General Guidelines for L visa and related issues concerning the incorporation of a petitioning company in the U.S.
I.In General: Purpose and Basic Requirements
 The Provision and Its Background
``Intracompany transferee'' (L-1 for principal; L-2 for spouse or child) has become one of the most important of the nonimmigrant work classifications, at least in terms of usage.It allows organizations with operations abroad to shift certain of their personnel to the United States temporarily, even if the jobs they fill are not temporary in character. For reasons that may help to explain some of its terms, Congress in 1970 added the ``L'' classification which, as amended in 1990, reads as follows: an alien who, within three years preceding the time of his application for admission into the United States, has been employed continuously for one year by a firm or corporation or other legal entity or an affiliate or subsidiary thereof and who seeks to enter the United States temporarily in order to continue to render his services to the same employer or a subsidiary or affiliate thereof in a capacity that is managerial, executive, or involves specialized knowledge, and the alien spouse and minor children of any such alien if accompanying him or following to join him.
The impetus for the new classification came mainly, but not exclusively, from large, multinational companies who found their ability to bring critical personnel from abroad severely limited as a result of the 1965 immigration amendments.Undoubtedly, as the Service has suggested, the L-1 status has also been used by smaller companies as a vehicle for the immigration of entrepreneurs.A reaction to this use may account only in part for INS rules and interpretations that may have seemed artificially rigid or narrow and that affected companieslarge and small.To restore the flexibility of the L-1 classification, Congress in 1990 amended its provisions to make them more accessible.At the same time, it legislated an analogous provision which entitles intracompany transferees who are managers or executives ``priorityworker'' status, i.e. a first employment-based preference, in the new permanent residence selection system.
The candidate for ``L'' classification is ordinarily subject to the same provisions that govern nonimmigrants generally, in respect of the visa process, and concerning admission, extension, and change of nonimmigrant status.INS regulations establish rules for the initial visa petition, and for maintaining or extending ``L'' status; regulations of the State Department govern the issuance of ``L'' visas. These provisions, as interpreted administratively and in very few court decisions, are analyzed in other sections of this chapter. The analysis addresses the required relationship between the employer abroad and in the United States, the kind of work the alien has to have done and must do to qualify, the one-year prior employment rule, the limits on how long the alien may continuously work in ``L'' status, and the procedures involved. The following outline may be useful both as a checklist in the typical case and an introduction to the central issues.
 The Employers: Their Relationship, Nature and Activities
[a] The Relationship Between the Employers
The L-1 nonimmigrant may enter the United States temporarily ``to continue to render his services to the same employer or a subsidiary or affiliate thereof.''Either the employer abroad or the prospective employer in the United States may be the petitioner, assuming they are otherwise qualified.There might only be a single employer if the alien had physically worked abroad directly for a U.S. company (unattached to a division or branch) and was coming to the United States to continue that employment. By regulation, however, the petitioning employer must be a ``qualifying organization,'' that is, a U.S. or foreign organization that will be ``doing business'' both in the United States and abroad throughout the alien's L-1 assignment.
Typically, the alien applicant will have worked abroad for a branch or division of a U.S. company or its main office, parent, subsidiary or affiliate. The petitioning papers must establish the relationship of the employer abroad as the same company to which the alien will render services in the United States, or its parent, subsidiary, or affiliate.
As for the parent-subsidiary relationship, it requires some stock ownership and control.A substantial minority block of shares could be controlling and create a subsidiary relationship if the balance of stock is widely distributed. The Service also recognizes the parent-subsidiary relationship resulting from a 50-50 joint venture if the co-venturer claiming to be a parent can exercise negative control by veto power.
The Service ordinarily recognizes as affiliates only organizations in a sibling relationship, that is, sharing the same parent. It will also accept two companies as affiliates if both are owned by the same small group of stockholders, each stockholder owning approximately the same proportion of each company. The Service will not recognize relationships built solely on contracts, interlocking directorships, or other non-equity links. An exception is created under the Immigration Act of 1990 for certain accounting firms that are treated as affiliates if they market their services under the name of the same international coordinating organization.
