Since Express Entry began on January 1, 2015, Citizenship and Immigration Canada (“CIC”) has issued several rounds of Invitations to Apply (“ITAs”).  An ITA allows a foreign national to submit their application for permanent residence under one of the following categories:

• The Federal Skilled Worker (“FSW”) Class;
• The Canadian Experience Class (“CEC”);
• The Federal Skilled Trades (“FST”) Class; or
• Members of the Provincial Nominee Class who fall within the Express Entry Stream of a Provincial Nominee Program (“PNP”).

Express Entry applicants are selected to receive an ITA based on how many points they are assigned under the Comprehensive Ranking System (“CRS”).

As of the date of this article, CIC has issued a total of 26 rounds of ITAs.  A summary of these Express Entry rounds appears below:

• In Round #1 (January 31, 2015), CIC issued 779 ITAs.  Applicants in this round were required to receive at least 886 CRS points.
• In Round #2 (February 7, 2015), CIC issued 779 ITAs.  Applicants in this round were required to receive at least 818 CRS points.
• In Round #3 (February 20, 2015), CIC issued 849 ITAs.  Applicants in this round were required to receive at least 808 CRS points.
• In Round #4 (February 27, 2015), CIC issued 1187 ITAs.  Applicants in this round were required to receive at least 735 CRS points.
• In Round #5 (March 20, 2015), CIC issued 1620 ITAs.  Applicants in this round were required to receive at least 481 CRS points.
• In Round #6 (March 27, 2015), CIC issued 1637 ITAs.  Applicants in this round were required to receive at least 453 CRS points.
• In Round #7 (April 10, 2015), CIC issued 925 ITAs.  Applicants in this round were required to receive at least 469 CRS points.
• In Round #8 (April 17, 2015), CIC issued 715 ITAs.  Applicants in this round were required to receive at least 453 CRS points.
• In Round #9 (May 22, 2015), CIC issued 1361 ITAs.  Applicants in this round were required to receive at least 755 CRS points.
• In Round #10 (June 12, 2015), CIC issued 1501 ITAs.  Applicants in this round were required to receive at least 482 CRS points.
• In Round #11 (June 26, 2015), CIC issued 1575 ITAs.  Applicants in this round were required to receive at least 469 CRS points.
• In Round #12 (July 10, 2015), CIC issued 1516 ITAs.  Applicants in this round were required to receive at least 463 CRS points.
• In Round #13 (July 17, 2015), CIC issued 1581 ITAs.  Applicants in this round were required to receive at least 451 CRS points.
• In Round #14 (August 7, 2015), CIC issued 1402 ITAs.  Applicants in this round were required to receive at least 471 CRS points.
• In Round #15 (August 21, 2015), CIC issued 1523 ITAs.  Applicants in this round were required to receive at least 456 CRS points.
• In Round #16 (September 8, 2015), CIC issued 1517 ITAs.  Applicants in this round were required to receive at least 459 CRS points.
• In Round #17 (September 18, 2015), CIC issued 1545 ITAs.  Applicants in this round were required to receive at least 450 CRS points.
• In Round #18 (October 2, 2015), CIC issued 1530 ITAs.  Applicants in this round were required to receive at least 450 CRS points.
• In Round #19 (October 23, 2015), CIC issued 1502 ITAs.  Applicants in this round were required to receive at least 489 CRS points.
• In Round #20 (November 13, 2015), CIC issued 1506 ITAs.  Applicants in this round were required to receive at least 484 CRS points.
• In Round #21 (November 27, 2015), CIC issued 1559 ITAs.  Applicants in this round were required to receive at least 472 CRS points.
• In Round #22 (December 4, 2015), CIC issued 1451 ITAs.  Applicants in this round were required to receive at least 461 CRS points.
• In Round #23 (December 18, 2015), CIC issued 1503 ITAs.  Applicants in this round were required to receive at least 460 CRS points.
• In Round #24 (January 6, 2016), CIC issued 1463 ITAs.  Applicants in this round were required to receive at least 461 CRS points.
• In Round #25 (January 13, 2016), CIC issued 1518 ITAs.  Applicants in this round were required to receive at least 453 CRS points.
• In Round #26 (January 27, 2016), CIC issued 1468 ITAs.  Applicants in this round were required to receive at least 457 CRS points.

The lowest minimum CRS score that was previously eligible to receive an ITA was 450 points, which occurred in rounds 17 and 18.  However, the minimum CRS score subsequently rose to over 480 in the rounds 19 and 20.

This was still a low enough score for a candidate to be selected without a Labour Market Impact Assessment or a nomination under a provincial nominee program Express Entry stream.  However, many applicants were hoping that the minimum CRS score would continue to drop before the end of 2015; this clearly did not occur.

Fortunately, the minimum CRS score appears to be dropping again.  The last two rounds (rounds 25 and 26) have required minimum CRS scores (453 points and 457 points) that have approached the levels used in rounds 17 and 18.

As a result of the Paris and San Bernadino attacks, the United States began closely scrutinizing its Visa Waiver Program (“VWP”).  Of course, Ms. Tashfeen Malik (one of the San Bernadino attackers) entered the United States under K-1 status, using an actual fiancee visa that she had obtained from a United States consulate.  Her husband, Syed Farook, was a United States citizen.  In other words, neither attacker had actually used the VWP to enter the United States.

In any event, reforms to the VWP were included in the Consolidated Appropriations Act, 2016 [Public Law 114-113] (the “Act”), which President Obama signed into law on December 18, 2015.  The two most significant changes to the VWP, as a result of the Act, are as follows:

• It requires that all VWP applicants be in possession of machine-readable passports. Beginning on April 1, 2016, the Act also requires that all passports must be electronic and fraud resistant, and must contain relevant biographic and biometric information. Governments of participating VWP countries must certify that they meet these requirements by April 1, 2016, and must also certify by October 1, 2016 that they require these passports for entry into their countries.
• More importantly, any individual who is a dual citizen of Iran, Iraq, Sudan (but not including South Sudan), or Syria, or who has visited any of those countries since March 1, 2011, is ineligible for travel to the United States under the VWP.  In other words, an Iranian citizen who also holds United Kingdom citizenship will no longer be eligible to use the VWP.  The Department of Homeland Security or Department of State may also designate additional countries as “areas of concern” or state sponsors of terrorism in the future, and if they do, similar restrictions will apply to individuals from those countries as well.

A VWP prohibition also applies to any individual (regardless of citizenship) who has visited Iran, Iraq, Sudan, or Syria since March 1, 2011.  However, an exception to this prohibition (but not the dual national prohibition) applies to individuals who are either a member of the military of a VWP country or a full-time employee of the federal government of a VWP country, who has traveled to one of the excluded countries on official orders.  In other words, it not sufficient to merely be a member of the military or a federal government employee of a VWP country; the individual must also have traveled to the excluded country on official orders.

On January 21, 2016, the Department of Homeland Security (“DHS”) and Department of State (“DOS”) issued a joint statement addressing these changes (the “Joint Statement”).  In this Joint Statement, DHS/DOS stated that (as of that date) travelers who currently had a valid Electronic System for Travel Authorization (“ESTA”) and who had previously indicated on their ESTA application that they held dual nationality with one of the four excluded countries would have their current ESTAs revoked.

