Understanding the Qualifying Relationship for the L-1 Visa

To facilitate the transfer of intracompany transferees from a foreign entity to a U.S. entity, a qualifying relationship must exist between the two entities. This requirement applies to both L-1A visa holders (executives and managers) and L-1B visa holders (individuals with specialized knowledge). The qualifying entity must be actively conducting business, or will be conducting business, in the United States and at least one other country, either directly or through a qualifying relationship. Ownership and control are key factors in determining whether a qualifying L-1 relationship exists between the foreign employer and the U.S. employer.

The petitioner must demonstrate that the beneficiary’s foreign employer is a branch of the proposed U.S. employer, or that the two entities are related as a parent and subsidiary, or as affiliates.

However, certain business relationships do not qualify under the L visa category. These include relationships solely based on contractual agreements, licensing or franchising arrangements, less than 50/50 ventures, and charter memberships.

Branch Relationship:

A branch relationship refers to the connection between the same entity operating a division or office at a different location. If the foreign employer establishes a branch office in the United States to expand its business, employees of the foreign company may be transferred to the U.S. branch as intracompany transferees, provided that they meet all other requirements for L visa.

Parent and Subsidiary Relationship:

Parent is a legal entity that (firm /corporation or other) owns another legal entity as its subsidiary. A parent company owns a subsidiary if the parent company

a) Owns 100% (directly or indirectly) and controls the other entity

b) Owns more than 50% (directly or indirectly) and controls another entity

c) Owns 50% (directly or indirectly) of the entity and controls the entity

d) Owns 50% (directly or indirectly) of the entity that is a 50/50 joint venture and has equal control and veto power over the other entity

e) Owns less than 50% (directly or indirectly) of the entity but in fact control the entity

Affiliate Relationship:

An affiliate meets one of the following:

a) One of two or more subsidiaries, all of which are owned and controlled by the same parent company

E.g.: Company A owns 100% of company B and Company C. B& C are affiliated.

b) One of two or more legal entities owned and controlled by the same person;

Mr. A owns more than 50% of Company B and C. Mr. A is the majority owner who has the control of both companies, hence, B & C are affiliated.

c) One of two or more legal entities owned and controlled by the same group of people, each person owning and controlling approximately the same share or proportion of each entity

E.g.: Mr. A, Mr. B, Mr. C and Mr. D owns 25% shares of both Company X and Company Y. X & Y are affiliated.

d) In the case of a partnership organized to provide accounting or management consulting services, an entity inside the United States is an affiliate of an entity outside the United States if:

• The entities market their accounting or management consulting services (directly or indirectly) using the same internationally recognized name, under an agreement with the same worldwide coordinating organization; and
• The worldwide coordinating organization is collectively owned and controlled by the member accounting or management consulting entities or by their elected members (that is, partners, shareholders, members, employees).