dismissed L-1A Case: Lumber Export

U.S. Citizenship 
and Immigration 
Services 
MATTER OF 0-0-T-C-, INC. 
Non-Precedent Decision of the 
Administrative Appeals Office 
DATE: JUNE 14,2017 
APPEAL OF CALIFORNIA SERVICE CENTER DECISION 
PETITION: FORM 1-129, PETITION FOR A NONIMMIGRANT WORKER 
The Petitioner, a lumber exporter, seeks to temporarily employ the Beneficiary as its chief executive 
officer under the L-1 A nonimmigrant classification for intracompany transferees. See Immigration 
and Nationality Act (the Act) section 101(a)(15)(L), 8 U.S.C. § 1101(a)(15)(L). The L-1A 
classification allows a corporation or other legal entity (including its affiliate or subsidiary) to 
transfer a qualifying foreign employee to the United States to work temporarily in a managerial or 
executive capacity. 
The Director of the California Service Center denied the petition concluding that the Petitioner did 
not establish, as required, that it has a qualifying relationship with the Beneficiary's foreign 
employer. 
The matter is now before us on appeal. In support of the appeal, the Petitioner contends that it and 
the foreign entity share a high degree of common ownership, thereby resulting in an affiliate 
relationship between the two entities. 
Upon de novo review, we will dismiss the appeal. 
I. LEGAL FRAMEWORK 
To establish eligibility for the L-1 nonimmigrant visa classification, a qualifying organization must 
have employed the Beneficiary in a managerial or executive capacity, or in a position involving 
specialized knowledge, for one continuous year within three years preceding the Beneficiary's 
application for admission into the United States. Section 101 (a)( 15)(L) of the Act. In addition, the 
Beneficiary must seek to enter the United States temporarily to continue rendering his or her services 
to the same employer or a subsidiary or affiliate thereof in a managerial, executive, or specialized 
knowledge capacity. !d. 
An L-1A classification petition must be accompanied by evidence establishing that: the beneficiary 
has been employed abroad in a position that was managerial, executive, or involved specialized 
knowledge for at least one continuous year in the three years preceding the filing of the petition; the 
beneficiary is coming to work in the United States in a managerial or executive capacity for the same 
employer or a subsidiary or affiliate of the foreign employer; and, the beneficiary's prior education, 
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Matter of 0 -0-T-C-, Inc. 
training and employment qualifies him or her to perform the intended services in the United States. 
8 C.F.R. § 214.2(1)(3). 
II. QUALIFYING RELATIONSHIP 
The Director found that the ownership scheme of the Petitioner and the foreign entity does not 
amountto an affiliate relationship as claimed. . 
To establish a "qualifying relationship " under the Act and the 
regulations , a petitioner must show 
that the beneficiary's foreign employer and the proposed U.S. employer are the same employer (i.e. 
one entity with "branch " offices), or related as a "parent and subsidiary " or as "affiliates. " See 
generally section 101(a)(15)(L) ofthe Act; 8 C.F.R. § 214.2(1). 
The term "affiliate " means: 
(I) One of two subsidiaries both of which are owned and controlled by the 
same parent or individual , or 
(2) One of two legal entities owned and controlled by the same group of 
individuals, each individual owning and controlling approximately the 
same share or proportion of each entity .... 
8 C.F.R. § 214.2(l)(ii)(L). 
In the Form 1-129, L Classification Supplement , Section 1, Item 10, the Petitioner stated that it and 
, the Beneficiary ' s foreign employer , are affiliates by 
virtue 
of being owned by the same three individuals. Specifically, the petition contains the following 
ownership breakdowns for the Petitioner and 
Petitioner 
20% 50% 
30% 25% 
Beneficiar y 50% Beneficiar y 25% 
By virtue of the above ownership breakdown , the Petitioner claimed both entities are "owned 100% 
by the same shareholders and ... 100% controlled by the same directors. " 
The Petitioner also provided: (1) a 2015 federal tax return, complete with Schedule G, which 
reiterates the Petitioner ' s ownership breakdown as described above ; (2) the Petitioner's "Written 
Consent of the Shareholders " showing that the above named shareholders elected themselves as the 
Petitioner 's three directors ; and (3) the Petitioner's "Voting Agreement. " The "Recitals " section of 
the latter document states that the three shareholders who "collectivel y own" the Petitioner and 
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Matter of 0-0- T-C-, Inc. 
are the directors of both entities so that the entities "are effectively controlled by the same 
group of directors," while the "Agreement" section of the same document gives each shareholder 
"the sole power to vote, or cause to be voted" his or her respective shares in the U.S. entity based on 
the ownership breakdown of those shares. 
