E-2 Ownership Rules: 50% Nationality, Control and Partners

An E-2 business must be at least 50% owned by nationals of the investor’s treaty country, and the investor must be in a position to develop and direct it, normally by owning at least 50% or by holding real operational control. A 50/50 split between two owners qualifies because each has “negative control,” but when three or more partners hold equal shares, no one controls the business through ownership alone.

These rules come from the Foreign Affairs Manual at 9 FAM 402.9-4(B) (nationality) and 9 FAM 402.9-6(F) (develop and direct), and from 8 CFR 214.2(e). They are separate from the investment test, and a case can fail on ownership even when the money and the business are strong. This page explains both tests and how they apply to partners, couples and companies.

Two different ownership tests

People often blend these together, but officers apply them separately:

1. Business nationality. At least 50% of the business must be owned by nationals of one treaty country. This decides whether the company is, for example, a “Japanese” or “Turkish” business for E-2 purposes.
2. Investor control. The individual applying as the investor must develop and direct the business. This is usually shown by personal ownership of at least 50%, but can also come from operational control.

A business can pass the first test and fail the second. If five Canadian friends each own 20% of a company, the company is 100% Canadian, but no single friend controls it.

How the nationality of a business is determined

Under 9 FAM 402.9-4(B), the nationality of a business is the nationality of its individual owners. Several points follow from that:

• Country of incorporation is irrelevant. A Florida LLC or a Delaware corporation owned by Italian nationals is an Italian business for E-2 purposes.
• Look through every layer. If a company owns the U.S. business, officers trace ownership up through each entity to the individuals at the top to confirm the 50% threshold.
• Publicly traded companies. If a corporation’s shares are traded only on a stock exchange in its country of incorporation, officers may presume it has that country’s nationality, though the company should still provide the best evidence available. A multinational traded on several exchanges must show its treaty nationality, and complex structures may be referred to the State Department for an advisory opinion.
• Green card holders do not count. Shares owned by U.S. lawful permanent residents cannot be counted toward treaty nationality, even if the holder is also a citizen of the treaty country.
• One nationality per business. Dual national owners must choose one nationality for the company, and the owners and E-2 employees must use that nationality consistently.

The single exception to the one-nationality rule: a business owned and controlled equally (50/50) by nationals of two different treaty countries can support E-2 visas for owners and employees of either nationality.

What “develop and direct” means

The E-2 investor must be coming to the U.S. solely to develop and direct the enterprise. 22 CFR 41.51 and 9 FAM 402.9-4(B) say control is normally shown by owning at least 50% of the business, but it can also be shown through operational control, such as a managerial position or another corporate device. A title alone is not enough: merely occupying a managerial position does not meet the test if you do not actually control the business.

51% or more

Majority ownership is the cleanest structure. The investor controls votes and decisions, and the operating agreement or bylaws usually confirm the investor as manager or chief executive.

Exactly 50/50 with one other owner

The FAM accepts an equal partnership of two parties, or an equal joint venture, as giving each party a controlling interest, called “negative control.” Each partner can block the other’s decisions, so each has real control. This works only if both partners keep full management rights and responsibilities. An operating agreement that gives the other partner a casting vote or sole management authority undermines it.

Three or more equal partners

The State Department has determined that an equal partnership with more than two partners does not give any partner control through ownership, because control would be too remote even under the negative control theory. Three partners at 33.3% each, or four at 25%, cannot rely on ownership for the investor route.

Possible solutions include:

• Restructuring so one treaty-national partner holds at least 50%.
• Giving one partner genuine operational control through the governing documents, which officers examine closely.
• Having the treaty-national owners show that together they own at least 50% and collectively develop and direct the business. In that case none of them can be the “investor,” and each applies as an E-2 employee of the U.S. company in an executive, supervisory or essential role (9 FAM 402.9-6(F)).

Control through management

The FAM acknowledges that modern business structures vary and that an investor with managerial control of the business can meet the requirement. This route is fact-specific. It works best when the governing documents give the investor authority over hiring, spending, contracts and strategy, and when the investor holds a significant stake.

