32.6 Technical Issues.

(a) Legal Entities .

The United States and qualifying employer abroad must be legal entities. In the United States, a business is usually in the form of a corporation, partnership, or a proprietorship. When dealing with a smaller petitioning legal entity, evidence should be provided which establishes that there is a sufficient amount of employees to continue business operations in the foreign country, as well as continuing business operations in the United States once the beneficiary completes the temporary services and transfe rs abroad.

The regulations at 8 CFR 214.2(l)(1)(ii) provide examples of the legal entities included under the L-1 classification. Evidence that the employer is a legal entity consists of evidence such as articles of incorporation, partnership agreement, license to do business, or evidence of registration with the Internal Revenue Service as an employer. In petitions involving well-known or publicly traded corporations, no such evidence should be required.

(b) Determining Whether a Qualifying Business Relationship Exists .

For purposes of L-1 classification, ownership and control are the factors for establishing a qualifying relationship between business entities.

· Ownership means the legal right of possession with full power and authority to control.

· Control means the right and authority to direct the management and operations of the business entity.

The petitioner is required to identify each of the qualifying organizations as one of the types of entities specifically described in 8 CFR 214.2(l)(1)(ii): parent, branch, subsidiary, or affiliate. The petitioner must document ownership and control of both legal entities to establish that a qualifying relationship exists as defined in the regulations.

Stock certificates alone may not be sufficient to establish that a qualifying relationship exists. Documents such as the corporate stock certificate ledger, stock certificate registry, corporate bylaws, and the minutes of relevant annual shareholder meetings when appropriate, should also be examined to determine the total number of shares issued, the exact number issued to the shareholder, and the subsequent percentage ownership and its effect on corporate control. When appropriate, a petitioning company sh ould be asked to provide all agreements relating to the voting of shares, the distribution of profit, the management and direction of the petitioning company, and any other factor affecting actual control of the entity. Without full disclosure of all relevant documents, USCIS may be unable to determine the elements of ownership and control. See Matter of Siemens Medical Systems, Inc ., 19 I&N Dec. 362 (BIA 1986). Evidence of the acquisition of the actual ownership interest (i.e., capital investment, wire transfers, stock purchase agreements, etc.) may be required as additional supporting evidence. See 8 CFR 214.2(l)(3)(viii).

The most common types of business relationships which are not qualifying under the L category are those based on contractual, licensing, and franchise agreements. Additional non-qualifying relationships include arrangements such as less than 50-50 joint ventures and charter membership arrangements. See discussions of various qualifying and non-qualifying relationships in Matter of Schick , 13 I&N Dec. 647; Matter of Del Mar Ben, Inc., 15 I&N Dec. 5; Matter of Aphrodite Investments, Ltd., 17 I&N Dec. 530; Matter of Tessel, Inc., 17 I&N Dec. 631; Matter of Barsai , 18 I&N Dec. 13 ; Matter of Hughes, 18 I&N Dec. 289 ; Matter of Siemens Medical Systems, Inc., 19 I&N Dec. 362.

Companies that are publicly traded and regulated by the SEC may submit copies of annual reports, where probative, as evidence of their affiliates and subsidiaries. Most annual reports will list the company's foreign affiliates and subsidiaries, along with the company's ownership interest (controlling, not controlling, joint venture, etc.). The annual reports are frequently prepared by major accounting firms and include audited financial statements. Evidence may also include copies of SEC Forms 10K and 10Q This will make L-1 processing easier for both USCIS and publicly-traded companies.

Where one or both of the qualifying entities has undergone or will undergo a corporate reorganization (e.g. merger, spin-off, acquisition, etc.), USCIS must determine whether the qualifying relationship between the entities will exist following the reorganization. USCIS should therefore review standard documents from the merger: the letter of intent, minutes from shareholder's meeting, the Hart-Scott-Rodino antitrust filings, as well as the ultimate contract. However, unless the company is publicly traded, there will likely be privacy concerns regarding proprietary information and finances.

(c) Doing Business .