The Director issued a request for evidence (RFE) followed by a notice of intent to deny (NOID), 
both of which advised the Petitioner that the record did not contain sufficient evidence to establish 
that it formed an affiliate relationship with the foreign entity. While the NOID acknowledged the 
Petitioner's submission of the above supporting documents, the Director noted that the ownership 
breakdowns provided above indicate that the two entities are not owned by the same group of 
individuals with each owning and controlling the same share or proportion of each entity. The 
Dirt(Ctor further noted that neither the "Written Consent of the Shareholders" nor the "Voting 
Agreement" addresses the issue of voting rights and control of the U.S. entity, even though the 
former names the company's directors. 
In response to the RFE, the Petitioner resubmitted its "Written Consent of the Shareholders" and 
"Voting Agreement," contending that together these documents establish that the same three 
shareholder directors control both entities. The Petitioner cited to precedent case law to support its 
contention that the ownership structures of the U.S. and foreign entities as described above constitute 
a high degree of common ownership, thereby resulting in the formation of an affiliate relationship. 
The Petitioner also offered an expert opinion letter, dated October 10, 2016, from . an 
attorney, who stated that based on his review of the voting agreement and "the corporate formation 
and governance documents," the two entities have a high degree of common ownership and "an even 
higher degree of common management, with management of both companies being identical." 
There is no indication that Mr. reviewed or had knowledge of the relevant regulatory 
provisions that define the term "affiliate" in the immigration law context and within the scope of the 
Act, which puts forth eligibility guidelines for the immigration benefit sought in the instant matter. 
Further, despite Mr. claim that he reviewed both entities' "corporate formation and 
governance documents," the only corporate document in the record that pertained to the foreign 
entity and was available at the time of Mr. statement was a list of shareholders. It is not 
apparent that Mr. reviewed documents describing how the foreign entity is governed. 
Although the Petitioner subsequently provided a translated tax declaration document naming Mr. 
Mrs. and the Beneficiary as the foreign entity's three appointed directors, that document 
was not generated until October 26, 2016, and thus could not have been reviewed by Mr. , as 
claimed, when he wrote his initial testimonial. 
In response to the NOID, the Petitioner offered a second letter from Mr. noting that per the 
Petitioner's company bylaws, each director gets one vote. The Petitioner also provided declarations 
from each of its three shareholders who stated that the same control structure exists for both the U.S. 
and foreign entities. All three declarants in their respective 
statements indicated that each 
shareholder, in his or her capacity as a director, "has one board vote." 
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Matter of 0-0- T-C-, Inc. 
In denying the Petition, the Director reiterated statements made in the NOID, where he found, that 
the U.S. and foreign entities are not owned by the same group of individuals with each owning and 
controlling the same share or proportion of each entity and further noted that the "Written Consent of 
the Shareholders" and the "Voting Agreement" do not address the issue of voting rights and control 
of the U.S. entity. 
On appeal, the Petitioner disputes the Director's finding, pointing out that both entities are owned by 
the same three shareholders with no ont~ shareholder owning a majority of either entity's stock. The 
Petitioner cites Matter of Tessel, Inc., 17 I&N Dec. 631 (Acting Assoc. Comm'r 1981 ), stating that 
the Commissioner found that an affiliate relationship existed where there was a high degree of 
common stock ownership in both companies. In the Tessel decision, the beneficiary solely owned 
93% of the foreign entity and 60% of the petitioner, i.e., the majority, thereby establishing a "high 
percentage of common ownership and common management." The decision further stated that 
"[w]here there is a high percentage of ownership and common management between two companies, 
either directly or indirectly or through a third entity, those companies are 'affiliated' within the 
meaning of that term as used in section 10l(a)(l5)(L) of the Act." !d. at 633. 
