Direct EB-5 requires you to be engaged in the management of the new commercial enterprise, and the regulation gives you two ways to get there. You can run the business day to day. Or you can be engaged in policy formulation, which is what a corporate officer or the managing member of an LLC does. Hiring a general manager is entirely allowed. Signing the company over to that manager and disappearing will cost you the petition, because the test asks what authority you hold, and an ordinary shareholder collecting distributions holds none.
What 8 CFR 204.6(j)(5) actually says
The evidence requirement is short. A petitioner must show engagement in the new commercial enterprise, either through the exercise of day to day managerial control or through policy formulation. Read the full text of 8 CFR 204.6 yourself rather than trusting a summary from a project sponsor. What the paragraph then asks for is narrow: a position title with a full description of its duties, evidence that you are a corporate officer or a member of the board, or evidence that you engage in policy making. An owner holding nothing but an economic interest can produce none of the three.
Nothing there sets a minimum number of hours. Nothing requires you to live in the same state as the business. No time sheet is contemplated anywhere in the rule, and adjudicators do not ask for one.
What they ask for is authority on paper.
Notice also that this differs from the tax idea of material participation, which carries hour thresholds under the passive activity rules. Immigration officers apply no such test. Anyone who tells you to log 500 hours a year to satisfy USCIS has borrowed a standard from the wrong agency.
Day to day control or policy formulation
Day to day control is the easier of the two to prove and the harder to live with. You are the person who hires, and you are the person who signs supplier contracts. Documentary proof falls out of the operation itself, in the shape of an employment agreement naming you as President plus bank resolutions showing you as an authorized signer.
Policy formulation suits investors who already have businesses elsewhere. Sit on the board. Vote on the annual budget and on the hiring plan, then keep minutes that record how you voted. A managing member whose operating agreement reserves major decisions to the members is engaged in policy formulation by definition, provided the agreement said so before the petition was filed rather than after a request for evidence arrived.
Adjudicators see far more of the second.
Where the equity holder shortcut stops
A formal shortcut sits in the same paragraph. Under 8 CFR 204.6(j)(5)(iii) an equity holder counts as engaged in policy making, on one condition. The organizational documents have to give you the rights, powers and duties that equity holders of that type of entity are normally granted in the state where the enterprise is organized. Older guides describe this as a limited partnership rule keyed to the Uniform Limited Partnership Act, which is how the regulation used to read. The current wording is entity neutral, so a non-managing member of an LLC stands on the same footing as a limited partner.
One sentence is doing enormous work there. Without it the entire Regional Center model would collapse, since it is what lets hundreds of investors hold genuinely passive interests and still pass the engagement test, and it explains why Regional Center investing asks nothing of your calendar.
Direct deals sometimes borrow the structure without the substance. A single investor operating company organized as a limited partnership, with the investor as sole limited partner and a friendly general partner, gets a close reading. The shortcut rewards an investor who actually holds the ordinary rights of their equity class. Stretched over a one person business drafted to keep its owner outside the enterprise, it invites the obvious question of who is really running the place.
Can you hire a manager and stay in the background?
Yes, within limits. Plenty of American business owners employ a general manager and never touch the till, and EB-5 does not force you to behave differently. Your authority over that manager has to be documented and real. You appointed the person. You can remove the person, and the budget they work to is one you approved.
Where this collapses is when the operating agreement stays silent. An investor who owns 100 percent of the units but has vested all management in a non-member manager, with no reserved matters and no removal right, has drafted themselves out of the enterprise. Amending the agreement after you file Form I-526 is possible, and it looks exactly like what it is.
Note the form number there. Direct investors file Form I-526, while Regional Center investors file Form I-526E, and a Regional Center investor may file as soon as the center has filed Form I-956F for that specific offering. Approval of the I-956F comes later and gates approval of the investor petition, never the filing of it.
Work authorization is a separate trap
Holding management authority and being allowed to work in the United States are two different questions. An investor still abroad, not yet admitted as a conditional resident, cannot take a salaried operating job at the enterprise. An investor already inside the country on another status needs employment authorization first, which for a pending adjustment applicant means Form I-765.
Owning the company and voting as a member is generally not treated as employment, so directing the business from overseas while your petition is pending works fine. Drawing a paycheck as its operations manager without authorization is another matter entirely. Ask first. Unauthorized work creates a problem at the adjustment stage that is fixable in some cases and not in others, and no attorney enjoys arguing the point when a clean structure was available from the first day.
Build the evidence file before the RFE arrives
- The operating agreement or corporate bylaws, showing your title and the decisions reserved to you personally.
- A signed appointment or employment agreement, dated before the petition went in.
- Meeting minutes across several dates, with real votes recorded rather than one organizational resolution from the week the company was formed.
- Correspondence showing you directing the manager on live questions such as a lease renewal or a senior hire.
- Bank resolutions naming you as an authorized signer, alongside tax filings that match the title you claim.
Adjudicators weigh those as a set. Any one alone proves little. A title with no decisions behind it reads as decoration, which is the polite version of what an RFE usually says.
Avoid these three structures
Silent capital in someone else's company is the most common. An investor puts $800,000 into a friend's existing restaurant group, takes non-voting units and a promise of distributions, then files. That fact pattern struggles on the management question and often on the new commercial enterprise question too.
A second pattern involves the 40 percent expansion route. Investing in an existing business that expands its net worth or its employee count by at least 40 percent can make the business a qualifying new commercial enterprise, and some promoters present that test as though it settles jobs too. It does not. Ten full time positions are still owed, and the expansion has to be the thing that creates them.
Then there is the absent owner. Someone buys a franchise and hands operations to a management company, then stays overseas for the next two years. Jobs may well materialize. Management evidence usually does not, and the gap surfaces at Form I-829, where you must show the enterprise was sustained through the conditional period. Conditional residence runs two years from admission and the I-829 falls due in the 90 days before that anniversary, so the whole window is under review.
Direct EB-5 Nightmares 2026: Common Pitfalls That Kill Entrepreneur Plans catalogues more of these. Most start with a structure chosen for tax reasons and never revisited for immigration ones.
So how involved do you actually need to be?
Involved enough that a stranger reading your corporate documents would name you as the person in charge. That is the practical standard, and it sits lower than the folklore suggests. You do not need to stand behind the counter. You do need a title, a vote and a paper trail showing the vote mattered.
Investors who want none of that should look hard at the Regional Center route instead. Direct EB-5 Investment vs Regional Center: Pros, Cons and Real Risks lays the two side by side without the sales gloss.