By Robert C. Divine, Shareholder, Baker Donelson
USCIS has published for public comment a draft Form I-956K and instructions for use by EB-5 securities “promoters,” implementing a new and unusual statutory requirement for promoters to register with USCIS, certify that they are not “prohibited persons,” and confirm the existence of a written agreement with the securities issuer or related party. Registration of promoters will not be required until the 60-day comment period ends and USCIS considers comments and publishes the final form. The form gives rise to several important questions that the instructions do not answer. Also, it gives rise to important obligations for EB-5 securities issuers and sponsoring regional centers.
The EB-5 Reform and Integrity Act of 2022 (“RIA”) enacted INA Section 203(b)(5)(K) that requires promoters to register and requires each EB-5 petition to include a written disclosure of all fees, ongoing interest, and other compensation paid to any agents, finders, or broker-dealers. Although USCIS has issued for immediate use other forms implementing RIA, the I-956K is published in draft only for now. Nevertheless, the same Federal Register notice calls for comment on new EB-5 forms I-956, I-956F, I-956G, and I-956H (not I-526 or I-526E).
Who must register should be clearer. The RIA does not specifically define “promoter.” The provision requiring fee disclosures applies to payments to “agents, finders, or broker-dealers.” The form requires the registrant to self-identify whether the person is a “direct promoter,” “third-party promoter,” or “migration agent,” or some combination, without any definition of those terms or any discussion of the implications. The form is for use by individuals and entities. It is not clear whether registration is required only of an individual or entity with an agreement to market EB-5 securities. The form asks if the registrant is employed to work as a promoter or otherwise engaged as a promoter on behalf of another promoter,” which implies that employees or agents of primary registrants must also register, but it is not clear what kind of a role in a promoter organization subjects one to the registration requirement. Also it is not clear how an employee or sub-agent completes the portion of the form collecting information about the registrant’s written agreement with the securities issuer or related party, and explanations in the addendum may be needed.