The Joint Statement also stated that, under the new law, the Secretary of Homeland Security had the authority to waive these restrictions, if he determined that such a waiver was in the law enforcement or national security interests of the United States; such waivers would be granted only on a case­-by-­case basis.  As a general matter, categories of travelers who may be eligible for a waiver include:

• Individuals who traveled to Iran, Iraq, Sudan or Syria on behalf of international organizations, regional organizations, and subnational governments on official duty;
• Individuals who traveled to Iran, Iraq, Sudan or Syria on behalf of a humanitarian NGO on official duty;
• Individuals who traveled to Iran, Iraq, Sudan or Syria as a journalist for reporting purposes;
• Individuals who traveled to Iran for legitimate business­-related purposes following the conclusion of the Joint Comprehensive Plan of Action (July 14, 2015); and
• Individuals who have traveled to Iraq for legitimate business­-related purposes.

Whether ESTA applicants will receive a waiver will be determined on a case­-by-­case basis, consistent with the terms of the law. DHS/DOS will also continue to explore whether and how the waivers can be used for dual nationals of Iraq, Syria, Iran and Sudan.

It should be mentioned that a dual national of one of the excluded countries (Iran, Iraq, Sudan, or Syria) who also holds Canadian citizenship will not be subject to any additional restrictions since Canada is not a participant of the VWP.  Canadian citizens are visa exempt under 8 CFR 212.1(a); this visa exemption exists independently from the VWP.

As previously mentioned, when the Ontario Immigrant Nominee Program (“OINP”) announced the termination of its Investor Stream on October 29, 2015, it promised that it would create new Entrepreneur and Corporate Streams to replace it.  On December 18, 2015, the OINP published complete eligibility criteria and application guidelines for these new business streams.  Details of both are provided below.

The Corporate Stream

Overview

The Corporate Stream is intended to support established international corporations looking to expand into Ontario or buy an existing business.  The OINP is currently accepting applications under this stream.

An eligible corporation begins the process by submitting an application under the Corporate Stream.  If the application is approved, the corporation will be required to sign a Performance Agreement, which outlines its commitments to invest and create jobs in Ontario.  Key staff will then be issued temporary work permit support letters, which they can use to obtain work permits.

Once the key staff have arrived in Ontario, the corporation has up to 20 months from the date that they arrive to implement the business plan, actively manage the business, and meet all of the commitments outlined in the Performance Agreement.  All permanent full-time jobs that have been created must have been continuously filled for at least 10 months, prior to the corporation’s submission of its Final Report.

The applicant corporation is responsible for filing a Final Report with the OINP between 18 and 20 months after the key staff have arrived in Ontario with their valid work permits.  The Final Report must be submitted to the OINP in order to initiate the nomination process.

If the corporation is successful in meeting the commitments outlined in its Performance Agreement, the key staff will be eligible to apply for nomination.  If nominated by the OINP, these key staff members may apply for permanent residence under the Provincial Nominee Class.

Eligibility Requirements

Corporate/Investment Requirements

To be eligible under the Corporate Stream, the corporation must meet the following requirements:

• The corporation must have already been established for at least 36 months at the time of the application.
• The corporation must invest a minimum of $5 million CAD in a new or existing Ontario business.  The investment funds must have been obtained from lawful sources.
• The proposed investment activity must be of significant economic benefit to Ontario.
• If the corporation is purchasing an existing Ontario business, the following additional criteria apply: (1) the acquired business must have been in continuous operation by the same owner for the preceding 60 months, (2) the purchase must completely transfer ownership from the previous owner(s) to the corporation, (3) the Ontario business must not have been previously owned/operated by a current or former OINP business stream nominee, (4) the proposed business plan must intend to grow the business (buy and hold business plans with no intent to grow the business are not permitted), (5) the corporation must maintain, at a minimum, the current wage levels and employment terms of existing staff, (6)  the corporation must preserve all existing permanent full-time jobs, and (7) the corporation must also satisfy the job creation requirement (see below).
• The corporation must create 5 full-time, permanent positions for Canadian citizens or permanent residents for each key staff member nominated.  Positions must be paid or at above the prevailing wage for that position.  A full time position means a position that consists of at least 1,560 hours of paid employment in a 12 month period.  However, the following are not considered permanent, full-time employees even if the employee works 1,560 hours in a 12 month period:  (1) seasonal or part-time employees, (2) subcontactors or agency workers, or (3) employees who do not work on the corporation’s premises (i.e. employees who work from home or who telecommute).
• There must be a clear structural linkage between the parent corporation and the proposed new business in Ontario (i.e. subsidiary, branch, or affiliate of the parent).
• The business must intend to make a profit through the sale of goods and/or services.
• Primary income sources must be from active (earned) income, not passive (unearned) income.
• The proposed business must comply with Canadian legal requirements and all regulatory industry and licencing requirements, which govern its legitimate operation.
• The proposed business must comply with all provincial labour laws, including employment standards, health and safety, and labour relations legislation.
• The proposed business must be considered a permanent business in Ontario.
• The corporation must submit a business plan with its application, prepared in accordance with the OINP’s requirements.

Please note that additional criteria and due diligence requirements apply where the proposed business is a land development or leasehold company.  However, this is outside the scope of the present article.

Ineligible Business Types

As the OINP will not process applications for proposed businesses that are likely to have little or no long term economic benefit.  Therefore, the proposed Ontario business may not be:

• Existing Franchises in Ontario (new foreign franchises expanding into Ontario are permitted) [Greater Toronto Area ("GTA") only];
• Gas Stations [GTA only];
• Tire Recycling;
• Scrap Metal Recycling;
• Pawnbrokers;
• Bed and Breakfasts [GTA only];
• Holding Companies;
• Laundromats;
• Automated Car Wash Operations;
• Payday loan and related businesses; and
• Businesses which have been previously owned / operated by current or former OINP business stream nominees

Key Staff Requirements

Applicant corporations may request up to 5 key staff members who will establish the business in Ontario and who are seeking a provincial nomination to permanently relocate to the province.  All key staff must meet Stage 1 requirements at the time of the application in order for the complete application to be approved.  Key staff must also meet additional nomination requirements once the business has met commitments outlines in the Performance Agreement (Stage 2) in order to be considered eligible for provincial nomination.

Stage 1 Key Staff Requirements

• Key staff must be essential to the establishment and operation of the proposed business.
• Key staff must be in a senior, executive, managerial, or specialized knowledge capacity (National Occupational Classification (“NOC”) level 0 or A) in the applicant corporation’s existing business.
• Only one key staff in NOC A can be proposed.
• The key staff must have at least 36 months of experience in the last 60 months, in same position that they will hold in the proposed Ontario business, with the applicant corporation.  They must have been continuously working for the applicant corporation in that position during the 12 months prior to the submission of the application.
• Key staff must not have an immediate family relationship with any member of the corporation’s Executive Board, Board of Directors, or a shareholder owing more than 10% equity in the applicant corporation. Immediate family members include: spouse, mother, father, sister, brother, grandparents, and the spouse’s immediate family members.
• Key staff must not hold any equity in the applicant corporation, except where it was obtained as part of the remuneration in accordance with his or her employment contract, in which case the equity must be less than 10% of the applicant corporation’s business.
• The position to be assumed in the proposed Ontario business must be a permanent, full-time position and must meet prevailing wage levels.