An L-1 petitioning company must be "doing business" as defined in 8 CFR 214.2(l)(1)(ii)(H) in the United States and at least one other country for the duration on the L-1 beneficiary's stay in the United States. In start-up operations, the business in the United States may be prospective in nature. Ordinarily, the viability of the U.S. employer may be demonstrated by the fact that the company has affiliate/subsidiary entities existing and operating under the laws of another country.

There may be instances where business is conducted through an agent rather than a separate legal entity. The mere presence of such an agent is insufficient to establish that the petitioner is doing business. The petitioner must establish that the entity conducts regular, systematic business (manufacturing, sales, services, etc.). A certified copy of the company’s most recent IRS Form 1120 , including all attachments and schedules may also be required. See discussion in Matter of Chartier, 16 I&N Dec. 284 (BIA 1977) . Matter of Thompson , 18 I&N Dec. 169 (Comm. 1981), which also discusses this issue, has been superseded by more recent regulations and should not be followed.

USCIS experience has revealed that a large number of suspect L-1 petitioners are operating as small import/export firms. If a company is doing business as an import/export firm, USCIS should require the firm to submit multiple examples of the customs forms that would be required in the normal course of business: Form 7525V (Shipper's Export Declaration), Form 7501 (Entry Summary), Form 301 (Customs Bond). The forms should include the importer's identification number. Other forms that would be required in the day-to-day business of an import-export firm would include invoices, shipping manifests, shipping insurance policies, bills of lading, letters of credit, wire transfer advisement, inspection certifications, sales contracts, and general business correspondence.

(d) Managerial or Executive Capacity .

The discussion of managerial and executive capacity that follows provides guidance for applying the definition of these terms to specific case situations:

An executive or managerial capacity requires a certain level of authority and an appropriate mix of job duties. Managers and executives plan, organize, direct, and control an organization's major functions and work through other employees to achieve the organization's goals. Front-line supervisors, such as those who plan, schedule, and supervise the day-to-day work of nonprofessional employees, are not employed in an executive or managerial capacity, even though they may be referred to as managers in their particular organization. In addition, individuals who primarily perform the tasks necessary to produce the product(s) or provide the service(s) of an organization are not employed in an executive or managerial capacity. See Matter of Church Scientology International, 19 I&N Dec. 593 (Comm. 1988).

Eligibility requires that the duties of a position be primarily of an executive or managerial nature. The test is basic to ensure that a person not only has requisite authority, but that a majority of his or her duties relate to operational or policy management, not to the supervision of nonprofessional employees, performance of the duties of another type of position, or other involvement in the operational activities of the company. This does not mean that the executive or manager cannot regularly apply hi s or her technical or professional expertise to a particular problem. Certain positions necessarily require a manager or executive's application of his technical or professional expertise; adjudicators should therefore focus on the primary duties of the beneficiary.

An executive or manager may manage or direct a function within an organization. It must be clearly demonstrated, however, that the function is not directly performed by the manager or executive. If the function itself is performed by the intended manager or executive, the position should be viewed as a staff officer or specialist, not as an executive/manager. In general, classification in a specialized knowledge capacity is more appropriate for individuals who perform the duties associated with a function, rather than managing other professional employees or directing the activities or policies of the function.

If a small or medium-sized business supports a position wherein the duties are primarily executive or managerial the position may qualify under the L category. However, neither the title of a position nor ownership of the business are, by themselves, indicators of managerial or executive capacity. For example, a physician may incorporate his or her practice for business purposes and may hire a receptionist, bookkeeper, and a nurse to assist in that medical practice. For L purposes, the physician is not a ma nager, but a person who primarily practices his or her professional skills as a physician.

The L beneficiary who is coming to the United States to open a new office may be classified as a manager or executive during the one year required to reach the "doing business" standard if the factors surrounding the establishment of the proposed organization are such that it can be expected that the organization will, within one year, support a managerial or executive position. The factors to be considered include amount of investment, intended personnel structure, product or service to be provided, physic al premises, and viability of the foreign operation. It is expected that a manager or executive who is required to open a new business or office will be more actively involved in day-to-day operations during the initial phases of the business, but must also have authority and plans to hire staff and have wide latitude in making decisions about the goals and management of the organization.

