IN THIS GUIDE · Reassess ownership when one business partner buys out another
Start with the E-2 eligibility and application overview
Identify what changes under the executed agreement
Record the interests being transferred, effective dates, remaining conditions and rights retained by the departing partner. A signed proposal is not necessarily a completed ownership change. Keep shareholder identity distinct from the commercial brand.
Apply nationality and control separately
The applicant needs relevant treaty nationality, and generally at least 50% of the enterprise must be owned by nationals of that treaty country. Development and direction may arise through at least 50% ownership or operational control through a managerial position or another corporate device. Neither the purchase percentage nor the seller’s exit answers both questions automatically.
Review capital and the continuing business
Establish lawful substantial capital committed at risk in a real nonmarginal enterprise, without a universal dollar minimum. Nonmarginality uses the applicable more-than-minimal-living or significant-economic-contribution standard. Funds secured by enterprise assets do not qualify as investor capital on that basis. Intent to depart when E status ends and appropriate permission to work remain necessary despite a completed buyout.
Develop and direct means control, not merely majority ownership
The evidence has to show money committed beyond recall and exposed to loss, which means an unconditional agreement, released deposits, equipment paid for and a lease carrying real liability. Passive interests are structured so the holder cannot direct, which is exactly what makes them unsuitable as the qualifying enterprise. Substantiality is proportional: the amount is weighed against the total cost of purchasing an established enterprise of that kind, and it must be large enough to make it likely that the investor will successfully develop and direct the business. The buyer's eighty percent stake meets the ownership threshold, and the company remains a qualifying enterprise because it is majority-owned by a Canadian national. The enterprise must be real and operating, or about to operate, and must not be marginal, meaning it should have present or future capacity to generate more than a minimal living for the family, typically shown through a hiring plan over five years. The business must not be marginal, and the evidence should connect the recovery plan to actual authority to develop and direct operations rather than to a passive financial interest. Ask both whether the enterprise will be real and operating by the interview date: a signed yard lease, purchased equipment, a state contractor’s registration and a first customer contract answer marginality better than projections. Bank transfers, escrow terms, invoices, ownership documents and cancellation clauses show what has truly been committed.
Seller financing secured on the business is not investment
Substantial capital is judged relative to the cost of the particular enterprise, not against a fixed minimum, so the spending pattern should match the plan you are presenting. Where debt was taken on, describe the security given, since debt secured by business assets is treated differently from borrowing backed by personal collateral. The investment must be irrevocably committed, at risk, and placed in an enterprise that is not marginal; a refundable arrangement may require more explanation than a payment exposed to the business's success or failure. If part of the price is seller-financed, only the portion actually paid and any indebtedness secured by the buyers’ personal assets counts; a loan secured on the business itself does not. Trace each transfer from the investor to the enterprise, noting any escrow release, seller financing, or refund right that changes the risk analysis.
Sources reviewed 2026-09-07. This guide covers a preparation focus; it is not an individual eligibility assessment.