Stage 2 Key Staff Requirements

After the corporation has met its Performance Agreement commitments, key staff will be required to meet the following additional requirements in order to be nominated for permanent residence:

• Key staff must be in a position for which they were approved by the OINP and carrying out the approved job duties.
• Key staff must physically reside in Ontario for at least 75% of each year (9 months out of the year) that they are in Ontario under a temporary work permit.
• Key staff must have a language proficiency equivalent to the Canadian Language Benchmark (“CLB”) Level 5.

The Entrepreneur Stream

Overview

The Entrepreneur Stream is designed to support individuals from countries who are looking to implement a new business idea or buy an existing business in the Province of Ontario.  However, unlike the Corporate Stream, individual entrepreneurs may not immediately submit an application under the Entrepreneur Stream. This is because the Entrepreneur Stream is subject to an Expression of Interest (“EOI”) System, which is similar to the Government of Canada’s Express Entry System.

Prospective entrepreneurs may submit an EOI to indicate their interest in being considered by the OINP they but will not be permitted to apply under the Entrepreneur Stream unless they receive an Invitation to Apply (“ITA”).  If the entrepreneur receives an ITA from the OINP, he or she can submit a complete application under the Entrepreneur Stream.

Under the EOI System, applicants are selected based on the number of ranking points that they receive, rather than when they file their application.  As a result, an applicant who submits an EOI after another applicant but who has a higher number of ranking points will receive an ITA before that other applicant.

Once an entrepreneur has received an ITA, has filed a complete application, and has been approved, he or she then signs a Performance Agreement with the OINP.  This Performance Agreement outlines the commitments that the entrepreneur has made to invest and create jobs in Ontario.  The OINP will then issue a temporary work permit support letter that the entrepreneur can use to apply for a temporary work permit, which will allow him or her to establish the proposed business in Ontario.

The entrepreneur must arrive in Ontario using their temporary work permit within 12 months from the date of their letter of confirmation.  Upon arrival, the entrepreneur will have up to 20 months from that date to implement the business plan and satisfy all of the commitments contained in the Performance Agreement.

The required permanent full-time jobs must be filled within 10 months from the date of the entrepreneur’s arrival in Canada they must remain filled for at least 10 months prior to the submission of the Final Report.  The entrepreneur will be responsible for filing a Final Report to the OINP between 18 and 20 months after he or she has arrived in Canada.  This Final Report must be submitted to the OINP in order to initiate the nomination process.

If the entrepreneur is successful in meeting the commitments described in the Performance Agreement, he or she will receive a Confirmation of Nomination, which may be used to apply for permanent residence.

Eligibility Requirements

Minimum Eligibility Requirements

There are 5 factors that have minimum eligibility requirements for the entrepreneur and, if applicable, his or her business partner:

• Experience – Applicants must have at least 36 months of full-time business experience in the last 60 months, with the last 12 months in either active general business administration or in an area of expertise related to the proposed business opportunity.  This experience must be as a business owner or senior manager.
• Net Worth - If the proposed business will be located in the GTA, the entrepreneur must have a minimum net worth of $1,500,000.00.  If the proposed business will be located outside the GTA, the entrepreneur must have a minimum net worth of $800,000.00.  If the proposed business will be in the Information and Communications Technology/Digital Communications Sector (regardless of where the  business is established in Ontario), the entrepreneur must have a net worth of $800,000.00.
• Personal Investment Funds – If the proposed business will be located in the GTA, the entrepreneur must make a minimum personal investment of $1,000,000.00 and have a minimum equity ownership of $33.3%.  If the proposed business will be located outside the GTA, the entrepreneur must make a minimum personal investment of $500,000.00 and have a minimum equity ownership of 33.3%.  If the proposed business will be in the Information and Communications Technology/Digital Communications Sector (regardless of where the  business is established in Ontario), the entrepreneur must make a minimum personal investment of $500,000.00 and have a minimum equity ownership of 33.3%.
• Job Creation – The entrepreneur must commit to creating at least 2 permanent full-time jobs for Canadian citizens or permanent residents.  Positions must be paid or at above the prevailing wage for that position.  A full-time position means a position that consists of at least 1,560 hours of paid employment in a 12 month period.  However, the following are not considered permanent, full-time employees even if the employee works 1,560 hours in a 12 month period:  (1) seasonal or part-time employees, (2) subcontractors or agency workers, or (3) employees who do not work on the corporation’s premises (i.e. employees who work from home or who telecommute).
• Exploratory Visit – If the entrepreneur purchases an existing business, he or she must make at least one business-related visit to Ontario with the 12 months preceding the submission of the application.

The entrepreneur must meet the minimum requirements for all of the above factors in order to be eligible to apply under the Entrepreneur Stream.  If the entrepreneur is applying with a business partner who is also seeking nomination, the business partner must also meet all of the minimum requirements for each factor described above.  For example, if the proposed business is located in the GTA, both the entrepreneur and the business partner must each investment $1,000,000.00 (a total of $2,000,000.00) and each create at least 2 permanent full time jobs (a total of 4).

General Requirements for the Proposed Business

In addition to the above minimum requirements, the proposed business must meet the following general requirements:

• The business must intend to make a profit through the sale of goods and/or services.
• Primary income sources must be from active (earned) income, not passive (unearned) income.
• The proposed business must comply with Canadian legal requirements and all regulatory industry and licencing requirements, which govern its legitimate operation.
• The proposed business must comply with all Ontario labour laws, including employment standards, health and safety, and labour relations legislation.
• The proposed business must be considered a permanent business in Ontario.
• Any third party investors must be a Schedule I or Schedule II bank or an institutional investor.

If the entrepreneur is purchasing an existing Ontario business, the following additional criteria apply:

• The Ontario business must have been in continuous operation by the same owner for the preceding 60 months
• The purchase must completely transfer ownership of the Ontario business from the previous owner(s) to the entrepreneur, the business partner, and/or third party investor(s).
• The Ontario business must not have been previously owned/operated by a current or former OINP business stream nominee.
• The entrepreneur must preserve all existing permanent full-time jobs and create 2 additional permanent full-time jobs.
• The entrepreneur must maintain, at a minimum, the current wage levels and employment terms of existing staff.
• The proposed business plan must demonstrate that the entrepreneur intends to grow the business.  Buy and hold business plans with no intent to grow the business are not permitted in the Entrepreneur Stream.

As with the Corporate Stream, the OINP will not process applications for proposed businesses that are likely to have little or no long term economic benefit.  Therefore, the proposed Ontario business may not be:

• Existing Franchises in Ontario (new foreign franchises expanding into Ontario are permitted) [Greater Toronto Area ("GTA") only];
• Gas Stations [GTA only];
• Tire Recycling;
• Scrap Metal Recycling;
• Pawnbrokers;
• Bed and Breakfasts [GTA only];
• Holding Companies;
• Laundromats;
• Automated Car Wash Operations;
• Payday loan and related businesses; and
• Businesses which have been previously owned / operated by current or former OINP business stream nominees

Nomination Requirements

The entrepreneur will be required to satisfy additional nomination requirements in order to be nominated by the OINP, once he or she has established the Ontario business and met the commitments described in the Performance Agreement.  The entrepreneur does not need to satisfy these criteria at the time of the initial application filing but must do so when applying for nomination after the business has been established.  The nomination criteria are as follows:

• The entrepreneur must have a language proficiency equal to CLB Level 5 or equivalent.
• The entrepreneur must be physically residing in Ontario for at least 75% of each year (9 months out of the year) that they are in Ontario establishing his or her business under a temporary work permit.

