule. To hear more about this exciting new rule for entrepreneurs, please click below.
What is it?
The International Entrepreneur Rule will allow certain entrepreneurs the opportunity to seek ‘parole’ into the United States, based on his or her role in the startup company, provided the company can demonstrate substantial potential for rapid growth and job creation in the United States. Not all entrepreneurs will be eligible. Qualifying entrepreneurs must demonstrate that their entry would create a significant public benefit in the United States, and provide ‘substantial’ and ‘demonstrated potential’ to create more jobs and business growth in the United States, and not merely provide income to the entrepreneur and his or her family members.
What are the requirements?
Entrepreneurs must demonstrate:
- At least a 15 percent ownership interest in their startup enterprise;
- That they take on an active and central role in the startup enterprise’s operations;
- That the startup enterprise has been formed in the United States within the past three years; and
- That the startup enterprise has proven to yield a substantial and demonstrated potential for rapid business growth and job creation as evidenced by:
- Having received a significant investment of capital of at least $345,000 from certain qualified U.S. investors that have a proven track record of success i.e. showing established records of successful investments;
- Having received significant awards or grants of at least $100,000 from federal, state, or local government entities; or
- By partially satisfying one or both of the above criteria, in addition to presenting other reliable and compelling evidence to show the startup entity’s substantial potential for rapid growth and job creation in the United States.
The start-up company 1) must be a qualifying United States business entity 2) must have been lawfully formed in the United States within 3 years before filing of the parole application under federal or state law 3) must have been conducting active lawful business since its founding and 4) demonstrate a substantial potential to increase jobs and business growth in the United States.
The business entity must be a U.S. corporation, LLC, partnership, or other entity that has been legally organized under federal or state law. The U.S. business entity must conduct active business in the United States, and not simply have been formed as a passive investment. In order to demonstrate that the entity conducts active business, the entity must provide or endeavor to provide goods or services in the United States.
A qualified investor can only be a 1) U.S. Citizen or 2) lawful permanent resident or 3) a U.S. organization operating through a legal entity that is organized under U.S. federal or state law, and is majority owned and controlled by a USC or LPR.
Investments made by a corporation, LLC, partnership, or other entity in which the entrepreneur or his or her relatives has a direct or indirect ownership interest will not qualify. Additionally, investments made by the entrepreneur himself, his/her parent, spouse, sibling, or child will not qualify.
Note: Small businesses that have limited potential to provide jobs and create growth in the United States will not qualify for this benefit.
The Proposed Entrepreneur Rule RIN 1615-AC04 has been published in the Federal Register. The comment period is currently open until October 17, 2016. Following the comment period, the Department of Homeland Security will review all of the comments and decide whether any changes to the rule are needed. The final rule will be submitted to the OMB again for review before the final rule can be published in the Federal Register.
For more information about the International Entrepreneur Rule please click here.
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