[b] The Nature of the Employer
Each employer, both immediately before and after the alien's entry in L-1 status, must be a ``firm or corporation or other legal entity .'' The entity, however, need not have a particular legal format. A sole proprietorship or partnership can qualify, as can a branch office. Moreover, there is no nationality requirement. Neither the employer abroad nor in the United States must be a U.S. entity. If an organization, it may be registered or incorporated outside the United States; and there is no restriction on the citizenship or nature of the owners. The entity, for example, could be owned by a foreign government.
[c] Employer's Activities
The organizations involved do not have to do business with each other or be engaged in international trade. Indeed, the statutory provision itself does not refer to business or commercial activity. The L-1 status is broad enough to include nonprofit organizations whose activities, for example, are primarily religious or cultural.
 The Employment Relationship; Managerial, Executive, Specialized Knowledge
The statute clearly requires that for one of the three years immediately before the petition, the prospective L-1 has been continuously ``employed''; and the alien must be entering to continue to render services in a capacity that is executive, or managerial, or involves specialized knowledge. These requirements touch on several important issues.
During the pre-entry period it is not enough simply to be employed by a qualifying organization. The alien must meet the managerial, executive or specialized knowledge standard not only for the prospective L-1 employment, but for the previous period as well.
As to the L-1 period, the Service equates rendering services with employment. Its treatment of employment, however, is ambiguous. A general definition of employment elsewhere in the regulations specifies compensation as one of the distinct elements; yet the Service has not rescinded its precedent holding that a non-salaried chairman can qualify as L-1.Moreover, while the services must be rendered on a significant, regular basis (mere attendance at meetings is not enough), the alien may divide executive work and responsibilities between a company in the United States and a related company abroad.
[b] As Executive, Manager, or Person of Specialized Knowledge
The terms ``executive,'' ``managerial,'' and ``specialized knowledge'' are somewhat broader than earlier construed, as a result of the definitions enacted by Congress in 1990.To qualify as a manager under the current definition, the alien may also be involved in the high-level management of an essential function as well as supervising the work of other supervisory, managerial, or professional employees.Executives direct the management of the organization or a major function or component of the organization, establish policies and goals of the organization, and exercise wide latitude in discretionary decision-making.An alien is considered to be in a capacity involving specialized knowledge if the alien possesses special knowledge of the organization's product or other interests and their application in international markets or an advanced level of knowledge of the organization's processes and procedures.
By regulation and earlier interpretation, the specialized knowledge had to relate directly to the employer's proprietary interest in a product, process, or program central to the organization's activity, and not generally be available in the United States. Even before the statutory amendments of 1990, the ``proprietary'' requirement was removed, as was the need for U.S. unavailability.
Although only employment as a manager or executive, or in a specialized-knowledge job is permissible, an alien may qualify for the earlier year in one of these capacities, and for the L-1 employment in another.
[c] Start-up or New Office
Some latitude in duties is permitted during a start-up operation, but approval to work in a new office is limited to one year. If the beneficiary is coming to the United States to open a new office, the issue of viability arises. The Service in such a case requires proof of ownership and control, a lease or deed, and the financial resources to sustain the operation.
 Defining the Prior Year
The statute requires employment by the organization for one continuous year within three years before the application for admission.The Service maintains that this year must be physically spent outside the United States. Time spent in the United States in proper immigration status on behalf of the company, will not interrupt the continuity of the employment abroad; but it cannot be counted toward the year. For example, an alien hired by the company in Paris on January 1, and who is sent to New York on a B-1 visa for meetings on June 1, must leave the United States by June 30, if he or she is to qualify as the beneficiary of an L-1 petition to be filed February 1 of the next year.