EOI Scoring Factors and Breakdown of Ranking Points

When a proposed entrepreneur submits an EOI, he or she will receive a total ranking score.  These ranking points may be earned in three categories: (1) experience, (2) investment, and (3) human capital; the maximum score available is 160 points.  These three categories are briefly described below.

Experience Factors

The maximum number of points awarded for experience factors is 50 points.

Applicants may claim points based on past business ownership or senior management experience during the last 60 months.  If an applicant has both business ownership experience and senior management experience during the past 60 months, he or she must use only 1 of these 2 types of experiences in the EOI.

The maximum number of points awarded for experience as a business owner is 25 points.  A business owner must have owned at least 33.3% of the business during the period claimed. A business owner must also have played an active role, meaning that he or she was personally involved in the day-to-day operations of the business and had direct involvement in decision making.

The maximum number of points awarded for experience as a senior manager is 20 points.  A senior manager’s role must have included senior decision-making responsibilities in areas such as operations, sales, finance, marketing, distribution, human resources, research and development, etc.

Entrepreneurs may also claim additional points based on past specific experiences in a high growth business and/or export trade business:

• High Growth Business - Experience in a business that experienced at least a 20% increase in revenue in 2 consecutive years.  Applicants will receive 15 points for this specific experience.
• Export Trade Business – Experience in a business exporting at least 20% of goods/services to a foreign market.  Applicants will receive 25 points for this specific experience.

Investment Factors

The maximum number of points awarded for investment factors is 90 points.  Applicants may claim points for net worth, investment amount, job creation, exploratory visits, key sectors, and NOC classification of the jobs that the proposed Ontario business will create:

• Net Worth – Applicants may claim points based on total net worth, up to a maximum of 15 points.  Personal net worth must be legally obtained and verifiable.
• Investment Amount – Applicants may claim points based on the total personal investment amount that will be made into the proposed Ontario business, up to a maximum of: (1) 20 points for a proposed Ontario business located within the GTA, or (2) 25 points for a proposed Ontario business located outside the GTA or in the Information and Communications Technology/Digital Communications Sector.  However, the following are not considered eligible investments: (1) cash, cash equivalents, and working capital (i.e. uncommitted funds) held by the Ontario business, and (2) wage payments made to the entrepreneur and his or her family members.
• Job Creation – Applicants may claim points based on the total number of permanent full time jobs that the proposed Ontario business will create for Canadian citizens or permanent residents, up to a maximum of 20 points.
• Exploratory Visits – Applicants may claim points based on any business-related visits to Ontario within the 1 year period preceding the submission of the EOI, up to a maximum of 5 points.  However, there is no mandatory requirement for any exploratory visits unless the entrepreneur is purchasing an existing business.
• Key Sectors Targeted – Applicants may claim points depending on whether the proposed Ontario business is in a key sector, as determined by the Government of Ontario, up to a maximum of 10 points.  However, there is no mandatory requirement that the proposed Ontario business be on one of these key sectors.  Key sectors currently defined as economic priorities for Ontario are: (1) aerospace, (2) automotive. (3) financial services, (4) food and beverage manufacturing, (5) information and communications technology, (6) life sciences, (7) mining, (8) tourism investment, and (9) water technology.
• NOC 0, A, or B Jobs – Applicants may claim points based on the NOC 0, A, or B jobs that the proposed Ontario business will create for Canadian citizens or permanent residents, up to a maximum of 15 points.  However, there is no mandatory requirement that the 2 newly created jobs actually be in NOC 0, A, or B.

Human Capital Factors

The maximum number of points that may be awarded for human capital factors is 20 points.  Applicants may claim points based on their level of education and official language ability:

• Level of Education – Applicants may claim points based on their highest level of post-secondary education completed, up to a maximum of 5 points.  However, there is no minimum education requirement to be considered for the Entrepreneur Stream.  Post-secondary education refers to full-time studies from a licenced post-secondary institution that leads to a credential that is the equivalent to a Canadian degree, diploma, or certificate.  If an entrepreneur receives an ITA, and claiming to have completed 6 months or more of post-secondary education, they will be required to provide evidence of this education when they submit their complete application, including their Educational Credential Assessment results.
• Official Language Ability -Applicants may claim points based on their proficiency in English or French, up to a maximum of 15 points.   Although there is no minimum mandatory language requirement to be considered for the Entrepreneur Stream at the EOI stage, language proficiency equal to CLB Level 5 will be required at the time that they apply to be nominated by the OINP.

Since Express Entry began on January 1, 2015, Citizenship and Immigration Canada (“CIC”) has issued several rounds of Invitations to Apply (“ITAs”).  An ITA allows a foreign national to submit their application for permanent residence under one of the following categories:

• The Federal Skilled Worker (“FSW”) Class;
• The Canadian Experience Class (“CEC”);
• The Federal Skilled Trades (“FST”) Class; or
• Members of the Provincial Nominee Class who fall within the Express Entry Stream of a Provincial Nominee Program (“PNP”).

Express Entry applicants are selected to receive an ITA based on how many points they are assigned under the Comprehensive Ranking System (“CRS”).

As of the date of this article, CIC has issued  a total of 20 rounds of ITAs.  A summary of these Express Entry rounds appears below:

• In Round #1 (January 31, 2015), CIC issued 779 ITAs.  Applicants in this round were required to receive at least 886 CRS points.
• In Round #2 (February 7, 2015), CIC issued 779 ITAs.  Applicants in this round were required to receive at least 818 CRS points.
• In Round #3 (February 20, 2015), CIC issued 849 ITAs.  Applicants in this round were required to receive at least 808 CRS points.
• In Round #4 (February 27, 2015), CIC issued 1187 ITAs.  Applicants in this round were required to receive at least 735 CRS points.
• In Round #5 (March 20, 2015), CIC issued 1620 ITAs.  Applicants in this round were required to receive at least 481 CRS points.
• In Round #6 (March 27, 2015), CIC issued 1637 ITAs.  Applicants in this round were required to receive at least 453 CRS points.
• In Round #7 (April 10, 2015), CIC issued 925 ITAs.  Applicants in this round were required to receive at least 469 CRS points.
• In Round #8 (April 17, 2015), CIC issued 715 ITAs.  Applicants in this round were required to receive at least 453 CRS points.
• In Round #9 (May 22, 2015), CIC issued 1361 ITAs.  Applicants in this round were required to receive at least 755 CRS points.
• In Round #10 (June 12, 2015), CIC issued 1501 ITAs.  Applicants in this round were required to receive at least 482 CRS points.
• In Round #11 (June 26, 2015), CIC issued 1575 ITAs.  Applicants in this round were required to receive at least 469 CRS points.
• In Round #12 (July 10, 2015), CIC issued 1516 ITAs.  Applicants in this round were required to receive at least 463 CRS points.
• In Round #13 (July 17, 2015), CIC issued 1581 ITAs.  Applicants in this round were required to receive at least 451 CRS points.
• In Round #14 (August 7, 2015), CIC issued 1402 ITAs.  Applicants in this round were required to receive at least 471 CRS points.
• In Round #15 (August 21, 2015), CIC issued 1523 ITAs.  Applicants in this round were required to receive at least 456 CRS points.
• In Round #16 (September 8, 2015), CIC issued 1517 ITAs.  Applicants in this round were required to receive at least 459 CRS points.
• In Round #17 (September 18, 2015), CIC issued 1545 ITAs.  Applicants in this round were required to receive at least 450 CRS points.
• In Round #18 (October 2, 2015), CIC issued 1530 ITAs.  Applicants in this round were required to receive at least 450 CRS points.
• In Round #19 (October 23, 2015), CIC issued 1502 ITAs.  Applicants in this round were required to receive at least 489 CRS points.
• In Round #20 (November 13, 2015), CIC issued 1506 ITAs.  Applicants in this round were required to receive at least 484 CRS points.

