Companies looking to transfer employees to the US from abroad can avail themselves of the L-1 intracompany transferees (L visa), which necessitates a qualifying relationship between the foreign company and the US entity, meeting the requirement for an L-1 visa

There are two classifications of L-1 visas:

The L-1A visa caters to intracompany transferees occupying managerial or executive roles within a company situated outside the United States.
The L-1B visa accommodates intracompany transferees engaged in roles demanding specialized knowledge.

Before embarking on an L-1 filing it is important to ensure that there exists or will exist a qualifying relationship. Understanding what constitutes a qualifying relationship can streamline the visa application process and ensure compliance with regulations. This article will explain what constitutes a qualifying relationship and will provide clarity through illustrative examples.

Defining Qualifying Relationships

A qualifying relationship, in the context of an L-1 visa, refers to the legal, corporate, or operational connections between the petitioning employer and the foreign entity. These relationships must meet specific criteria outlined by U.S. Citizenship and Immigration Services (USCIS) to demonstrate eligibility for the visa.

Parent-Subsidiary Relationship:

Example: Company A, a U.S.-based corporation, wholly owns Company B, a foreign entity. In this scenario, Company B is considered a subsidiary of Company A. Therefore, Company A can petition for an L-1 visa to transfer eligible employees from Company B to its U.S. operations.

The same relationship would exist if Company B, the foreign entity wholly owned Company A, the U.S. entity.

Branch Office Relationship:

Example: Company C establishes a branch office in the United States, which is an extension of its foreign operations. Employees working at the foreign branch may qualify for an L-1 visa to transfer to the U.S. branch, provided they meet the visa requirements.

Affiliate Relationship:

Example: Company X owns 51% of Company Y and 51% of Company Z. A majority stock ownership in both companies is sufficient to create an affiliated relationship. Less than majority ownership will only create an affiliated relationship if there is de facto control. This can be demonstrated by a company showing that it has control over management and policy.

For example, if Company X owned only 50% of Company Y, but the other 50% was distributed among 5 other shareholders (10% each), Company X could argue that it has control over the company as the other stock is so widely dispersed among minority shareholders.

Ownership by a common group. Affiliation exists where two subsidiaries are owned and controlled by the same group of individuals, each individual owning and controlling approximately the same shares.

For example, Company A, the U.S. entity is owned by 4 individuals, who each own 25%. If those same 4 individuals own the foreign entity albeit in slightly different share amounts, (26%, 24%, 26% and 24%) the companies would still be affiliated. However, if the same 4 individuals held shares in the foreign entity that were not similar (10%, 30%, 35% and 25%) it’s unlikely that an affiliated relationship would exist.

Joint ventures. Where two parent companies (Company X and Company Y) own 50% of Company Z and have equal control then a joint venture exists. That joint venture is a subsidiary of both Company X and Company Y, despite there not being majority ownership. Both Company X and Company Y will need to demonstrate that they financially contributed to Company Z in equal amounts.

Conclusion.

Establishing a qualifying relationship serves as the foundation for a successful L-1 filing, facilitating the transfer of skilled employees to the United States. As multinational business operations continue to evolve, a thorough understanding of qualifying relationships remains paramount for achieving immigration objectives effectively.

If you have any questions regarding the above, please reach out to PLG Partner, Chris Prescott at cprescott@patellegal.com.