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t he i nte re st s of t he EB-5 i nve stor s. The re a re
several redeployment programs and funds created
by experienced third parties that offer multiple
reinvestment options and are open to any EB-5 fund
seeking to reinvest capital. Some of these programs
offer independent review, ongoing due diligence and
administration as part of their program, as well as a
selection of potential reinvestment options. There are
also experienced regional center operators that have
established their own redeployment funds in which
EB-5 proceeds from multiple EB-5 funds are pooled
and reinvested into multiple projects. This practice
offers the benefit of diversification of investments
and, in some cases, more liquidity than investing in a
single loan or equity investment.
REVIEW THE EB-5 FUND’S GOVERNING DOCUMENTS
& FOLLOW THE PROCEDURES REQUIRED BY THOSE
DOCUMENTS FOR REINVESTMENT
If the partnership or operating agreement of the EB-5
fund does not authorize the general partner or manager
to select a reinvestment at all, or if it only allows
reinvestment with the consent of the EB-5 investors,
then the consent of the EB-5 investors must be obtained.
Rather than asking for approval of a specific reinvestment
option, it may be preferable to request approval of an
amendment to the partnership or operating agreement
to allow the general partner or manager to select all
reinvestments for the EB-5 fund, subject to defined
standards that apply to selection of the reinvestment.
These standards should include an independent review
process. The benefit of this approach is that it covers not
only the first reinvestment, but all future reinvestments
that may be necessary for as long as the EB-5 fund has
EB-5 investors who are not eligible for repayment.
PROVIDE WRITTEN DISCLOSURE TO EB-5 INVESTORS
PRIOR TO REINVESTMENT OF THE MATERIAL TERMS OF
THE REINVESTMENT
Whether or not an amendment is required to approve
reinvestment, an EB-5 fund manager should provide
written notice to EB-5 investors prior to every reinvestment,
informing them of the repayment of the original investment
and the details of the proposed reinvestment. The notice
should include a disclosure of the project in which the
reinvestment will be made, the experience of the owner
or developer of the project, the terms of the reinvestment,
the process used by the EB-5 fund manager to select the
reinvestment (including any independent advice and
reports obtained as part of the process), and the reasons
why the EB-5 fund manager selected or recommended the
particular reinvestment for the fund.
ALLOW EB-5 INVESTORS WHO HAVE WITHDRAWN THEIR
I-526 PETITIONS TO GIVE NOTICE & RECEIVE A RETURN
OF THEIR INVESTMENT PRIOR TO REDEPLOYMENT
A s pre v iously descr ibed, some EB-5 i nvestors,
particularly those from mainland China who are
now subject to substantial delays in obtaining their
visas under the EB-5 program, have or will choose to
withdraw their visa petitions rather than continue
the immigration process. A ny investor who has
withdrawn his or her visa petition would be eligible
to receive a return of their investment. EB-5 fund
sponsors should offer those EB-5 investors who have
withdrawn or desire to withdraw their visa petitions
an opportunity to give notice to the EB-5 fund, so that
their investments may be repaid from their share of
the repayment proceeds, rather than having their
capital reinvested.
It is important to note that this is not a guaranty of
repayment, because repayment would only be made
to EB-5 investors if and when the EB-5 fund receives
repayment of its investment, and only to the extent of
each EB-5 investor’s pro rata share of the repayment.
The re fore, a l low i ng EB-5 i nve stor s to re ce ive
repayment, rather than reinvesting proceeds, should not
be considered an impermissible guaranty of repayment
Whether or not an
“
amendment is required to
approve reinvestment,
an EB-5 fund manager
should provide written notice
to EB-5 investors prior to
every reinvestment...