Qualifying Relationships Between Foreign and U.S. Businesses

Date of Information: 11/11/2026

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Why the Business Relationship Matters

An L-1 transfer requires a qualifying connection between the employee’s foreign employer and the proposed U.S. employer. The operations must be the same organization operating through a branch, or separate entities related as a parent and subsidiary or as affiliates. These requirements apply to L-1A executives and managers and to L-1B specialized-knowledge employees.

The analysis follows the legal ownership and control of the businesses. A shared brand, close commercial cooperation, or the same person managing both companies does not, by itself, establish the required relationship. This guide addresses that business connection; the employee’s qualifying employment and proposed duties are separate requirements discussed in our L-1A overview.

Parent and Subsidiary Relationships

A parent is an entity that has subsidiaries. A subsidiary is a separate entity that the parent owns, directly or indirectly, and controls under the regulatory definition. The rules recognize several ownership arrangements:

  • More than half ownership, together with control;

  • Half ownership, together with control;

  • A 50/50 joint venture in which the parent has equal control and veto power; or

  • Less than half ownership when the parent nevertheless actually controls the entity.

There is therefore no universal rule that every L-1 structure must involve 51 percent ownership. Cases involving equal or minority ownership require a close examination of the governing documents and actual control rights. An indirect structure also requires evidence connecting each relevant entity in the ownership chain. See 8 C.F.R. § 214.2(l)(1)(ii)(K).

Example: A foreign company owns all of a newly formed U.S. corporation and controls its management. The foreign company is the parent and the U.S. corporation is its subsidiary. Forming the U.S. subsidiary addresses the relationship question; the remaining new-office and employee requirements still must be met.

Branch Offices

A branch is an operating division or office of the same organization at another location. It is not a separate subsidiary simply because it operates in another country.

Example: A foreign corporation registers to conduct business in a U.S. state and operates a U.S. office as that same corporation. That may support a branch relationship. By contrast, if the foreign corporation forms a separate U.S. corporation or LLC, the relationship ordinarily must be analyzed through the separate entity’s ownership and control.

The word “branch” on a website or organizational chart is not decisive. The legal formation and registration records should show whether the U.S. operation is the same legal organization or a separate entity.

Affiliate Relationships

An affiliate relationship commonly arises when two separate entities are both owned and controlled by the same parent or individual. It can also arise when the same group of individuals owns and controls both entities, with each person owning and controlling approximately the same share or proportion of each.

Example: An individual owns and controls all of a foreign company and all of a separate U.S. company. The companies may qualify as affiliates even though neither owns the other. If several individuals own the businesses, merely finding the same names on both shareholder lists is insufficient; their respective ownership and control must fit the regulatory definition.

The regulations also contain a specialized affiliate provision for certain internationally coordinated accounting partnerships. Businesses relying on that provision need to address its particular conditions. See the regulatory definition of affiliate.

Ownership and Control Must Be Established

Ownership concerns the legal interest in the business. Control concerns the legal right and authority to direct its management and operations. The evidence should explain both. Equity percentages, voting rights, board appointment powers, operating agreements, and shareholder arrangements may affect the result.

A founder’s practical influence or executive title does not replace proof of legal control. When a case relies on proxy votes, USCIS requires evidence that the proxies are irrevocable from filing through adjudication and that the qualifying relationship will continue during the requested approval period. Review the USCIS ownership and control guidance before relying on a proposed governance arrangement.

Proving the Qualifying Relationship

Start with a clear ownership chart identifying the U.S. employer, the foreign employer, relevant intermediate entities, ownership percentages, and the people or entities exercising control. Support that chart with the underlying records, which may include:

  • Formation documents, articles, corporate registry extracts, and U.S. registrations of a foreign entity;

  • Current stock or membership ledgers, issued ownership certificates, and capitalization records;

  • Bylaws, operating or partnership agreements, shareholder agreements, voting agreements, and relevant board records;

  • Executed acquisition or subscription agreements and evidence that the transaction closed and the ownership interests were issued or transferred; and

  • Records supporting each link in an indirect ownership chain, including the documents explaining any special control rights.

An organizational chart summarizes the evidence; it does not replace it. Formation papers may establish that a company exists without establishing its current owners. Authorized shares are not necessarily issued shares. Reconcile inconsistencies among the petition, ownership chart, corporate records, and financial documents rather than leaving the officer to infer the relationship.

Common Arrangements That Need Closer Review

A franchise, licensing, distribution, management, or customer contract does not by itself establish the required ownership and control. A franchisee can still qualify if a separate qualifying relationship exists between the U.S. petitioner and the foreign employer. Likewise, family connections between owners, common directors, or a common trade name do not substitute for the required legal relationship.

When the Relationship Must Exist

The qualifying relationship must exist when the petition is filed; an intention to form or acquire a related U.S. business later is insufficient. The new-office provisions do not excuse the relationship requirement.

The qualifying organization must also continue to meet the L-1 requirements during the authorized transfer. A merger, sale, new investment, dilution, or change in voting arrangements may affect eligibility and may require an amended petition. Review the immigration consequences before completing the transaction.

Ownership and control are also distinct from doing business. A corporate structure alone does not establish qualifying ongoing operations in the United States and abroad. That operational question is addressed separately in the guide, “Proving That the U.S. and Foreign Businesses Are Doing Business.”

Legal Authorities and Official Resources

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