Establishing Qualifying Corporate Relationships

In order to transfer an executive or manager to the U.S. by way of an EB-1C visa, the foreign affiliate employing the beneficiary must have (and prove) a specific affiliation with the petitioning U.S. employer. U.S. Citizenship and Immigration Services (USCIS) considers two interrelated concepts, common ownership and effective control, to establish the qualifying relationship.

In essence, a qualifying relationship “arises from the common ownership and control of both subsidiaries by the same legal entity.” [9 FAM 402.12-9(A)] In this statutory context, ownership refers to the legal right of possession and full power over a business entity, and control refers to the right and authority to direct the management and operations of said business entity.

Specific Definitions

Federal law recognizes four relationships between a petitioning U.S. employer seeking to sponsor an EB-1C transferee and the foreign company affiliate. To qualify, the U.S. company must be a parent, subsidiary, branch, or affiliate of the foreign company. These terms are defined as follows:

  • A parent is a firm, corporation, or other legal entity that has subsidiaries. In the context of immigration, two scenarios arise in this type of relationship, with a parent company also considered a majority owner:

    1. A foreign entity owning more than 50 percent of a U.S. entity is the majority owner of the U.S. entity. For example, a large technology company in India that owns more than 50 percent of a smaller, related U.S. company is the majority owner and parent of the U.S. company.

    2. A U.S. entity owning more than 50 percent of a foreign entity is the majority owner of the foreign entity. For example, a large American corporation that owns more than 50 percent of a Chinese computer company is the majority owner and parent of the Chinese company.

  • A subsidiary is a firm, corporation, or other legal entity of which a parent owns, directly or indirectly, more than half and therefore over which a parent has control; alternatively, a subsidiary is a firm, corporation, or other legal entity of which a parent owns, directly or indirectly, half of the entity and controls the entity; or owns 50 percent of a 50/50-joint venture and has equal control and veto power over the entity as does the other owning half; or owns less than half of the entity but nonetheless controls the entity.

    -For example, let’s say a Chinese company, “Company A,” owns 49 percent of the stock of a U.S. company, “Company B.” The remaining 51 percent of stock is divided among an additional 10 investors, none of whom owns more than 10 percent of total Company B stock. In this ownership structure, Company B would have a qualifying relationship because Company A is a parent with actual control over Company B, a subsidiary, despite owning less than half of Company B’s stock.

  • A branch is an operating division or office of the same organization simply housed in a different location. For example, a company might have branches of its business in several countries and therefore require the ability to transfer high-level employees between them.
  • An affiliate can take on one of two forms: it can be one of two subsidiaries, both of which are owned and controlled by the same parent or individual, or it can be one of two legal entities owned and controlled by the same group of individuals, with each individual owning and controlling approximately half the same share or proportion of each entity.

    - Let’s consider another example, a partnership that is organized in the U.S. and provides accounting, managerial, and consulting services, and markets its accounting services in particular under an internationally recognized name through an agreement with an international coordinating organization owned and controlled by member accounting firms. To qualify as an affiliate of the U.S. partnership, a partnership organized outside the U.S. that provides accounting services would be considered an affiliate of the U.S. partnership if the international partnership markets its accounting services under the same internationally recognized name through the same agreement with the same international coordinating organization of the U.S. partnership.

Materials submitted in petitions must substantiate that the two organizations, i.e. the U.S. employer and foreign entity, whether they are a parent, branch, subsidiary, or affiliate of the other, have common ownership and control to demonstrate that a manager or executive qualifies as an EB-1C beneficiary.

Let’s consider another hypothetical example: Foreign Company X is an affiliate of U.S. Company Y. Company X has four shareholders, A, B, C, and D, with A having majority control. Company Y also has four shareholders, A, B, E, and F, with A similarly having majority control. Although they are not owned by the exact same group of individuals, the same individual has majority ownership of both companies. Therefore, the two companies would have a qualifying relationship.

Note that a contractual relationship (i.e. licensing or franchising) is often not sufficient to establish the corporate relationship required for an EB-1C visa. Moreover, if one or both of the qualifying entities has undergone or will undergo some type of corporate reorganization, such as a merger or acquisition, then USCIS must be apprised so that it can determine whether a qualifying relationship between the entities exists or will exist.

Clarifying Common Control: A Real-World Example

In late April 2010, an attorney at our Los Angeles offices filed an EB-1C petition on behalf of an executive intending to permanently transfer from a Chinese company to said company’s U.S. affiliate. The executive had already been in the U.S. on an L-1A visa, and she had majority control of both the U.S. and Chinese enterprises, with the organization of four individual shareholders adhering to the following:

  • U.S. enterprise:

    1. Shareholder A (the beneficiary above): 60%

    2. Shareholder B: 35%

    3. Shareholder C: 5%
  • Chinese enterprise:

    1. Shareholder A (the beneficiary above): 98%

    2. Shareholder D: 2%

Our experienced immigration attorneys were confident that the two entities would satisfy the requirements for an affiliate relationship identified above, as the beneficiary had majority control of both companies. USCIS, however, issued a denial of her EB-1C petition in September 2010, stating that the evidence submitted showed that “both entities are owned by certain individuals and entities that have no ownership in both entities. Thus, the two entities are not owned and controlled by the same individuals.”

Our firm immediately filed an appeal, countering that the denial was based on an “erroneous application of law” and that “the qualifying relationship is clearly established by [the beneficiary’s] majority and common ownership of the petitioning company and the overseas affiliated company.” Even though both companies were not owned by the exact same group of individuals, our attorneys were confident that the qualifying relationship was indeed established by the common majority ownership of the beneficiary.

Thanks to our firm’s skillful application of the law and the persistence that defines the work we do, USCIS reversed its decision regarding the two companies, ultimately conceding that their relationship had in fact met the requirements to be considered affiliates.

For more information on the EB-1C visa, refer to the following links:

Our experienced immigration attorneys are here to assist you in your EB-1 application. For more detailed information on the EB-1 category, including minimum requirements and USCIS policies, refer to the following links:

Updated 04/10/2017