 Temporary Intent and Residence; Dual Intent
Like the H-1 statuses, for example, the L-1 does not require the alien to maintain a residence abroad. But neither may he intend to stay indefinitely or permanently.
To render the services in the United States, the alien is permitted by statute to enter only ``temporarily.'' The petition will therefore be denied if it appears that the petitioner intends for the services to continue indefinitely. On the other hand, the employer may legitimately employ the alien temporarily, while planning to employ the alien permanently if and when it is legally permissible. The alien may also intend to leave at the end of the authorized stay unless he or she has meanwhile become a permanent resident. The approval of a labor certification or the filing of a preference petition is not itself conclusive evidence of a prohibited intent. And, L-1 beneficiaries are no longer subject to the º 214(b) presumption. Under State Department and INS interpretations of the 1990 amendments, the question of whether the beneficiary properly seeks to enter ``temporarily'' is reduced to whether he or she will adhere to the statutory limits of an L-1 stay imposed under the 1990 Act.
 The Five or Seven Year Limit
L-1 petitions are usually approved initially for three years, and extensions may be given in increments of up to two years, for a total of five in the case of an alien with specialized knowledge, and seven years for a manager or executive.Special rules determine whether the five years run when the alien's presence in the United States has been intermittent. The alien is not eligible for a new five/seven year cycle as an ``L'' until he or she has been employed by the organization outside the United States for an aggregate of a year prior to readmission in such status.
II.The Foreign and U.S. Employers: Nature and Activities; as ``Qualifying Organizations''
 Nature and Activities
The statute declares that the alien's employment before and after entry must be for ``a firm or corporation or other legal entity.''The Service has accepted that the statutory language was designed to include any form of legal entity, and ``does not preclude a proprietorship or partnership as long as the required ownership and control exist.''According to Representative Feighan, a proponent of the legislation in the House, it was ``anticipated that the words ~firm' and ~legal entity' will be interpreted in the broad sense to include all bona fide forms of business organizations including partnerships, sole proprietorships, and labor organizations.''Trusts and unincorporated associations should qualify as well, and the Service has recognized, for L-1 purposes, foreign legal entities, including the commercial instruments of foreign governments.
There is no requirement that the employer be a U.S.-owned concern.It is clear from the legislative history that the omission was deliberate and that the statute was intended to benefit both foreign and domestic organizations.
Nor must the entities be large, monolithic organizations, involved in trade with each other, or in international commerce of any kind, to qualify.Moreover, their activities need not be confined to business in the commercial sense. As indicated above, Representative Feighan saw unions as included among the acceptable types of organizations. Although the Immigration Service refers to qualifying organizations as ``doing business,'' it defines that term as providing ``goods and/or services'' without specifying a commercial component.Organizations that provide religious, charitable or other types of non-profit services are covered by the Service definition, although they are ineligible to file blanket petitions.9
 Requirements for ``Qualifying Organization''
[a] In General
The Service has established the term, ``qualifying organization'' by regulation to accomplish certain substantive ends. It defines that term in part as a U.S. or foreign entity which meets the requirements of a parent, branch, subsidiary, or affiliate and is or will be doing business ``as an employer in the United States and at least one other country for the duration of the alien's stay in the United States as an intracompany transferee directly or through a parent, branch, subsidiary, or affiliate, and [o]therwise meets the [L-1] requirements à.''(The addition of the phrase ``as an employer'' was apparently inserted like its counterpart in the definition of ``doing business'' to preclude an entity from qualifying through the exclusive use of an agent or contractor.) By this provision the Service seeks to bolster certain of its earlier decisions and to supervene others.