(e) Specialized Knowledge Capacity .

The alien should possess a type of specialized or advanced knowledge that is different from that generally found in the particular industry. See Appendix 32-1 for the text of the March 9, 1994, Memorandum from James A. Puleo, Acting Executive Associate Commissioner, Interpretation of Specialized Knowledge (providing examples and further guidance on the proper interpretation of specialized knowledge). The knowledge need not be proprietary or unique. Where the alien has specialized knowledge of the company product, the knowledge must be noteworthy or uncommon. Where the alien has knowledge of company processes and procedures, the knowledge must be advanced. Note, the advanced knowledge need not be narrowly held throughout the company. Further, there is no test of the U.S. labor Market in determining whether an alien possesses specialized knowledge. Only an examination of the knowledge possessed by the alien is necessary.

There are multiple examples outlined in the March 1994 memo. A common specialized knowledge theme is that the knowledge the beneficiary possesses, whether it is knowledge of a process or a product, would be difficult to impart to another individual without significant economic inconvenience to the United States or foreign firm. The knowledge is also not generally known and is of some complexity. The petitioner bears the burden of establishing through the submission of probative evidence that the alien's spe cialized knowledge is distinguished by some unusual qualification and not generally known by practitioners in the alien's industry. Likewise, a petitioner's assertion that the alien possesses an advanced level of knowledge must be supported by evidence describing and setting apart the knowledge from elementary knowledge possessed by others.

(f) Extent of Employment .

It must be established that the alien will be rendering services to and employed by the entity inside the United States. The alien does not have to be employed by the U.S. employer on a full-time basis, but a significant portion of the alien's employment in the United States must involve managerial, executive, or specialized knowledge activities. Generally, activities such as conferring with officials, attending meetings and conferences, and participating in training are not considered productive employment and are appropriate for B-1 classification. Salary and source of remuneration are not issues relevant to L-1 petition adjudication. See Matter of Pozzoli , 14 I&N Dec. 569.

(g) Procedures for Calculating Maximum Period of Stay Regarding the Limitations on Admission of L-1 Nonimmigrants . (Revised 10-20-2005; AFM AD05-21)

USCIS officers shall comply with the following guidance to determine whether periods of time spent outside the United States by an L-1 nonimmigrant worker in a specialized knowledge or a managerial or executive capacity will be recaptured:

(1) Periods of Time Outside the United States that May Be Recaptured for an L-1 Nonimmigrant Worker in a specialized knowledge or a managerial or executive capacity .

Because section 214(c)(2)(D) of the Act states that “the period of authorized admiss ion for” an L-1 nonimmigrant admitted to render services in a managerial or executive capacity shall not exceed 7 years, or an L-1 nonimmigrant admitted to render services in a capacity that involves specialized knowledge shall not exceed 5 years, and becaus e “admission” is defined as “the lawful entry of the alien into the United States after inspection and authorization by an immigration officer” o nly time spent in the United States as an L-1 counts towards the maximum. Thus, upon requesting an extension, the L-1 nonimmigrant can request that full days spent outside the U.S. during the period of petition validity be recaptured and added back to his or her total maximum period of stay. As always, it is the applicant/petitioner’s burden to demonstrate eligibility, and appropriate evidence, such as copies of passport stam ps, I-94 ’s a nd/or plane tickets must be submitted.

The applicant for extension seeking to recapture time spent outside the U.S. need not demonstrate that the time spent outside the U.S. was meaningfully interruptive of his or her L-1 stay. The reason for the absence is not relevant to the question of whether the time may be recaptured. Any trip of at least one 24-hour day outside the U.S. for any purpose, personal or business, can be recaptured. The applicant for extension must only demonstrate to the satisfaction of the adjudicator that he or she was ou tside the U.S. for the amount of time for which recapture is requested. Matter of IT Ascent, EAC# 0404753189 , was designated as bind in g policy guidance on October 18, 2005. While that decision only deals with H-1B extensions, Officers should refer to this decision as illustrative of the rationale for allowing recapture of any time spent outside the United States by L-1 nonimmigrants.

