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What is the advantage of forming a Limited Partnership for an EB-5 project vs. using a LLC structure?
It appears that most RC's use the LP structure with their EB-5 investors. What is the advantage of using the LP structure over the LLC?
Actually, there is nothing to stop regional centers from choosing a LLC as the legal entity. It just happens that LLC is relatively a "new" legal entity, so when EB-5 law was enacted, the law specifically mentioned a Limited Partnership entity as an allowed entity that can be used as a New Commercial Enterprise entity; therefore, regional centers are merely mimicking the legal entity specifically mentioned in the EB-5 regulations: you can say regional centers are "playing it safe" by choosing a limited partnership. Aside from this, I don't see any material difference.
I concur.
As a matter of fact, the LLC structure has more advantages. Different from (and better than LP), the investors in an LLC may avoid personal liabilities. As to the internal governance, an LLC can be structed in any way, as centralizd as a corporation and as loose as an LP. In the latter, the investors become non-manager members, while managers are appointed by them playing the role similar to general partner.
Or you can have non-manager members and manager members, the former is similar to limited partners and the latter is general partners. I cannot find any compelling reason for selecting a LP. To say the least, as long as LLC is not prohibited by the EB-5 law, it should be considered.
There is one good reason why EB-5 project operators choose the Partnership structure: The applicable regulation specifically mention the LP structure.
Therefore, they feel safer operating under the LP structure. I know they say "other entity which may be publicly or privately owned", but no one wants to take any chance. Also, there is more case law governing the LP structure than LLC.
You said "Different from (and better than LP), the investors in an LLC may avoid personal liabilities."
What sorts of "personal liabilities" did you refer to ? LP's liabilities to the limited Partnership entity is up to the amount a LP invest, isn't it ?
Yes, you don't have any additional liability other than the investment amount under the LP structure.