EB-5 INVESTOR OPPORTUNITIES
INTRODUCTION – THE EB-5 PROGRAM FOR RURAL BROADBAND INFRASTRUCTURE
The EB-5 investor visa program presents a significant opportunity to fulfill the goals of the United States Congress, to promote business expansion in America.
The opportunities for the foreign investor are of the type that enjoy an additional layer of transparency under the JOBS Act. The United States Congress, in addition, created and passed the JOBS Act (Jump Start Our Business Sector) in order to create and promote further business expansion in America. Under this Act, the Congress increased transparency by adding to the availability of information to investors, by allowing for certain equity investment opportunities to be posted, advertised and sold on the Internet.
Taken together, these two laws that have been created by the United States Congress, can have a tremendous impact on the funding of projects for rural broadband infrastructure in the United States.
Our company, Rural Broadband Company, Inc. (RBC), is one such company that originates, develops, organizes, seeks funding for, and fulfills the building of such projects.
GENERAL BACKGROUND ON THE EB-5 PROGRAM
In 1990, the United States Congress passed a law that created the EB-5 program. The law was created and passed for the purposes of expanding jobs in America, providing for an additional source of investments to increase economic activity, providing for new sources of project investment at no cost to U.S. taxpayers, and as a way for foreign entrepreneurs and their families to enjoy the benefits of permanent immigration status in the United States.
The process of the EB-5 applications has been made more efficient by the introduction of the Regional Center Program. Under this program, United States immigration authorities can approve a geographic area of investment. The investor can be the sole program beneficiary, can join with another program group, or can create a program group, in order to process the EB-5 visa.
In general, and among other requirements, there is a minimum required investment of $1,000,000.00, although for certain areas that are approved by the immigration authorities, an investment of $500,000.00 is sufficient. There is no maximum limit on the amount that may be invested. Investors may invest larger amounts in order to achieve their, or the project’s objectives.
THE COLLABORATION WITH THE UNITED STATES
IMMIGRATION SERVICE (USCIS), AND THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION (SEC)
The United States Immigration Service(USCIS) handles the visa paperwork part of the EB-5 application. The EB-5 investor, however, for certain investments, is also subject to the laws of the United States that govern the sale of securities, otherwise known as equities, or shares of stock. These sales are regulated in most types of transactions, whether a part of the EB-5 program or not, but some are exempt from registration, even though they are regulated.
With respect to certain equities, the United States Congress, in the year 2012, passed the JOBS Act. The Congress required that the JOBS Act come under the jurisdiction of a regulatory agency called the United States Securities and Exchange Commission (SEC). In the United States, regulatory agencies, like the SEC, are charged with creating rules that will govern how a law gets implemented. This process is accomplished under the agency’s rule-making authority. The process begins with the agency making a public notice that solicits comments as to what rules should apply to implement the new law. After comments are submitted, the agency takes those comments and drafts the rules that will govern and guide practitioners who wish to take advantage of the benefits of the law.
After a period of comment, one part, Title II, of the JOBS Act was made effective by the rules of the SEC on September 23, 2013. These rules made a change to previous SEC Rule 506. Under the old rule, sales of 506 shares, called ‘exempt limited offerings,’ could not be offered or sold to the public using public means of dissemination, like the Internet. The JOBS Act changed that law, and allowed for Rule 506 investments to be advertised and sold to the public using public means of providing information, like on the Internet.
Thus, on September 23, 2013, our company, Rural Broadband Company, Inc. (RBC), uploaded one of the first JOBS Act registrations with the SEC. During that first week, we uploaded two more, and all three are posted here on our website, at the ‘SEC Rule 506 JOBS Act Registrations’ tab.
The JOBS Act applies to all sales of Rule 506 securities that are being offered and/or sold to the public, like on the Internet. At the same time, the JOBS Act for Rule 506 does not apply to Rule 506 offerings that are not being offered or sold to the public. One clear benefit of JOBS Act Rule 506 offerings, whether for U.S. or foreign investors, is that the new rules add a layer of information for any investor by providing for greater transparency in transactions. For any investor, the ability to be able to go to the SEC website and view a registration, and the contact information, can allow for a greater sense of credibility and security.
The EB-5 investor, however, and any investor, in fact, may not be subject to the SEC rules. It depends on the investment.
THE EB-5 AND SEC NEXUS – EXCEPTIONS
As long as the requirements of the EB-5 rules are met, the foreign investor can still process the EB-5 visa application. If the investment has to do with purchasing shares, or purchasing an equity share, or a percentage, of a new or existing business, then most likely, the SEC rules will apply. The SEC rules can be many, and, as indicated above, not limited to JOBS Act rules.
There are, however, some exceptions to the application of SEC rules for the EB-5 investor. For example, where the investor is simply making an all- cash purchase, or even a purchase that is financed with a loan, there is likely to be no SEC question involved. Where, for example, an entire set of equipment is purchased by a single investor, and that equipment is used to build out a rural broadband infrastructure project, the SEC rules would not apply. In these instances of the single investor, the SEC rules simply would not apply. Since no shares would be sold to anyone in the public sector, such transactions, for SEC purposes, are typically known as ‘exempt transactions.’ That is, they are exempt from any notice or registration requirements with the SEC.
CONCLUSION
In America, and in fact in many parts of the world, there remains a large gap between broadband infrastructure in urban/suburban vs. rural areas.
For the EB-5 investor, this is an opportunity to be able to achieve a transparent investment, and also to see the benefits of that investment as the project gets built out. This is a win-win opportunity.
Together, we can all meet the challenge of rural broadband infrastructure expansion. We can turn that challenge into an opportunity, by providing funding to expand the infrastructure throughout rural America. Such a carrier-neutral, modern, high quality infrastructure is a 40-year asset that will allow for the most modern capability, including dark fiber, 1000 mbps ‘Gig’ cities, and white space technology that can also provide for community wi-fi centers.
We encourage serious investors to contact us for further information.