Proving that an investor is positioned to “develop and direct” an E-2 enterprise is one of the most important — and most scrutinized — parts of an E-2 application.
What “develop and direct” actually means for an E-2 investor
The E-2 treaty investor classification requires that the applicant will be coming to the United States to develop and direct a qualifying enterprise. At its core, this means the investor must have the authority and intention to exercise meaningful operational control over the business, not merely hold passive financial interests.
Government guidance from the Department of State and U.S. Citizenship and Immigration Services explains that control is typically shown by ownership or by an active executive or managerial position. See the Department of State E-2 overview for consular guidance and USCIS for U.S.-based adjudication perspectives:
Key legal and practical standards adjudicators apply
Adjudicators focus on three interrelated questions:
- Does the investor have legal authority? That means ownership, voting rights, contractual authority, or a formal executive role.
- Can the investor exercise actual operational control? Beyond titles, can the investor hire/fire, approve strategy, sign contracts, and control funds?
- Is the enterprise substantial and active? A passive investment in stocks or a marginal venture will not meet the test.
There is no single magic percentage of ownership written into the regulations. In practice, ownership of more than 50% makes the “develop and direct” showing straightforward. However, a minority investor can also qualify if he or she demonstrates clear, enforceable control through governance documents, employment agreements, voting trusts, or other arrangements.
Types of evidence that prove the ability to develop and direct
Adjudicators prefer contemporaneous, detailed documentation. Examples of persuasive evidence include:
- Ownership and governance documents: share certificates, operating agreements, articles of incorporation, shareholder agreements, voting trusts, and amendments showing the investor’s control rights.
- Corporate resolutions and board minutes: records showing the investor’s appointment to a senior management role (CEO, President, Managing Member) and authority for major decisions.
- Employment agreements and job descriptions: signed contracts that outline duties, decision-making authority, term, compensation, and reporting lines.
- Business plan with operational detail: a realistic, well-supported plan that describes responsibilities, organizational chart, staffing timeline, revenue projections, and how the investor will execute the plan.
- Financial documents and proof of investment: bank statements, wire transfers, invoices, receipts, and evidence that the investor’s capital is at risk in the business.
- Contracts and client relationships: major supply agreements, purchase orders, client contracts, or letters of intent showing active business operations.
- Payroll records and tax filings: payroll summaries, employment tax returns, and state filings showing the enterprise’s payroll and hiring plans.
- Permits, licenses, and insurance: business licenses, professional certifications, lease agreements, and insurance policies that evidence commercial activity.
- Communications and marketing: website screenshots, marketing materials, press coverage, and client emails that demonstrate the enterprise’s presence in the marketplace.
How different business structures affect the “develop and direct” showing
The investor’s legal structure changes which documents matter most:
- Corporations: focus on stock ownership, board resolutions, appointment letters for executive roles, and shareholder agreements that spell out control rights.
- LLCs: operating agreements and member resolutions are central; they often specify management authority, allocation of profits, and voting rules.
- Partnerships: partnership agreements, general partner status, and management clauses show whether the investor can direct operations.
- Sole proprietorships or single-member LLCs: ownership is self-evident but the investor must still document operational control and commercial activity.
Common scenarios and how to prove control in each
Majority owner who is CEO or managing member
This is the clearest case. The investor should submit share certificates or membership interest documents plus appointment letters, an organizational chart showing the investor’s role, and board minutes evidence. Demonstrate actual duties with copies of contracts the investor signed, major decisions he or she led, and payroll records that show staff reporting to the investor.
Minority owner with contractual control
When the E-2 applicant personally owns less than 50%, but the combined shares of treaty nationals still satisfy majority, the emphasis shifts to contractual and governance evidence. Useful items include a shareholders’ agreement giving veto or special voting rights, management agreements, power of attorney, and documentation of exclusive control over funds or executive appointments. The business plan should explain why the investor’s role is essential and how day-to-day control flows to them despite minority ownership.
Passive investor vs. active investor
Passive investors who buy stock and have no management role will not qualify. To convert a passive investment into an active one for E-2 purposes, the investor must assume an executive or managerial role and show operational duties and evidence of decision-making authority. Adjudicators will look for contemporaneous, pre-existing records where the investor takes an active role, not just declarations drafted after the fact.
Employee of an E-2 enterprise
Non-investor employees seeking E-2 classification through an E-2 enterprise must demonstrate that they are coming in an executive or supervisory capacity, or possess special qualifications essential to the enterprise’s operation. Evidence includes detailed job descriptions, organizational charts, the employer’s documents showing need for the employee’s services, and proof that the employee’s role cannot be filled by a U.S. worker in the immediate term.
