Fund Administration
Also known as: Third-party fund administration, escrow administration
Financial · EB-5 Glossary
Definition
Under the RIA, regional centers must use a fund administrator to manage and hold EB-5 investor capital. The fund administrator serves as an independent custodian that controls the disbursement of investor funds according to the terms of the offering documents. This requirement was designed to prevent misuse of investor funds.
Context
Fund administration is one of the key integrity measures introduced by the RIA. Before the RIA, there was no requirement for third-party oversight of investor capital, which contributed to several high-profile fraud cases.
Related Terms
More Financial Terms
- Capital
Cash, equipment, inventory, tangible property, cash equivalents, and indebtedness secured by assets owned by the investor, provided the investor is personally and primarily liable. Capital does not include assets acquired by unlawful means.
- Economic Impact Analysis
A formal study prepared by a qualified economist that quantifies the economic effects of an EB-5 project, including the number of direct, indirect, and induced jobs created. The analysis uses an accepted methodology (RIMS II or IMPLAN) and is a required component of the I-526E petition for regional center projects.
- Job-Creating Entity
The business entity that directly creates the jobs counted toward the EB-5 job creation requirement. In regional center projects with a two-entity structure, the JCE receives capital from the New Commercial Enterprise (NCE) and uses it to operate the business and hire employees.
- New Commercial Enterprise
The business entity in which the EB-5 investor places their capital. The NCE must be a lawful, for-profit entity established after November 29, 1990, or an existing entity that has been restructured or expanded. Qualifying entity types include corporations, partnerships, limited liability companies, joint ventures, and sole proprietorships.
- Operating Agreement
The governing document of the New Commercial Enterprise that establishes the rights and obligations of all members (investors) and the managing member. For EB-5 LLCs, the operating agreement typically defines voting rights, distribution preferences, capital call provisions, and the process for I-829 compliance.
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