Qualifying Business Entities and Positions

As noted in the L-1 visa requirements page, overseas business entities seeking to transfer their employees to the U.S. by way of L-1 visas must be related in a specific way to the petitioning U.S. company. Likewise, the prospective alien beneficiary must be employed in a certain kind of position, depending on whether the alien is seeking L-1A or L-1B status.

This article is devoted to exploring the types of business entities that U.S. Citizenship and Immigration Services (USCIS) regards as qualifying for L-1 visa purposes, as well as the types of jobs deemed acceptable under this category.

Qualifying Business Entities

Immigration law considers two related concepts, ownership and control, as the determining factors for establishing a qualifying relationship between business entities. Ownership refers to the legal right of possession with full power over a business entity, while control refers to the right and authority to direct the management and operations of that business entity. The first step in determining whether a U.S. company and foreign entity have a qualifying relationship, therefore, is ascertaining whether or not a relationship of ownership and control exists between two legal business entities.

Second, an entity petitioning for an L-1 visa must be a parent, branch, subsidiary, or affiliate, as defined by federal statute. Note the multiple references to ownership and control in the definitions below.

  • A parent refers to a firm, corporation, or other legal entity that has subsidiaries. In the immigration context, this could mean one of two scenarios:

    -A foreign entity owns more than 50 percent of a U.S. entity and is therefore a majority owner of the U.S. entity.

    • For example, a large technology company in India owns more than half of a smaller, related U.S. company.

    -A U.S. entity owns more than 50 percent of a foreign entity and is therefore a majority owner of the foreign entity.

    • For example, a large American company owns more than half of a Chinese computer company.
  • A branch is defined as an operating division or office of the same organization housed in a different location. This corporate structure is essentially a foreign business doing business in the U.S. The office is not a separate entity.

    -Most people are familiar with the concept of a branch, and the purpose of one is fairly obvious: a company might have branches of their business located in many countries throughout the world and accordingly may manifest a need to transfer employees between them.

  • A subsidiary is a firm, corporation, or other legal entity of which a parent owns, directly or indirectly, more than half of the entity and therefore has control of the entity; or 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 of and veto power over the entity as does the other half of ownership; or owns less than half of the entity, but in fact controls the entity.

    -To make the abstract definition above a little clearer, consider this example: Chinese company A holds 49 percent of U.S. company B’s stock. The remaining 51 percent is divided among another 10 investors, with none holding more than 10 percent individually. Company B, a subsidiary, is a qualifying business entity under the L-1 visa category because company A, its parent, has actual control over company B.

  • An affiliate refers to one of the following:

    -One of two subsidiaries, both of which are owned and controlled by the same parent or individual, or

    -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.

A contractual relationship (i.e. licensing or franchising) is generally not sufficient to establish the necessary relationship for an L-1 visa.

Business restructurings, like mergers and acquisitions, are common processes. If such a reorganization applies to your business, note that USCIS must be informed, as USCIS will ultimately determine whether or not a qualifying relationship between the resultant entities still exists.

Qualifying Job Positions

We break down the conditions required of a prospective L-1 beneficiary’s employment into the L-1A and L-1B subtypes.

L-1A Managers and Executives

As is self-evident, an L-1A visa beneficiary should hold a managerial or executive position. How does immigration law define these terms, though?

A managerial capacity refers to a position defined by the following primary duties:

  • Managing an organization, department, subdivision, function, or component; or managing an essential function within an organization, or department or subdivision of an organization
  • Supervising and controlling the work of other supervisory, professional, or managerial employees
  • Possessing the authority to hire and fire or recommend personnel actions (if other employees are directly supervised); and/or
  • Exercising discretion over day-to-day operations of the activity or function.

First-line supervisors are usually not considered managers for L-1A visa purposes unless the employees they supervise are professionals. For example, a junior supervisor in an accounting firm may qualify as an L-1A manager since the employees she oversees are professional accountants.

An executive position is one in which the employee primarily:

  • Directs the management of an organization or a major component or function;
  • Establishes goals and policies;
  • Exercises wide latitude in discretionary decision-making; and
  • Receives only general supervision or direction from higher-level executives, a board of directors, or stockholders.

Determining whether or not a prospective L-1A beneficiary has a management or executive position hinges on cross-referencing said beneficiary’s job duties with either of the above definitions. Note that the requirements for qualifying corporate entities, as described above, apply to the L-1A beneficiary’s petitioning company.

L-1B Employees with Specialized Knowledge

An employee with specialized knowledge is an individual who possesses knowledge about a company’s products and services and whose travel to the U.S. serves to impart said specialized knowledge onto the company’s U.S. employees. An alternative qualifying position for L-1B purposes is when a company lacks an office in the U.S. and desires to send to the U.S. an employee with specialized knowledge of the company in order to establish a presence in the U.S.

According to 8 CFR 214.2(l)(1)(ii)(D), this type of employee “must be more than simply skilled or familiar with the employer’s interests.” Rather, the knowledge of such an employee must be “beyond the ordinary and not commonplace within the industry or the petitioning organization.” This includes knowledge of a company or organization’s product, service, research, equipment, techniques, management, or other interests, as well as application of this knowledge in international markets.

As is the case for the L-1A subcategory, the same requirements exist for qualifying corporate entities under the L-1B classification.

For more information on the L-1 category, refer to the following links:

Updated 05/18/2017