Although the lowest CRS score eligible to receive an ITA has been 450 points (which occurred in rounds 17 and 18, the minimum CRS score has risen to over 480 in the last two rounds (rounds 19 and 20).  This is still a low enough score for a candidate to be selected without a Labour Market Impact Assessment or a nomination under a provincial nominee program Express Entry stream.  However, many applicants were hoping that the minimum CRS score would continue to drop for the remainder of the year; this clearly did not occur.

On November 16, 2015, the Ontario Immigrant Nominee Program (“OINP”), formerly known as the Ontario Provincial Nominee Program, announced that it has exhausted its base stream allocation for 2015. Annual provincial nomination targets for each year are determined by Citizenship and Immigration Canada (“CIC”). For 2015, the OINP received a base stream allocation of 2,500 nominations.

The OINP’s two new Express Entry Streams (the Ontario Human Capital Priorities Stream and the Ontario French Speaking Skilled Worker Stream) are not considered base streams and are therefore still available. The Ontario Human Capital Priorities Stream is for English-speaking skilled workers who want to live and work permanently in Ontario. The Ontario French-Speaking Skilled Worker Stream is for French-Speaking skilled workers who have strong English language abilities and who want to live and work permanently in Ontario. However, applicants seeking nominations under one of these OINP Express Entry streams must first submit their profile under the Federal Express Entry Program and then wait to receive a Notice of Invitation from the OINP.

For applicants who have already submitted an application to the OINP but have not yet received a decision, their application will be finalized in 2016, under next year’s allocation. If an employer’s pre-screen application has been approved, the OINP will also continue to accept the corresponding nominee application(s) under the Foreign Worker Stream and International Student with a Job Offer Stream.

Between November 16th, 2015 and January 3, 2016, the program will not accept any new employer pre-screen applications or applications under the Master’s Stream or PhD Stream. Any applications received during this time period will be returned to the applicant.

The OINP will again begin accepting new applications under all base streams on January 4, 2016.

On October 29, 2015, the Ontario Immigrant Nominee Program (“OINP”), formerly the Ontario Provincial Nominee Program, announced that the Ontario Ministry of Citizenship, Immigration and International Trade is redesigning its OINP business streams. As a result, it has terminated its existing Investor Stream.

The Investor Stream allowed certain investors to obtain a nomination certificate from the OINP if:

• They obtained an official endorsement from an Ontario ministry for the investment and the number of positions requested;
• The size of the investment was at least $3 million CAD;
• The investment would create at least five net permanent, full-time jobs for Canadian citizens or permanent residents located in Ontario; and
• The investment was not a passive type of investment.

As of October 29, 2015, new applications under Investor Stream are no longer being accepted. However, all Investor Stream applications that were received on or before October 29, 2015 will not be affected and will be processed under the Investor Stream criteria as it applied on the date of the application.

Applications for its redesigned Corporate Stream and Entrepreneur Stream will be accepted in the Fall of 2015. A brief summary of both redesigned business streams appears below.

The Corporate Stream is designed for corporations who have a viable business activity that will bring significant economic benefit to the Province of Ontario. The following criteria will apply:

• The corporation must invest a minimum of $5 million CAD in a new or existing business;
• Key staff seeking nomination must be currently employed with the corporation and be essential to the operation of the business in Ontario;
• The corporation must create five full-time, permanent positions for Canadian citizens or permanent residents per nominee position; and
• Key staff nominees will have two years to demonstrate that they satisfy the minimum language requirement prior to receiving a nomination for permanent residence.

Other criteria (to be determined) may also apply to the Corporate Stream.

The Entrepreneur Stream is designed for applicants who have a viable business activity that will bring significant economic benefit to the Province of Ontario. An applicant (and one business partner) may initially apply for a temporary work permit in order to establish a proposed business, if the OINP approves his or her proposal. Once the proposed business has been successfully established, the applicant and one business partner may be eligible for nomination by the Province of Ontario. The following criteria will apply:

• A minimum investment of up to $500,000 CAD will be required for each potential nominee applicant;
• A minimum net worth of $800,000 CAD will be required for each potential nominee applicant;
• If required, the entrepreneur may identify a business partner for nomination to assist in the establishment of the business in Ontario;
• The entrepreneur and/or business partner will have two years to meet minimum program requirements (including language) prior to receiving a nomination for permanent residence; and
• The potential nominee must create at least two full-time, permanent jobs for Canadian citizens or permanent residents.

Other criteria (to be determined) may also apply to the Entrepreneur Stream.

These redesigned business streams are a welcome change, especially the Entrepreneur Stream, which will allow individual entrepreneurs to seek a nomination certificate without having to obtain a prior endorsement from an Ontario ministry or to invest $1 million CAD in the Province of Ontario.

Background

As was previously mentioned, Jason Kenney, Minister of Employment and Social Development, and Chris Alexander, Minister of Citizenship and Immigration, announced changes to Canada’s Temporary Foreign Worker (“TFW”) program on June 20, 2014.  Among these changes was a proposal to impose fines of up to $100,000 on employers who violated the TFW program.  The names of employers who were fined, and the amount of the fine, would also be published on the public list of violators.

At the end of September 2014, Employment and Social Development Canada (“ESDC”) published a discussion paper, which proposed to implement a system of Administrative Monetary Penalties (“AMPs”) for violations of the TFW program.  It also proposed to increase the maximum ban for employers who violate the TFW program from two years to ten years (a permanent ban was also being considered).

On June 12, 2015, the Minister of Citizenship and Immigration published amendments (the “Amendments”) to the Immigration and Refugee Protection Regulations (“IRPR”), which were intended to implement these proposed changes.  These Amendments will now come into force on December 1, 2015.

Overview

According to R209.94, the purpose of AMPs is to encourage compliance with the provisions of the Immigration and Refugee Protection Act (“IRPA”) and the IRPR, and not to punish.  According to R209.95(1), an employer who fails to comply with one of the conditions listed in Schedule 2, Table 1, if the failure to do so is not justified under the IRPR, commits a violation and:

1. Is liable to an administrative monetary penalty of an amount that is determined in accordance with R209.98 [see Schedule 2, Table 2] or if it is determined under that section that there is no penalty, is issued a warning informing the employer that there is no administrative monetary penalty for the violation but that the violation will be considered in the calculation of the total number of points under R209.991(1)(a)(i) [see Schedule 2, Tables 4 and 5] for any subsequent violation; and
2. If applicable, is ineligible to employ a foreign national for whom a work permit is required for the period determined in accordance with R209.99 [Schedule 2, Table 3].

Calculation of AMPs

The AMPs will be determined by the Minister of Employment and Social Development (“ESDC”) or a Citizenship and Immigration Canada (“CIC”) officer based on:

1. The type of violation;
2. Whether the employer is an individual, small business, or large business;
3. The employer’s history of violations that occurred on or after December 1, 2015; and
4. The severity of the violation according to a system of points.

