While no changes have been made to the EB-5 Program yet, whispers around the industry suggest EB-5 Regional Centers with current offerings should ensure that they can adapt to program changes should they occur.
Multiple changes could happen to the EB-5 Program. EB-5 Regional Centers with current offerings must be able to adapt to these changes quickly to maintain investor confidence.
Changes that could happen include stricter TEA designations and increases in minimum investment amounts.
EB-5 Regional Centers with current offerings should prepare well before any changes to the EB-5 Program are announced. A few ways regional centers can prepare include:
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Find an experienced and qualified securities attorney who can advise the regional center on the best ways to communicate EB-5 Program changes to their investors. If changes to the program happen midway through an offering deal, investors will worry about its impact. In order to ease that worry, regional centers can learn from their counsel the best ways to discuss the impact of the changes to their investors.
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Are the regional center's transactional documents sufficient to adapt to any changes that may occur to the program? It may be important for a regional center to speak to their attorney about the legality of this issue. The regional center may also be required to inform their investors in writing of any changes that have occurred. An experienced attorney will be able to inform their regional center of any obligations to disclose information.
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Changes to the minimum investment amount may not sound like a big deal, but it could drastically change the capital structure of the offering. A regional center must consult with their attorneys to find out the best ways to accommodate these changes. These changes not only affect investors, but lenders, developers, and third parties. It can affect various parties at every stage of development.
These are a few tips to help regional centers maintain their flow and keep their projects from suffering due to rapid changes to the EB-5 Program. Although the EB-5 Program has not seen any changes yet, amending documents to accommodate possible changes and keeping communication channels open with EB-5 investors will keep projects on schedule.
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