E-2 ownership scenarios and outcomes

Ownership structure	Treaty nationality test	Investor control test	Typical outcome
100% owned by one treaty national	Met	Met	Qualifies as investor
51% treaty national, 49% U.S. citizen	Met	Met	Qualifies as investor
50% treaty national, 50% non-treaty national	Met (exactly 50%)	Negative control, if full management rights	Usually qualifies; many attorneys prefer 51%
50/50 between nationals of two treaty countries	Met for both nationalities	Negative control for each	Owners of either nationality can qualify
49% treaty national, 51% U.S. green card holder	Not met	Not met	Does not qualify
Three treaty nationals at one third each	Met	No individual control	Owners may apply as E-2 employees, not investors
30% treaty national with management control, 70% other treaty nationals of the same country	Met	Possible through operational control	Case-specific, depends on governing documents
60% owned by a foreign company whose owners are treaty nationals	Met through look-through	Company develops and directs	Company’s employees of the same nationality can qualify
Treaty national holds 50% or more but is a U.S. green card holder	Shares not counted	Not applicable	Does not support E-2 visas

These outcomes describe how the rules are commonly applied. Your attorney should review the actual operating agreement or bylaws, because control is judged on the documents and the facts.

Couples investing together

Spouses often want to own the business jointly. The good news is that only one spouse needs to be the E-2 investor. The other spouse receives E-2 derivative status, whatever their nationality, and is authorized to work. That makes the ownership split mostly a planning question.

Both spouses share the treaty nationality. Any split works for nationality. The spouse applying as the principal should hold at least 50% or clear operational control. A 50/50 split also works under negative control.

Spouses have different nationalities, one from a non-treaty country. The treaty-national spouse must own at least 50% and should be the principal investor. Many attorneys prefer 51% or more for the treaty spouse to avoid any question at the 50% line. The non-treaty spouse can still own the remaining share and work in the business as an E-2 spouse.

Spouses hold two different treaty nationalities. Either spouse can be the principal. A 50/50 company owned by nationals of two treaty countries can support E-2 visas for either nationality, but the case is simpler when one spouse clearly controls.

Source of funds matters here too. If the investment comes from joint savings, the file should show how the funds belong to the investing spouse, for example through joint account records or a gift document.

Corporate investors and E-2 employees

An E-2 investor can be a company rather than an individual. If a foreign company owns at least 50% of the U.S. business and its own owners are treaty nationals, the foreign company is the investor and must show it develops and directs the U.S. enterprise.

That structure lets the company send employees on E-2 visas. Under 9 FAM 402.9-7(A):

• The employer must have treaty nationality (at least 50% owned by treaty nationals).
• The employee must have the same nationality as the employer.
• The employee must be an executive or supervisor, or have skills essential to the business.
• If the employer is an individual living in the United States, that individual must be maintaining E status.

The same-nationality rule means a non-treaty national cannot use the employee route, even when working for a treaty-owned company. See E-2 visa for employees and options for non-treaty nationals.

What happens when ownership changes?

Ownership is not fixed after approval. A change can affect your E-2 basis in three ways:

• Treaty ownership falls below 50%. If you sell shares to non-treaty nationals or U.S. persons and treaty nationals no longer hold 50%, the business loses its treaty nationality.
• You lose control. Bringing in partners who outvote you, or moving from 50/50 to three equal partners, can remove your develop-and-direct basis.
• A sale, merger or acquisition. These are substantive changes. They require a new Form I-129 approval from USCIS or a new visa application before you continue in E-2 status on the new terms.

Change in ownership is also the main situation in which an officer re-examines whether the investment is substantial, which otherwise is not normally re-evaluated at renewal. Plan any change with your attorney before signing. Read E-2 substantive change for the procedure.

How to document ownership and control

Officers expect clear, consistent documents:

• Articles of organization or incorporation.
• Operating agreement or bylaws, with management and voting provisions.
• Membership ledger or stock certificates and share register.
• A capitalization table showing each owner’s percentage and nationality.
• Passports for every owner whose shares count toward treaty nationality.
• For corporate owners, the ownership chart up to the individual shareholders.
• An organizational chart showing the investor’s role.

Choosing between an LLC and a corporation affects taxes and governance more than eligibility; see LLC or corporation for an E-2.

Next steps

Test your ownership structure with the E-2 eligibility checker and review the full list of E-2 visa requirements. If you are planning a partnership, a couple’s investment or a company structure, book a consultation and we will help design the business so the ownership and control are clear before your attorney files.