Here, the Petitioner contends that the lack of a majority interest by any one party demonstrates that 
all three parties have equal control of the U.S. and foreign entities, the ownership distribution 
depicted above does not support the Petitioner's contention 
based on the fact that negative control of 
the two entities rests with two different individuals. To the extent that a 50% ownership interest by 
one shareholder is sufficient to negate the combined votes of the two remaining shareholders, we 
find that control exists even where no one shareholder owns the majority of a company's shares. 
Here, the Beneficiary owns 50% of the Petitioner's shares and thus has negative control of the 
Petitioner, while owns 50% of the foreign entity's shares, thereby maintaining negative 
control ofthat .entity. While the Petitioner contends that each shareholder has one board vote in each 
entity such that the three shareholders equally control both entities, the Petitioner provided 
documentation showing that the directors serve at the will of its shareholders and that each 
shareholder votes his or her respective shares of the U.S. entity. Therefore, control is ultimately 
proportional to the number of shares owned. As the Beneficiary owns twice the shares in the 
Petitioner than the two remaining shareholders combined, he ultimately has greater control over the 
U.S. entity, to the extent that he can block a corporate action put forth by the other two shareholders. 
The same can be said of the foreign entity based on its ownership breakdown, despite the 2016 
income tax declaration listing the Beneficiary, and as the foreign entity's 
appointed directors. 
Further, citing Sun Moon Star Advanced Power, Inc. v. Chappel, 773 F. Supp. 1373 (N.D. Cal1990), 
the Petitioner asserts that two companies may be affiliated even though they are not owned by the 
exact same individuals. In Sun Moon Star, former Immigration and Naturalization Service (INS), 
now U.S. Citizenship and Immigration Services (USCIS), refused to recognize the indirect 
ownership of the petitioner by three brothers owning shares of the company as individuals through a 
holding company. The decision stated that the two claimed affiliates were not owned by the same 
group of individuals. The court found that the INS decision was inconsistent with previous 
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Matter of0-0-T-C-, Inc. 
interpretations of the term "affiliate" and contrary to congressional intent because the decision did 
not recognize indirect ownership. Prior to the adjudication of the Sun Moon Star petition, INS 
amended the regulations so that the definition of "subsidiary" recognized indirect ownership. 52 
Fed. Reg. 5738, 5741-2 (Feb. 26, 1987). Accordingly, the basis for the court's decision has been 
incorporated into the regulations. However, despite the amended regulation and the decision in Sun 
Moon Star, neither former INS. nor USCIS has ever accepted a combination of individual 
shareholders as a single entity, so that the group may claim majority ownership, unless the group 
members have been shown to be legally bound together as a unit within the company by voting 
agreements or proxies. 
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The Petitioner must establish that it and the foreign employer share common ownership and control. 
Control may be "de jure" by reason of ownership of 51 percent of outstanding stocks of the other 
entity or it may be "de facto" by reason of control of voting shares through partial ownership and 
possession ofproxy votes. Matter of Hughes, 18 I&N Dec. 289 (Comm'r 1982). 
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In this case the Petitioner's voting agreement does not show that any combination of the 
shareholders is in any way bound to vote together. Further, the record shows that the Beneficiary 
owns only 25% of the foreign entity, which is half of his ownership interest in the Petitioner. 
Similarly, owns only 20% of the Petitioner, which is comparatively less than half of his 
ownership interest in the foreign entity, where he holds a 50% ownership interest. We cannot 
conclude that owning 50% of one entity while owning one quarter or one fifth of ;nother entity 
equates to owning "approximately the same share or proportion of each entity" as required to form 
an affiliate relationship. 8 C.F.R. § 214.2(l)(l)(ii)(L)(2). While it is true that the same three 
individuals are shareholders of both entities, two different individuals have negative control in each 
entity and the three individuals do not own "approximately the same share or proportion of each 
entity." !d. Therefore, we do not find that the Petitioner and the foreign entity have an affiliate 
relationship. 
For the reasons discussed above, the evidence submitted does not establish that the Petitioner and the 
Beneficiary's foreign employer have a qualifying 
relationship and on the basis of this conclusion, the 
instant petition cannot be approved. 
ORDER: The appeal is dismissed. 
Cite as Matter of0-0-T-C- , Inc., ID# 421353 (AAO June 14, 2017) 
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