Risk and compliance
Subscription agreement
Also called subscription docs, subscription documents.
A subscription agreement is the contract by which an investor buys an interest in the new commercial enterprise, carrying the price, the investor's representations, the closing conditions and, where the offering uses one, the terms on which money leaves escrow.
What it decides
It binds; the marketing deck does not. Both must still be filed: a regional center must file all investment and offering documents, including subscription, investment, partnership and operating agreements, private placement memoranda, term sheets and the marketing materials themselves, with the Form I-956F project application under 8 U.S.C. 1153(b)(5)(F)(i)(IV), and Part 6, Item 2 of that form asks for them by exhibit number and name. Read what the agreement says about when money leaves escrow and what happens if Form I-526E is denied. Read the repayment terms hardest of all. Under 8 U.S.C. 1153(b)(5)(D)(ii)(III)(dd) the capital does not count if any agreement with the enterprise gives the investor a contractual right to repayment, such as a mandatory redemption or a put option held by the investor, and it still does not count where that right is contingent on the enterprise having the cash. A buy back option exercisable solely at the discretion of the enterprise is different: subclause (IV) preserves it, and USCIS treats it as permissible.
Where this is explained properly
Pages here that go into subscription agreement rather than mentioning it.
Related terms
- Operating agreementAn operating agreement is the contract that governs a limited liability company serving as the EB-5 new commercial enterprise, setting voting, management, distributions, transfers and redemption. A limited partnership uses a limited partnership agreement for the same purpose. Neither is defined by the EB-5 statute or regulations, but the immigration rules test what they say.
- Side letterA side letter is a separate written promise between an EB-5 project and one investor, sitting outside the main offering documents and changing what those documents say for that investor alone. It is a securities practice term rather than a USCIS one, and whether it costs the investor the petition depends on which promise it carries.
- Exit strategyExit strategy is the industry name for how and when invested capital is meant to return to the investor, whether through repayment of the project loan, a sale, a refinancing or a buyback. USCIS does not define the term, and immigration law limits it: capital the investor has a contractual right to get back does not count as capital at all.
Checked against primary sources on . Back to the glossary