The Key to an L-1 Petition: How Should Ownership Be Structured Between Affiliates?

When preparing an L-1A or L-1B petition, many companies plan to give the U.S. and foreign companies the same ownership structure in order to establish an affiliate relationship. But once the U.S. company starts raising money or brings in local investors, the list of shareholders and their percentages may diverge. That raises an important question: if the two companies' ownership no longer matches, can they still meet the L-1 requirements?

To answer it, start with one concept. The L-1 requires a qualifying relationship between the U.S. company and the foreign company. Qualifying relationships include parent and subsidiary, branch, and affiliate. This article covers only the affiliate relationship.

For affiliates, immigration law does not require the two companies' ownership percentages to be identical. What matters is who owns each company and who has the power to control its management and operations.

I. What ownership structures qualify as L-1 affiliates?

Under 8 CFR § 214.2(l)(1)(ii)(L), ordinary businesses can be affiliates in two main ways.

1. Both companies are owned and controlled by the same individual or the same parent

If the same individual or parent company owns and controls both the U.S. and the foreign company, the companies may qualify even if the ownership percentages differ. "Owns" here means that the same individual or company holds more than 50% of each company.

For example, suppose the Chinese company is owned 60% by A and 40% by B. To bring in investor C, the U.S. company adopts this structure:

Here A holds 60% of the Chinese company and 70% of the U.S. company and is the majority owner of both. As long as A actually controls both companies, B's different percentages and C's new stake in the U.S. company do not, in principle, prevent the two from being affiliates. Bringing a minority investor into the U.S. company does not mean the Chinese company has to change its ownership to match.

2. Both companies are owned and controlled by the same group of individuals in approximately the same proportions

If no single person or entity owns and controls both companies (there is no majority owner), the question is whether the same group of individuals owns and controls both, with each owning and controlling approximately the same share in each company.

For example, if A, B, and C own 40%, 40%, and 20% of the Chinese company and hold the U.S. company in the same proportions, the companies may meet this standard even though no one owns more than half.

Note that the regulation says "approximately the same share or proportion," not exactly the same. Whether each owner's stake and control in the two companies are close enough still depends on the specific structure.

So the first step in assessing an affiliate relationship is to identify which standard the companies are relying on. The "approximately the same proportion" requirement of the second standard should not be applied to the first. Affiliate status always turns on both ownership and control.

II. Can ownership change after the L-1 is approved?

An L-1 approval does not freeze a company's ownership forever. Raising capital and bringing in partners are normal business decisions. The question is whether, after the change, the U.S. and foreign companies still have a qualifying relationship.

If A controlled both companies before and still owns and controls both afterward, the affiliate relationship survives even if minority owners' percentages change. But if a new investor in the U.S. company reduces A's stake from 70% to 40%, the companies can no longer simply rely on A holding a majority of both. Actual control has to be re-evaluated, along with whether another qualifying relationship exists.

Even if the companies remain affiliates after the change, reporting cannot be ignored. Under 8 CFR § 214.2(l)(7)(i)(C), when an approved qualifying relationship changes, or other information affects the beneficiary's eligibility, the petitioner must file an amended petition. Before any change in ownership, the beneficiary should have an experienced immigration attorney assess whether it affects L-1 eligibility and, even if it does not, whether an amended petition is required.

Conclusion

The ownership structure of the U.S. and foreign companies is a basic building block of L-1 eligibility. From the initial petition through operations after approval, companies need to consider the L-1 impact whenever they raise money, add shareholders, or change ownership. How the shares are divided can follow business needs. Who owns and controls the two companies must always be clearly documented in corporate records and actual operations.

An immigration lawyer's job is not limited to a single petition. It should run through the company's whole life in the U.S., helping it meet its business goals while staying in compliance with immigration law.

Our team has years of U.S. business immigration experience, and every L-1 case we have handled to date has been approved. From setting up a new office and the first L-1 petition, to extensions and immigration compliance once the business is running, to L-1B, O-1, H-1B, and TN visas for other employees and long-term planning for executives seeking green cards through EB-1C, we provide immigration counsel to companies and their leaders at every stage of growth, so each step of the business in the U.S. rests on a clear, sound status plan.

For choosing visas for team members moving to the U.S., see our article "Expanding Into the U.S.: Choosing Work Visas for Executives and Technical Staff." If you are considering the L-1 to build your business in the U.S., or need a visa strategy for an expansion team, please contact our team for a professional assessment.

This article is for general legal information only and is not legal advice for any individual case.