Building a persuasive business plan focused on “develop and direct”
A robust business plan is a cornerstone of a strong E-2 submission. It should be realistic, supported by evidence, and tailored to demonstrate the investor’s role in building the business.
Key elements of the plan include:
- Detailed organizational chart: show the investor’s position, reporting lines, and planned hires by month/year.
- Operational timeline: milestones for launching or scaling operations, when key hires will be made, and when revenue targets are expected.
- Financial projections and assumptions: monthly cash flow for at least 12 months, sources and uses of funds, and sensitivity analysis for realistic scenarios.
- Management responsibilities: specific duties the investor will perform—e.g., negotiating contracts, hiring management team, selecting vendors, overseeing production.
- Market analysis: evidence of demand, customer pipeline, sales strategy, and competitive advantage demonstrating a real enterprise, not a minimal activity.
Responding to RFEs and consular interviews
If an adjudicator requests further proof via a Request for Evidence (RFE) or if the investor faces tough questioning at a consulate, the response should be documentary and specific. Vague descriptions will weaken the application.
Practical tips for responses and interviews:
- Provide direct evidence rather than summaries — e.g., append signed contracts and board minutes rather than paraphrasing.
- Address any apparent gaps: if the investor owns less than 50%, provide governance agreements showing control and explain why ownership percentage does not limit authority.
- Describe daily duties and strategic responsibilities clearly. Interviewers often probe what the investor will do on a typical weekday.
- Bring corroborating third-party evidence — client letters, supplier contracts, or bank confirmations can validate claims about the business’s activity level.
- When possible, use contemporaneous documents prepared before filing; after-the-fact documents can look contrived.
Real-world examples
Example 1 — Technology founder: A software founder owns 50% of an LLC and holds contractual rights to appoint the CEO, control the operating account, and veto major transactions through a shareholder agreement. The founder provides the operating agreement, board resolutions, a signed employment contract naming him CEO, a business plan showing growth and hiring plans, and client contracts. Even with 50% ownership, this package demonstrates the control needed to satisfy the “develop and direct” test.
Example 2 — Franchise owner: An investor purchases a franchise and is listed as the managing member with 75% equity. The franchise agreement, lease, bank receipts, payroll documents, and franchise training records show the investor’s operational control and active management role, creating a straightforward case for E-2 status.
Example 3 — Passive investor issue: An investor buys 51% of a holding company but does not engage in decision making and hires a manager to handle everything, keeping a truly passive role. Adjudicators may view this unfavorably because the investor is not demonstrating the intention to personally develop and direct the enterprise.
Common pitfalls to avoid
Several recurring mistakes undermine the “develop and direct” showing:
- Relying on titles alone: a title like “Chairman” or “CEO” means little without supporting evidence of authority and activity.
- Using post-filing documents only: creating records after the application to prove control can raise credibility concerns.
- Investing passively: purchasing shares without taking on operational responsibilities will fail the test.
- Fuzzy business plans: unrealistic projections, vague staffing plans, or absent operational detail weaken the case.
- Ignoring entity governance: inconsistent or missing agreements (e.g., no operating agreement for an LLC) create avoidable gaps.
Practical checklist to prepare a convincing E-2 package
Before filing, the investor should assemble:
- Ownership and governance documents (articles, operating agreements, shareholder agreements)
- Proof of capital at risk (bank records, purchase invoices, escrow statements)
- Signed employment contracts and job descriptions
- Board minutes or corporate resolutions appointing the investor to a managerial role
- Detailed business plan with organizational chart and financials
- Contracts, leases, licenses, insurance policies
- Client/supplier contracts and marketing materials
- Payroll and tax records if the business is already operating
- Consistent, contemporaneous evidence rather than retroactive statements
When to get professional help
Because adjudicators evaluate the totality of the circumstances, small gaps can be fatal. If the investor’s control is not obvious — for instance, when ownership is less than 50% or governance arrangements are complex — legal counsel can structure governance documents, prepare a persuasive business plan, and assemble evidence to present a coherent narrative. Experienced counsel can also prepare tailored responses to potential RFEs and simulate consular interview questions.
For more about the E-2 process and how to prepare the strongest possible application, the Department of State and USCIS pages provide official guidance:
Which aspects of the investor’s role are strongest to document — ownership, contractual control, or day-to-day managerial duties — and which require more work to satisfy an adjudicator? Thinking through that question early and assembling clear, contemporaneous evidence will greatly increase the chance of approval. If uncertainty remains, seeking an experienced E-2 immigration attorney can help turn a complex ownership picture into a convincing case for the investor’s ability to develop and direct the enterprise.
Please Note: This blog is intended solely for informational purposes and should not be regarded as legal advice. As always, it is advisable to consult with an experienced immigration attorney for personalized guidance based on your specific circumstances.