There has been a lot of recent discussion on an investment by a minor and how it is treated by USCIS, in addition to the corporate issues related. The key factors to be considered are the following:
- A minor can be an investor. This was verbally confirmed by one of the Deputies of USCIS to me personally at the Miami Stakeholders Meeting on July 28, 2016.
- The key component of a minor Subscriber is USCIS’s concern that the investment is not voidable or void.
- Generally, the state law stated in the Subscription Agreement and/or Operating Agreement would apply as to what law would determine the enforceability of the investment contract. This will be discussed below. Independently, I checked with Chinese counsel who acknowledged that a minor is generally under the age of 18 and that a parent can sign for a minor as a guardian providing there is proof of the parent’s capacity.
In analyzing the minor investment, there are two (2) types of minor investments:
- A gift by a parent to a minor under the Uniform Gift to Minors Act where the parent actually gifts money to the minor, but has the investment be a custodian investment held by the parent for the child.
- The child actually makes the investment directly, since some minor children have their own bank accounts and can fund moneys directly. In this case, the guardian/parent would be the authorized party to bind the child to a contract under most state laws.
In order to handle both of these situations, we have created a signature page for the minor subscriber and custodian/guardian, along with an acknowledgment of custodian and/or guardian to verify the investment. You can access it by clicking here. We also advise that the minor likewise sign a subscription agreement as a subscriber even though the parent’s signature is required to bind the minor to the contract.
For purposes of reference, we have included the Uniform Gift to Minors Act for the states of Florida, Texas and Delaware. We believe New York is very similar as well as California. The three (3) states referenced define a minor as under the age of 21 and not 18. Please click here to view the aforementioned document.