[b] Doing Business as an Employer in the United States
The stipulation that the L-1 alien be employed by an entity ``doing business as an employer in the United States'' is not found in the statute. The intracompany transferee provision, rather, states that the alien must have been employed for one continuous year within three years before applying for L-1 admission and seeks to enter ``to continue to render his services to the same employer'' or to a related entity.Applying this provision would seem to allow a Canadian company, for example, to send to the United States an otherwise qualified employee who would report to the home office in Winnipeg. Not so, said the Service in Matter of Penner, holding that to be eligible the employee must be placed under the control of a branch office or other qualifying entity physically located in the United States.The Penner decision seems inconsistent with Matter of Chartier which it failed to mention.In Chartier, the Board held eligible for L-1 status a Canadian who had worked directly for a Michigan company by selling from his home in Ontario. No more need seems to exist for an American entity in Penner than for a Canadian entity in Chartier, particularly as the statute by text and intention treats foreign and U.S. employment alike.15 By requiring a company presence in the United States, the regulation, like Penner, reads into the statute what the Board refused to find in Chartier.
The company presence required by the regulation is substantial. By ``doing business,'' the Service means ``the regular, systematic, and continuous provision of goods and/or services by a qualifying organization and does not include the mere presence of an agent or office of the qualifying organizationin the United States and abroad.''The Service acknowledges, however, that company representatives and liaison offices may be regarded as doing business for this purpose by providing services in the United States, albeit for a company abroad.
[c] New Offices
Although the employer must be doing business in the United States during the L-1 stay, according to the regulation, it is clear that the alien need not be coming to an existing office. Soon after Congress enacted the transferee provision, the Service held in Matter of LeBlanc that establishing a new operation for the employer was an acceptable L-1 purpose.The earlier acquisition of the necessary premises, noted in LeBlanc as a fact, was carried into the regulations as a requirement.
The regulations had imposed certain questionable requirements when a petition indicates that the alien is coming to open or to be employed in a ``new office,'' i.e., one doing business in the United States for less than a year.They mandate proof that the alien was employed by the organization as a manager or executive for the year abroad, and that the new office will, within a year of approval, support a managerial or executive position. The Service explained that it did not mean to foreclose an alien from qualifying in a new office for a specialized-knowledge position, but its explanation was problematic.The Serviceaddressed this problem in the 1991 regulation by setting out new official requirements for specialized knowledge personnel that are distinct from those that apply to managers and executives.It is nonetheless reasonable to expect that when an alien is being transferred in any capacity to open a new office, the petitioner will document its ownership, control, financial capacity, and staffing pattern.It would not seem that the requirements of a ``new office'' would have to be met in the case of a new branch office or location of a company that has already been doing business in the United States for more than a year.
[d] Continuing to Do Business Abroad
By requiring the qualifying organization to continue to do business through an entity in another country throughout the L-1 stay, the regulation grafts onto the statute a new condition, one that was expressly rejected in Matter of Thompson.In that precedent decision, the Commissioner examined the statute and found that it unambiguously permitted a company to liquidate its foreign operations while establishing a business in the United States as the basis for an intracompany transfer. Hence the Commissioner held that there was no room to explore the meaning of the statute. Furthermore, he noted the lack of ``a clear expression of congressional intent which would preclude an interpretation favorable to the petitioner.''In reversing its stand, the Service explained only that ``Matter of Thompson was an inappropriate application of the holdings of Chartier,'' a slender basis for reinterpreting the statute seventeen years after its enactment.
The deviation from Chartier and Thompson, however, has less of an impact than first appears. The definition of ``qualifying organization'' requires that the U.S. employer continue to have a related entity doing business abroad. That entity, however, need not be the alien's former employer. There is nothing in the definition to prevent the dissolution or sale of the former employer so long as another affiliate continues to do business abroad. Reading the regulation this way satisfies the Service's concern that an entity remain to which the alien, at least theoretically, can be transferred at the end of his or her United States assignment.