AMPs are cumulative, and separate AMPs will be imposed for each violation.

According to R209.93, the term “small business” is defined as any business, including its affiliates, that has fewer than 100 employees or less than $5 million in annual gross revenues at the time a request for an assessment is received, or if no such request is made, at the time a copy of an offer of employment for a work permit application is provided to the Minister.  The term “large business” is defined as any business that does not meet the definition of “small business.”

According to R209.991, the total number of points in respect of each violation is determined by adding the points resulting from the employer’s compliance history [Schedule 2, Table 4] to the points resulting from the severity of the violation [Schedule 2, Table 5].  However, where the employer has made an acceptable voluntary disclosure, the total number of calculated points may be reduced as follows:

1. If the total number is four or more, four points will be subtracted from the total; or
2. If the total number is less than four, the value will be replaced with a value of zero.

The voluntary disclosure made by an employer with respect to the commission of a violation by the employer is considered acceptable if:

1. The disclosure is complete; and
2. At the time the voluntary disclosure is made, the employer’s compliance is not being reviewed and no enforcement action related to an offence under IRPA is being undertaken against the employer.

However, a CIC officer or the Minister of ESDC may still conclude that the voluntary disclosure is not acceptable after considering

1. The severity of the impact of the violation on the foreign national;
2. In the case of an LMIA-exempt work permit, the severity of the impact of the violation on the Canadian economy, or in the case of an LMIA-based work permit, the severity of the impact of the violation on the Canadian labour market;
3. Whether the disclosure was made in a timely manner;
4. The number of times an acceptable voluntary disclosure is made by the employer; and
5. The nature of the condition with which the employer failed to comply.

The maximum AMP is $100,000 per violation and the total that can be imposed is capped at $1 million on a single notice of final determination.  In addition, the total AMPs imposed on a single employer cannot exceed $1 million in the one-year period preceding the date of the final determination.

There is no limitation on the collections period for AMPs.  A new Labour Market Impact Assessment (“LMIA”) or work permit application will not be accepted if the employer has not paid an outstanding AMP or is not complying with a payment agreement (if it has entered into one).

Rules Applicable to Violations

As violations are calculated based on the number of violations that have occurred, the following rules will determine when certain conduct will be treated as a separate violation:

1. A violation of a condition that affects more than one foreign national constitutes a separate violation for each foreign national affected [R209.96 (1)].
2. A violation of any one of the following conditions constitutes a separate violation:
• To provide the foreign national with employment in the same occupation as the occupation that is set out in the foreign national’s offer of employment;
• To provide the foreign national with wages that are substantially the same as — but not less favourable than — those set out in the foreign national’s offer of employment; and
• To provide the foreign national with working conditions that are substantially the same as — but not less favourable than — those set out in the foreign national’s offer of employment [R209.96(2)]
3. For employers who employ foreign nationals as live-in caregivers, a violation of either one of the following conditions constitutes a separate violation:
• To ensure that the foreign national resides in a private household in Canada,
• To ensure that the foreign national provides child care, senior home support care or care of a disabled person in that household without supervision [R209.96(3)].
4. A violation of the condition of making reasonable efforts to provide a workplace that is free of abuse within the meaning of R72.1(7)(a) [physical abuse, sexual abuse, psychological abuse, and financial abuse] constitutes a separate violation [R209.96(4)].

Assessment Procedure

If it is assessed during an inspection that a violation has been committed because the employer failed to comply with a condition and that failure was not justified under the IRPR, a preliminary finding must be issued to the employer.  A notice of preliminary finding may be corrected or cancelled before a final determination is made.

After the notice of preliminary finding is issued, employers will be provided the opportunity to make written submissions regarding the information in the notice within 30 days after it is received.  An employer may be granted an extension to this opportunity to respond if the Minister of ESDC or the CIC officer is satisfied that there is a reasonable explanation for requesting a longer period.

The Minister of ESDC or a CIC officer shall issue a notice of final determination if it is determined that a violation was committed because the employer failed to comply with a condition and that failure was not justified.  This determination is final and binding except for judicial review.

Ineligibility to Participate in the TFWP

Employer violations may also result in a ban from future participation in the TFW program.  As of December 1, 2015, the maximum period of ineligibility will change from two years to a permanent ban in the most serious cases. 

According to R209.99(1), the period of ineligibility for a violation is the period set out in Column 2, 3 or 4 of Schedule 2, Table 3.  If a ban is imposed, the duration of the ineligibility can vary from one year to a permanent bar, depending on the circumstances.  According to R209.99(2), the ban begins on the day that the determination is made in respect of the employer.

Publication of Employer’s Information

According to R209.997(1), if the Minister of ESDC or a CIC officer makes a determination under R209.996 that a violation has occurred, the employer’s details will be added to the public list of violators, except where the employer has received only a warning and no AMP has been imposed.  The public list will include the following information:

1. The employer’s name;
2. The employer’s address;
3. The criteria or conditions with which the employer failed to comply;
4. The day on which the determination was made;
5. The eligibility status of the employer; and
6. If applicable:
• The AMP amount, and
• The ineligibility period of the employer.

Conclusion

In light of the increased penalties that will become effective on December 1, 2015, it is critical that employers ensure their compliance with all conditions imposed upon them, in connection with any LMIA-based or LMIA-exempt work permit, and that they continue to comply with these conditions for the duration of the TFWs work permit in Canada.

SCHEDULE 2

VIOLATIONS

TABLE 1
EMPLOYER CONDITIONS

TABLE 2
ADMINISTRATIVE MONETARY PENALTY AMOUNTS

TABLE 3
PERIOD OF INELIGIBILITY

TABLE 4
COMPLIANCE HISTORY

TABLE 5
SEVERITY OF THE VIOLATION

Overview

As previously discussed, Citizenship and Immigration Canada (“CIC”) implemented its Express Entry system on January 1, 2015.  Applicants seeking permanent residence under one of the following classes must now submit an Express Entry Profile and then wait until they receive an Invitation to Apply (“ITA”) before they will be permitted to seek permanent residence:

• The Federal Skilled Worker (“FSW”) Class;
• The Canadian Experience Class (“CEC”);
• The Federal Skilled Trades (“FST”) Class; or
• Members of the Provincial Nominee Class who fall within the Express Entry Stream of a Provincial Nominee Program (“PNP”).

The fourth class describes a foreign national who has received a nomination certificate from a Provincial PNP.  A PNP nomination gives the foreign national an additional 600 Comprehensive Ranking System (“CRS”) points under Express Entry, which makes it much more likely that they will receive an ITA quickly.

When the CIC Express Entry Program began on January 1, 2015, the Ontario Immigrant Nominee Program (the “OINP”), formerly known as the Ontario PNP, still did not have an Express Entry Stream in place.  However, the OINP has now announced two Express Entry Streams: (1) the Human Capital Priorities Stream, and (2) the French-Speaking Skilled Worker Stream.

The Ontario Human Capital Priorities Stream is for English-speaking skilled workers who want to live and work permanently in Ontario. The Ontario French-Speaking Skilled Worker Stream is for French-Speaking skilled workers who have strong English language abilities and who want to live and work permanently in Ontario.

