For example, should migration agents be actively involved
in the decision-making? Are they relegated to serving as
just an intermediary between the NCE and EB-5 investors?
Let’s explore the relative considerations of the respective
parties in the redeployment context regarding how fiduciary
duties and broker-dealer considerations can affect both
issuers and foreign migration agents. Investment advisor
considerations are beyond the scope of this ar ticle,
although it may have applicability under appropriate facts.
FIDUCIARY DUTIES
Redeployment is vexing because USCIS ’s published
guidance has created more questions than answers.
In practice, this has confounded EB-5 issuers as they
face mounting pressure from EB-5 investors and their
migration agents. Worse, the GP is left to grapple with
the fiduciary duties it owes to EB-5 investors as they try to
effect redeployment strategies. Generally, the GP acts as
a fiduciary to the NCE and its limited partners. As such,
a GP owes certain legal duties to the limited partners
who have entrusted the GP with control. Because limited
par tners have vested control with the GP under the
auspices of trust and confidence, fiduciary duties are
designed to ensure the GP places the interests of the NCE
and its limited partners before its own interests. Although
the exact standards for fiduciary duties can vary by state,
a GP typically owes duties of care and loyalty as well as
the obligation to operate in good-faith.
• Proven track record in business immigration cases,
including EB-5, L-1, E-1 / E-2
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Robert P. Gaffney, Esq.
Certified Specialist in
Immigration & Nationality Law
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86
EB5 INVESTORS M AGAZINE
Consequently, a GP that must effect a redeployment
cannot do so without considering the best interests of
the NCE and its limited partners. The GP’s fiduciary
duties will require the GP to act in a reasonably prudent
manner and include not only the traditional du ties
of any oth e r g e ne r al par tne r, b u t also e n c o m pass
elements that are unique to the EB - 5 Program. In
such regard, the GP ’s consideration should include,
the impac t , if any, that the re de ploy me n t s trate g y
will have on the immigration benefit sought by the
limited partners, including ensuring that job creation
requirements have been or are likely to be satisfied
and maintenance of the “at risk” requirement.
But the GP is not alone. It is not unusual for
fo r e i g n m i g r a t i o n a g e n t s to w a n t to i n te r c e d e i n
the redeployment process. Given the emerging
importance of redeployment and its potential impact
to EB-5 investors, foreign migration agents may seek
to n e g otia te re d e p loy m e n t te r ms i n th e mig r a tio n
agent agreement entered into between the NCE and
the agent. Regional centers , developers and EB - 5
issuers are likely to have to provide foreign migrations
agents with certain contractual rights with respect to
redeployment. Set for th below is an example of one
such provision:
“A s d i s c l o s e d i n t h e o f f e r i n g d o c u m e n t s , f i n d e r
understands that in the event that the EB-5 Borrower
r e p ays t h e l o a n m a d e to i t by t h e c o m p a ny u s i n g
the proceeds of the financing, the company may be
required to redeploy such repaid loan proceeds for
th e d eve l o p m e n t of o n e o r m o re p r o j e c t s (e a c h a
“ Re d e p loy m e n t P roje c t ” ) to re main in c o m p lia n c e
with the requirement of the EB-5 Program (including
satisfac tion of the “at risk ” requirements thereof ).
Upon the company identifying a redeployment project,
the company shall provide writ ten notice to f inder
of its intent to enter into definitive documentation
to provide financing to a redeployment project
(“ Redeployment Notice” ). The redeployment notice
shall include a summary of the redeployment project
a n d a c o py of all i nfo r ma tio n d e e m e d re l eva n t by
the company to assess the financial viability of the
redeployment project.
During the fif teen (15)- day period following deliver y
of the redeployment notice (the “ Redeployment
Review Period” ), company shall consult with finder
re garding the me ri ts of the re de ploy me n t p roje c t .
Subject to applicable law and the terms of the
company ’s operating agreement, if af ter finder has
s u r v e y e d t h e d i s b u r s e d s u b s c r i b e r s a n d f i n d e r,
before the termination of the redeployment review
period, cer tifies to the company that at least two -
thirds (2 /3) of the disbursed subscribers objec t to
the re de ploy me nt proje c t (the “C e r tif ication” ), the
company shall terminate all discussions regarding
the proposed redeployment project and shall not take
any m easu res to c o nsu m ma te su c h re d e p loy m e n t
project; provided, however, that upon written opinion