III.Relationship of Foreign and U.S. Employers: Parent, Subsidiary, Affiliate, Branch
 In General
The statute refers to the initial employment ``by a firm or corporation or other legal entity or an affiliate or subsidiary thereof,'' and to the alien's entry ``to continue to render his services to the same employer or a subsidiary or affiliate thereof. '' An L-1 petitioner must therefore establish a qualifying relationship between the employer abroad and the prospective employer in the United States. The petitioner may show that both employers are a single organization, that one is a parent and the other a subsidiary, or that both are affiliates of each other. Although no reference is made in the statute to a parent, such an entity is of course implied by the existence of a subsidiary. Moreover, the Service has defined affiliates as siblings of the same parent or parents. The Service also holds, that an alien who continues to work for the same corporation, rather than a subsidiary or affiliate, has to be attached in the United States to a ``branch,'' another term missing from the text of the ``L'' provision.
Both ``subsidiary'' and ``affiliate'' have been construed in several precedent and numerous unpublished decisions. In its major revision of the L-1 regulations in 1987, INS essentially codified its developing interpretation of these terms as involving at least some stock ownership and effective control. It also gave formal definition to the terms ``parent'' and ``branch.'' The Service refuses to recognize relationships that depend solely on contract, rather than on some equity and effective control, except for certain international accounting firms that are treated as affiliates under the 1990 Act.
Nothing in the statute or regulations suggests that the qualifying relationship between an employer abroad and the prospective employer in the United States has to have existed for any length of time.Therefore, a multinational organization that wants the longtime president of an independent British company to head up its U.S. subsidiary, need only buy that company before it files the L-1 petition. L-1 applicants may be assigned to work at the premises of third entities that are not branches, subsidiaries, or affiliates of the L-1 entities.Such offsite work qualifies as L-1 employment so long as the L-1 applicant remains under the supervision of the qualified U.S. entity.
``Parent'' is defined in the regulations simply as ``a firm, corporation, or other legal entity which has subsidiaries.''Although ``parent'' is not referred to in the statute, it is logically related to the terms ``subsidiary'' and ``affiliate'' and involved in their application.
``Branch'' means ``an operating division or office of the same organization housed in a different location.''An alien approved for L-1 employment in one branch should be able to move to another branch of the same organization in the United States without Service permission so long as there is no material change in the duties.
``Subsidiary'' means ``a firm, corporation, or other legal entity of which a parent owns, directly or indirectly, more than half of the entity and controls the entity; or, owns, directly or indirectly, half of the entity and controls the entity; or ownsdirectly or indirectly 50% of a 50-50 joint venture and has equal control and veto power over the entity; or owns, directly or indirectly,less than half of the entity, but in fact controls the entity.''The fact that the ownership and control may be ``indirect,'' is a realistic acceptance that company relationships sometimes involve layers of entities.
The Service has been reasonably consistent in rejecting parent-subsidiary relationships that rely exclusively on contractual links or minority equity without control.In a 1981 memorandum, the Commissioner stated:
Stock ownership and a substantial degree of managerial control are the keys to measuring a subsidiary relationship. Control can be through less than majority stock ownership. Proxy votes of minor stockholders could give a larger stockholder a ``majority.'' Also, as is the case with large corporations, extremely diverse holdings of minor stockholders could vest control in a main, larger stockholder. Most large corporations assign day to day operations to professional management. Responsibility for major policy decisions is vested in a board of directors.
Minority stock ownership and de facto control were found sufficient in Matter of Hughes which explores in some detail the meaning of ``subsidiary'' and of ``affiliate'' in various contexts, including other federal regulatory provisions. The Hughesdecision suggests, and the Service generally accepts, that majority ownership by itself is usually enough as it presumes control.Hughes also foreshadowed the acceptance of 50-50 joint ventures in Matter of Siemens Medical Systems, Inc.