Both Ontario Express Entry Streams require a potential applicant to first qualify under CIC’s Express Entry pool, based on either the FSW Class or the CEC.  This means that they must submit an Express Entry profile with CIC and be accepted into the pool of Express Entry candidates, under either the FSW Class or CEC.

Applicants also may not apply directly to the OINP under either of the Ontario Express Entry Streams.  They must first wait until they receive a Notification of Interest (“NOI”) from Ontario.

Refugee claimants currently in Canada are also not eligible to seek a nomination under either of the Ontario Express Entry Streams.

Provincial Eligibility Criteria

To be eligible to apply under either the Human Capital Priorities Stream or the French-Speaking Skilled Worker Stream, applicants must satisfy the following provincial criteria:

Work Experience

All applicants require a minimum level of work experience:

• If an applicant chooses to be assessed against the FSW criteria, he or she must have a minimum of one year of continuous and full-time employment (1,560 hours or more) or an equal amount in continuous part-time paid work experience in a National Occupation Classification (“NOC”) level 0, A, or B occupation in the past five years from the date of the PT Notification of Interest from Ontario.  The one year minimum of continuous and full-time (or equivalent continuous part-time) employment must have been completed in one specific NOC occupation.
• If an applicant chooses to be assessed against the CEC criteria, he or she must have a minimum of one year of cumulative and full-time employment (1,560 hours or more) or an equal amount in part-time paid work experience in a NOC 0, A, or B occupation in Canada in the past three years from the date of the PT notification of interest from Ontario.

Education

All applicants must have a Canadian Bachelor’s, Master’s or Ph.D. degree or an Educational Credential Assessment (“ECA”) report produced by a designated organization indicating that their foreign education is the equivalent of a Canadian Bachelor’s, Master’s or Ph.D. degree.

Language Requirements

For the Human Capital Priorities Stream, all applicants must have a language level of Canadian Language Benchmark (“CLB”) 7 or above in all language competencies (reading, writing, listening, and speaking) in either English or French.  For the French-Speaking Skilled Worker Stream, all applicants must have a French-language level of CLB 7 or above in all language competencies (reading, writing, listening, and speaking) AND an English-language level of CLB 6 in all competencies.

Acceptable tests for language ability are:

• International English Language Testing (“IELTS”) [General Training Test only] or Canadian English Language Proficiency Index Program (“CELPIP”) [General Test only] for English testing; or
• Test d’Evaluation de Français (“TEF”) for French testing.

Express Entry Ranking

All applicants must score a minimum of 400 CRS points in CIC’s Express Entry system. The applicant’s CRS score must remain at or above 400 during both the Ontario nomination processing stage and at the federal permanent residence processing stage.

Settlement Funds

All applicants must possess sufficient funds and/or income to cover settlement costs in Ontario.  Funds must be unencumbered, readily transferable in a convertible currency, and supported by bank statements. Income may be demonstrated from ongoing employment in Ontario or a valid job offer in Ontario (the applicant must be able to legally work in Ontario).

Intention to Reside in Ontario

All applicants must intend to reside in Ontario, as demonstrated by a statement of intent and indication of ties to Ontario.

Additional Requirements

Additionally, if an applicant chooses to qualify under the FSW criteria, they will also be assessed against CIC’s six selection factors to ensure that they meet the minimum requirement of 67 points of assessment under the FSW Class.

Selection and Processing of Ontario Express Entry Stream Applicants

To determine which candidates will receive a NOI, the OINP searches CIC’s Express Entry pool and identifies potential candidates who meet the criteria of the two Ontario Express Entry Streams.  If it identifies a desirable applicant in CIC’s Express Entry pool, the applicant will receive an NOI from the OINP, through CIC’s web portal.

The NOI invites the applicant to apply for nomination under the one of the two Express Entry Streams.  Upon receipt of this NOI, the applicant will have 45 days to apply for a nomination certificate.

If the application is approved, the applicant will receive notification from the OINP.  The Applicant will have 30 days to accept the nomination from Ontario, within CIC’s Express Entry system.

A nomination from the OINP will give the applicant an additional 600 CRS points (once their express Entry Profile has been updated) and they should receive an ITA from CIC soon after.  Once the applicant receives an ITA from CIC, they will have 60 days to apply for permanent residence.

Introduction

Foreign-based franchisors may wonder how difficult it would be to expand their businesses into the United States.  Although ensuring compliance with local franchising laws is essential, it is not the only challenge that foreign-based franchisors will face when attempting to establish a presence in the United States.

For example, most foreign-based franchisors will not have the same level of brand recognition in the United States as they will have in their own countries.  For this reason, it may be much more difficult to find potential franchisees in the target country.

One possible solution is for the foreign-based franchisor to initially sell its U.S. franchises to citizens of its home country, or citizens of other countries where it may already have an established presence.  This solution offers significant advantages because many of the potential franchisees from these countries will be familiar with the franchisor’s brand name and business operations abroad.  However, it also creates an additional layer of complexity for franchisors, who will now need to advise their foreign franchisees on applicable U.S. immigration laws.

Fortunately, in most cases, a foreign franchisee will be eligible to own and operate a franchised business under the E-2 treaty investor category.  A summary of key E-2 eligibility requirements is provided below.

E-2 Treaty Investor Status Available to Specific Nationalities Only

The basis for E-2 treaty investor category lies in treaties that are intended to enhance and facilitate economic and commercial interaction between the United States and the treaty country.  Many countries (including Canada) already have an eligible treaty in force with the United States; a complete list of these eligible countries appears here.

Provided that the foreign franchisor’s home country, or other country where the franchisor has an established presence, has an eligible treaty with the United States, its citizens will be eligible to seek an E-2 visa.  However, E-2 eligibility does not extend to permanent residents of those eligible treaty countries.

The Foreign Franchisee Must Make a Qualifying Investment in the United States

In order to qualify for an E-2 visa, the foreign franchisee must have made a qualifying investment in the treaty business.  To establish this qualifying investment, the following must be established:

1. The foreign franchisee must be in possession and control over the capital invested. In other words, he or she must have acquired the investment funds by legitimate means (savings, gift, inheritance, contest, etc.) and have control/possession over the invested funds.
2. Capital in the process of being invested or that has been invested must be irrevocably committed to the enterprise. Therefore, a significant portion of the investment must already have been spent in furtherance of the franchised business before an E-2 visa will be issued.
3. The qualifying investment must be at risk in the commercial sense with the objective of generating a profit. In other words, the investment must come from the foreign franchisee’s personal capital or, if a loan is obtained, it must not be secured on the assets of the franchised business.

The Foreign Franchisor’s Investment Must be Substantial

The foreign franchisee’s qualifying investment in the treaty business must also be considered substantial.  The official position of the United States Department of State (“DOS”) is that there is no set minimum dollar amount that will be considered “substantial” for the purposes of E-2 eligibility.  Instead, U.S. consular officers apply what is known as the proportionality test.

The proportionality test is a comparison between two figures:

1. The amount of qualifying funds invested; and
2. The cost of an established business or, if a newly created business, the cost of establishing such a business.

The lower the cost of the business, the higher the percentage the qualifying investment must be.

The question of whether a proposed investment will be considered substantial is very discretionary matter.  According to the current version of the Foreign Affairs Manual (“FAM”), investments of 100% or higher would normally automatically qualify for a small business of $100,000.00 or less.  At the other extreme, an investment of $10 million in a $100 million business would likely qualify, based on the sheer magnitude of the investment itself.