(2) Evidence .

The burden of proof remains with the L-1 petitioner and/or the L-1 beneficiary to submit evidence documenting any and all exact periods of physical presence outside the United States when seeking eligibility for an extension of petition validity and extension of stay as an L-1 nonimmigrant. The petitioner and/or beneficiary are clearly in the best position to organize and submit evidence of the beneficiary’s departures from and reentry into the United States. While petitioners often submit a summary and/or charts of travel and the number or days spent out of the United States, which eases review of the accompanying documentation, petitioners are also required to submit independent documentary evidence establishing that the alien was outside of the United States during all the days, weeks, mon ths etc. that he or she seeks to recapture (e.g. photocopies of passport stamps and/or Form I-94 arrival-departure records).

The fact that the burden may not be met for some claimed periods, or has been met for some claimed periods, has no bearing on the remaining claimed periods. Any periods of time for which the burden has been met may be added to the eligible period of admission upon approval of the application for extension of status. An alien may not be granted an extension of stay for periods of time that are not supported by independent documentary evidence. A Request for Evidence should not be sent to the petitioner for any claimed periods unsupported by evidence .

In some instances, the alien may not be granted the entire period of time requested because the evidence submitted does not establish eligibility for the entire period of stay requested. In those situations, the approval notice should be issued for the period of time for which eligibility has been demonstrated.

The status of an L-2 dependent of an L-1 nonimmigrant is subject to the same period of admission and limitations as the principal alien. For example, if an L-1 alien is able to recapture a two-week business trip abroad for each year for five years in a row (for a total of 10 weeks), then his or her L-2 dependents, if seeking extension of stay, should be given an extension of stay up to the new expiration of the L-1 alien's stay. The statute and regulations allow L-2 status only "if [the dependents] are acc ompanying or following to join the beneficiary in the United States." If it appears that the dependent is not using or is not intending to use L-2 status primarily to accompany or follow to join the principal L-1 alien, such as a situation in which the principal only is physically present or intends to be physically present in the United States for a small proportion of his or her period of L-1 admission and the dependents are using L-2 status to evade the limitations on or eligibility rules of the nonimmi grant options that otherwise would be available, then the L-2 extension of stay may be denied, limited or revoked on notice giving the L-2 the opportunity to provide evidence of the intention primarily to accompany the principal.

Officers involved in the adjudication of L-1 petitions are cautioned that the examples provided in this memorandum are not all inclusive. Situations may develop in the adjudication of certain petitions, which will require the adjudicating office to use discretion. Therefore, decisions on petitions for extension concerning this issue that contain unique or novel circumstances may be certified to the Administrative Appeals Office for review.

(h) Decoupling Time Spent in L-2 Status from L-1 Maximum Period of Stay [Chapter 32.6(h) added 12-05-2006] .

(1) Time spent in L-2 status does not count against the five or seven-year maximum period of admission applicable to L-1A and L-1B aliens respectively. An alien who holds L-2 status (or who previously held L-2 status) and subsequently seeks to obtain L-1A or L-1B status is eligible for a maximum period of stay of five or seven years in L-1A or L-1B status respectively.

(2) In the context of any applications for change of status from L-2 to L-1A or L-1B, adjudicators should consider whether the L-2 alien complied with the requirements of accompanying or joining the L-1A or L-1B alien, and whether the alien otherwise maintained valid nonimmigrant status.

(3) USCIS may limit, deny or revoke on notice any stay for an L-2 dependent that is not primarily intended for the purpose of being with the principal worker in the United States, and a spouse or child may be required to show that his requested stay is not intended to evade the normal requirements of the nonimmigrant classification that otherwise would apply when the principal alien is absent from the United States.

USCIS (as well as port inspectors and consular officers) may adjudicate applications for dependent stays in order to prevent an L-1 alien from using only occasional work visits to the United States in order to “park” the family members in the United States for extended periods while the principal alien is normally absent.