The Service regards true co-venturers as parents and the joint venture as a subsidiary of each parent; but it insists on equal ownership of the assets, equal control of the entity, and veto power.In addition to other corporate documents, the Service may require evidence that the claimed parent has not by agreement or otherwise ceded its control to the other joint venturer. The recognition of joint ventures is particularly important for the transfer of personnel by U.S. companies with operations in countries that do not permit local enterprises to be more than 50% foreign-owned. Contractual joint ventures do not qualify.
``Affiliate'': means ``(1) One of two subsidiaries both of which are owned and controlled by the same parent or individual, or (2) One of two legal entities owned and controlled by the same group of individuals, each individual owning and controlling approximately the same share or proportion of each entity.''It also includes certain partnerships that market accounting services under an internationally recognized name by agreement with a worldwide umbrella organization run by its member accounting firms.
A Service memorandum also regarded subsidiaries of the same parent as corporate siblings, namely, affiliates. The memorandum acknowledged as ``probable that many variations of the subsidiary/affiliate relationship exist. Each case must be judged on the merits of its corporate structure.''
From the inception of the ``L'' provision, the Service, at least in its precedent decisions, rejected an expansive view of affiliation. Almost immediately following the enactment of the law, in 1970, it denied the possibility of affiliation based on contract or on ``a unity of interest and a meaningful association tofurther the common interests of both parties,'' and insisted on ``an interrelationship based on a common parentage.''Soon after, the Service rejected the notion that while Congress intended ``subsidiary'' to be a controlled entity, it meant ``affiliate'' to include a company only partially owned by another affiliate.
Unpublished decisions of the regional offices suggested that, even absent control and perhaps even without stock ownership, affiliation could be recognized in the use of the same trademark, the same product, and common promotional, consulting and financial services, as in franchise organizations; or the regular sharing of name, personnel, research, and expertise, as in certain types of cooperatives.The position of the Service is now clear: ``Associations between companies based on factors such as ownership of a small amount of stock in another company, exchange of products or services, licensing or franchising agreements, membership on boards of directors, or the formation of consortiums or cartels do not create affiliate relationships between the entities for L purposes.''
In line with several unpublished decisions, the regulation, does give affiliate status to entities owned by the same group of individuals in approximately the same proportion. The Service cautions that the owners must be individuals and not companies and leaves it to the judgment of adjudicators to determine ``if the shares owned by each individual in each entity are almost the same.''One court has rejected this construction of the term affiliate as arbitrary for precluding ownership of a subsidiary through an intervening holding company.
Summary of The L-1 Visa (Intra-company Transferee) Reform Act of 2003:On 9/17/03, Senator Chambliss (R-GA) introduced the “L-1 Visa (Intra-company Transferee) Reform Act of 2003.” Narrower in scope than previous L legislation, this bill would modify only the L-1B visa program, re-instate the 1 year work requirement for blanket applicants, and mandate collection of L-1 program statistical data.
Specifically, this legislation would:
Modify INA Section 214(c)(2) to prevent an L-1B visa holder from being primarily stationed at the worksite of another employer in cases where:
The L-1B visa holder will be controlled and supervised by an unaffiliated employer, or
The placement of the L-1B visa holder at the third party site is part of an arrangement to provide labor for the third party rather than placement at the third party site in connection in order to perform a duty involving specialized knowledge specific to the petitioning employer.
Strike from INA Section 214(c)(2)(A) the provision permitting the 6 month work requirement for L-1 blanket petitions.
Require Department of Homeland Security to maintain statistics on petitions filed for L-1 visas, including the number of L-1B petitions approved in total as well as the number of L-1B petitions approved where the visa holder will work primarily offsite.
If enacted, the legislation will go into affect 180 days after the date of enactment.
See text of the bill in the PDF file below.......
An unpublished AAO decision upholds denials of L-1A petition: This was made available to us on Jan 7, 2007:
An unpublished 2005 AAO decision upholds the denial of an L-1A multinational manager/executive petition, rejecting the notion of a "hybrid 'executive/manager' that relies on partial sections of the two definitions.
This decision is posted on this website to the right of this box.