The examples provided in the current FAM are not very illustrative.  However, a prior version of the FAM did include the following specific examples of acceptable proportionality:

1. In the case of a $50,000.00 investment, an investment approaching 90-100% would easily meet the test;
2. A business costing $100,000.00 might require an investment of 75-100% to meet the test;
3. A business costing $500,000.00 would demand generally upwards of a 60% investment, with a $375,000.00 investment clearly meeting the test;
4. In the case of a million-dollar business, a lesser percentage might be needed, but a 50-60% investment would qualify;
5. A business requiring $10 million to purchase or establish would require a much lower percentage—a $3 million investment might suffice in view of the sheer magnitude of the dollar amount invested; and
6. An investment of $10 million in a $100 million business would qualify based on the sheer magnitude of the investment itself.

The above examples were later deleted from the FAM because too many consular officers were interpreting them as bright line tests.  Nevertheless, they can still be useful as examples of acceptable proportionality.

Despite the official DOS position that there is no minimum dollar amount, in practice, many U.S. consular posts still apply an unofficial minimum dollar threshold, in addition to the proportionality test.  This threshold will vary depending on the particular consular post.

For E-2 visa applications filed at U.S. consular posts located in Canada, a proposed investment of $75,000.00 or higher (preferably closer to $100,000.00) is normally sufficient to satisfy the unofficial minimum dollar threshold.  An investment as low as $50,000.00 may be acceptable in specific cases, but the chances of a denial will be much greater at this level of investment.

Franchised Business Must Not be a Marginal Enterprise

In order to qualify for an E-2 treaty investor visa, it must be established that the franchised business is not a “marginal enterprise.”  This term is defined as an enterprise that does not have a present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and his dependents.  In the case of future capacity (i.e. new business), this should be realizable within five years from the date that the foreign franchisee commences business operations in the United States.  Typically, the foreign franchisor will need to demonstrate that the franchised business will support several U.S. employees and still earn sufficient net income to support the foreign franchisor and his or her dependents, within the first five years of business.

Foreign Franchisee Must Develop and Direct the Treaty Business

An E-2 treaty investor must be seeking entry solely to develop and direct the treaty business.  The ability to develop and direct can normally be established by owning at least 50% of the treaty business (if the applicant retains full rights of control over that portion of the business and has not assigned them to another), by possessing operational control through a managerial position or other corporate device, or by other means.

Most franchisees will own 100% of their franchised business.  However, franchise agreements often contain restrictions on how the franchisee can operate the business.  If these restrictions are too onerous, it is possible that a consular officer could conclude that operational control has been transferred to the franchisor by contract.  If this occurs, the foreign franchisee will no longer have the ability to develop and direct the treaty business.

The above issue was previously considered in the precedent decision of Matter of Kung, 17 I&N Dec. 260 (Comm’r 1978).  In that case, the Commissioner concluded that a franchisee could still qualify for E-2 status if he or she retained sufficient control over the management of the business, including the ability:

1. To hire and fire employees;
2. To set wage scales; and
3. To set the hours of the business.

The franchise agreement considered in Matter of Kung was actually quite restrictive.  Nevertheless, Commissioner concluded that the franchisee retained sufficient control over the treaty business.

In light of Matter of Kung, most franchisees should be able to demonstrate their ability to develop and direct the franchised business.

Hiring Foreign Employees

If a foreign franchisee is found to be eligible for an E-2 treaty investor visa as a principal investor, he or she may also hire foreign employees (if they hold the same nationality) who will be employed in an executive, supervisory, or essential skills capacity.  This allows the foreign franchisee to send key employees to the United States in order to assist in the operation of the franchised business.

Executive or supervisory duties grant the employee ultimate control and responsibility for the enterprise’s overall operation or a major component thereof.  An executive position provides the employee great authority to determine the policies and direction of the enterprise.  A supervisory position grants the employee supervisory responsibility for a significant proportion of an enterprise’s operations and does not generally involve the direct supervision of low-level employees (i.e. first line supervisors will not qualify).

Essential skills workers are employees who have special qualifications that make the service to be rendered essential to the efficient operation of the treaty enterprise. In other words, it must be established that the employee possesses specialized skills and that those skills are needed by the treaty enterprise. It must also be established that the treaty investor has a long-term need for the employee’s essential skills. Otherwise, the consular officer will expect the essential skills worker to eventually be replaced by a U.S. worker (typically within two years).

Duration of E-2 Visas

The maximum validity period for an E-2 visa will depend upon reciprocity with the foreign national’s country of nationality.  The maximum validity period for each country is shown in the reciprocity tables published by DOS; these reciprocity tables are available online.  In many cases, the maximum duration of an E-2 visa will be five years at a time.

During the validity period of an E-2 visa, the visa holder may freely enter the United States Status in connection of the treaty business.  They may also remain continuously in the United States for a maximum period of two years at a time.

There is no maximum limit on the number of years that an E-2 treaty investor may hold such status.  As long as they remain eligible, E-2 treaty investors may continue to renew their E-2 visas indefinitely.

The long-term nature of the E-2 category ensures that foreign franchisees who establish franchised businesses in the United States will be allowed to continue operating these businesses for an extended period.

Conclusion

For the above reasons, foreign-based franchisors who are interested in expanding their businesses into the United States may wish to consider selling at least some of their U.S. locations to citizens of other eligible treaty countries, especially those countries where the company’s brand is already well established.  This will help to simplify the task of finding potential franchisees and may help to accelerate the company’s expansion into the United States.

Earlier this month, the United States Department of State (“DOS”) announced that, due to technical problems, it was temporarily unable to issue U.S. visas at consular posts abroad.  This problem is currently affecting overseas visa processing worldwide.

According to the notice posted at travel.state.gov, applicant biometric data is not being processing properly, which is preventing overseas posts from performing the security checks necessary to issue visas.  As a result, consular posts are unable to issue U.S. visas to these individuals.

The above problems have also affected some U.S. passport processing abroad.  Domestic passport operations are still functioning, with some processing delays.  However, the technical problems have adversely affected the intake of some mailed applications and same-day service at passport agencies.

The United States Consulate General in Toronto has confirmed that consular posts have been unable to print most immigrant and non-immigrant visas for applicants who were approved after June 8, 2015. They have also been unable to process new applications submitted on or after June 9, 2015.

Individuals with visa interview appointments that are scheduled in Canada on June 22 or 23, 2015, are being advised to reschedule their appointments, if they submitted a DS-160 online application after June 9, 2015.  However, individuals who submitted their DS-160 online applications prior to June 9, 2015, should plan to attend their scheduled visa interview appointments.

Any non-immigrant who is currently in the United States, and who does not already hold a currently-valid U.S. visa, should consider delaying their trip abroad until this technical problem has been resolved.  Otherwise, they may experience delays in obtaining a new visa at a consular post abroad.  Even after the technical problem has been addressed, visa processing delays are expected as consular posts work to clear the backlog of pending cases.

The one exception to would apply to foreign nationals who are entitled to automatic visa revalidation under 22 CFR §41.112(d).  According to 22 CFR §41.112(d), certain non-immigrants in the United States who travel solely to contiguous territory (i.e. Canada or Mexico) for a period of 30 days or less may be readmitted and their expired visas will be deemed revalidated for that one entry.

DOS officials have stated that they are hoping to have their visa systems working again sometime this week.