The investment must be an active investment

The investor must make an irrevocable commitment of funds that represents an actual, active investment that is, the business enterprise underlying the investment must represent a real operating enterprise productive of some service or commodity.

Normally this can be done by  placing the purchase price of a business in an ‘escrow account’. The funds in the escrow account will be paid to the seller upon the approval of the E2 visa application. This way the investor is protected in the event that the application is denied.

Examples of types of business activity are clearly not “active” investments:

A           passive or speculative investment held for potential appreciation in value, such as undeveloped land or the securities of a business in which the in­vestor is not actively engaged. A classic example is the purchase of a house to live in where the hope is that it will appreciate in value over the course of time.

Situations where there is a question whether an investment is ‘active’ or ‘passive’

(1)   The overseas national purchases a parcel of land that he intends to develop and re-sell for a profit. He hires an architect to develop plans for the construction of homes upon the land, and hires contractors to build them, and enters into contract with them to do so.

This scenario would almost certainly qualify as an‘active’ investment.

(2)   The overseas national purchases a  ‘strip mall’ containing various shops. He also forms a management company that locates and provides services to the tenants of the mall and otherwise operates the same for a profit.

This scenario would probably be considered to be an active investment.

(3)   In this situation the overseas investor purchases a ‘strip mall’ or apartment complex but hires a management company to take care of the day to day management of the same, involving the maintenance of the property and the collection of rent form tenants.

This could well be considered to be a passive investment. It may be argued that the investor is not directly involved in the management of the enterprise but is simply making a speculative investment.

Much would depend on how this was presented to the consular officer handling the application.