New 2025 H-1B Rule Lets You Be CEO and Visa Holder at the Same Time

 

The H-1B Modernization Rule

In late 2024, the U.S. Department of Homeland Security (DHS) finalized a rule titled “Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Non-immigrant Workers.” It was published in the Federal Register on December 18, 2024, and took effect on January 17, 2025.

This is commonly referred to as the H-1B Modernization Rule (or 2025 H-1B Final Rule). It is not a new law passed by Congress but a regulatory update by DHS/USCIS that revises existing H-1B program rules under the Immigration and Nationality Act. It aims to streamline processes, add flexibilities (especially for employers and certain workers like entrepreneurs and F-1 students), clarify definitions (e.g., “specialty occupation”), codify some prior policies (like deference to prior approvals), and strengthen program integrity and oversight.

Key broader changes in the rule include:

• Updates to the definition and criteria for “specialty occupation.”
• Clarifications on employer-employee relationships:
• The 2025 H-1B Modernization Final Rule revised the definition of a "United States employer" by:
• Removing the previous requirement to establish a common-law "employer-employee relationship" (i.e., the petitioner’s right to hire, supervise, fire, and control the beneficiary’s work).
• Replacing it with clearer, more flexible criteria: The petitioner must have a legal presence in the U.S., an IRS EIN (tax ID), be amenable to service of process, and extend a bona fide job offer for the beneficiary to work in the U.S. (including remote/telework).
• Expanded cap-exemptions for certain nonprofits and affiliated entities.
• Revised Form I-129 requirements (a new edition became mandatory on the effective date with no grace period).
• Explicitly clarified, codified, and expanded the ability for a U.S. company owned or controlled by the foreign national beneficiary to file an H-1B petition on their behalf. This is called the “beneficiary-owner” or owner-employee rule.
• Other flexibilities, such as for F-1 OPT students.

The Beneficiary-Owner Provisions

 The 2025 H-1B Modernization Final Rule explicitly clarified, codified, and expanded the ability for a U.S. company owned or controlled by the foreign national beneficiary to file an H-1B petition on their behalf.

Prior to the rule, USCIS required a clear employer-employee relationship, meaning the petitioning company had to demonstrate the right to hire, supervise, fire, and control the beneficiary’s work (based on common-law principles). When the beneficiary owned a controlling (or 100%) interest, this created a perceived conflict: the owner was essentially supervising themselves. Adjudicators frequently denied such petitions or issued Requests for Evidence (RFEs) demanding strong evidence of separation, such as:

• A board of directors or investors with real oversight power.
• Formal employment contracts, performance reviews, and governance structures.
• Evidence that the company operated independently of the owner’s personal decisions.

Sole proprietorships almost never worked (no legal separation). Even corporations/LLCs faced high denial risks due to “ambiguous policy” and discretionary scrutiny.

The 2025 rule changed this by:

• Expanding the definition of a “U.S. employer” (legal presence in the U.S., IRS EIN, ability to be served process) and removing/revising the strict employer-employee relationship language in relevant contexts.
• Explicitly stating that ownership alone does not disqualify someone, while still requiring all other H-1B criteria (specialty occupation, qualifications, prevailing wage, etc.).
• Adding safeguards for program integrity: Initial approval and first extension limited to 18 months each (subsequent extensions up to 3 years).

Main features of the Beneficiary-Owner Provisions

• A U.S. company (the petitioner) that is owned or controlled by the foreign national (the beneficiary) can file an H-1B petition on their behalf.
• “Controlling interest” generally means the beneficiary owns more than 50% of the company or holds majority voting rights.
• The company must still qualify as a valid “U.S. employer” (legal presence in the U.S., IRS EIN, ability to be served process, etc.). A corporation or LLC is a separate legal entity, so the company (not the individual) is the petitioner, even if the beneficiary owns 100%.
• Sole proprietorships typically do not qualify because they lack separation between owner and business.
• All standard H-1B requirements still apply: The position must be a “specialty occupation”, the beneficiary must meet qualifications (e.g., relevant degree or equivalent), there must be a bona fide job offer, and prevailing wage rules must be followed. The employer must demonstrate the ability to hire, supervise, and control the employee’s work (e.g., via board oversight or governance structures in startups).

Special validity periods for beneficiary-owners

• Initial petition: Up to 18 months.
• First extension: Up to 18 months.
• Subsequent extensions: Up to 3 years (with the usual 6-year total maximum, extensions possible in certain cases).

“Specialty occupation” requirement

The beneficiary must perform “specialty occupation” duties for a majority of their working time, that is, more than 50% (often described as at least 51%). Examples of common specialty occupations include engineers, scientists, IT professionals (e.g., software developers), accountants, architects, doctors, lawyers, and certain management or business roles that require highly specialized knowledge.

For beneficiary-owners, the core role (e.g., CTO, lead software engineer, financial analyst) must qualify as a specialty occupation and occupy the majority of time, even if the person also handles CEO/founder responsibilities.

This is a standard H-1B requirement for all petitions, not limited to the beneficiary-owner (owner-employee) provisions of the 2025 H-1B Modernization Final Rule.

Setting up a US company 

How many shareholders/directors?

Minimum number of shareholders: 1 (one).

Under the 2025 H-1B Modernization Rule, a single foreign national can own 100% of a valid U.S. company (LLC or corporation) and have that company petition for his H-1B as CEO/CTO/software engineer in a specialty occupation. There is no minimum number of shareholders or members required. The company must be a separate legal entity (not a sole proprietorship), have a legal presence in the U.S., an IRS EIN, and be amenable to service of process.

• LLC: Can be a single-member LLC.
• Corporation (C-Corp or S-Corp): Can have a single shareholder.

Sole proprietorships do not qualify because there is no legal separation between the owner and the business.

Best place to incorporate: Delaware is by far the most popular and recommended choice for this scenario.

Why Delaware?

• Highly business-friendly laws with maximum flexibility for small/startup companies.
• One person can be the sole director, officer, and shareholder/member.
• Strong privacy protections and a well-established court system (Court of Chancery) that investors and USCIS recognize favorably.
• Easy to form remotely (no need to be in the U.S.).
• Standard choice for tech startups and companies planning to raise funding later.
• You can register the company in Delaware and then qualify it to do business in another state (e.g., California or New York).

Other options like Wyoming or Nevada are sometimes used for privacy/tax reasons, but Delaware is the gold standard for H-1B/startup cases.

Board of directors: 1 person is legally sufficient, and no independent board is strictly required under the new 2025 rule.

Practical Recommendations for Improving the Odds of an Approval

Even though the H-1B Modernization Rule removed the old strict “common-law employer-employee relationship” barrier and explicitly allows controlling-interest (50%+) owners:

• Having at least 1–2 additional board members or advisors (even non-voting or family/friends) is still highly recommended by many immigration attorneys. It demonstrates that the company operates as a legitimate separate entity with some oversight.
• Include a formal employment contract, organizational chart, board resolutions (if applicable), and clear evidence that you will spend the majority (>50%) of your time on specialty occupation duties (e.g., software engineering/CTO work, not just general CEO/founder tasks).

Conclusion:

This change has made it significantly more feasible for founders, startup CEOs, and self-employed professionals to use H-1B status through their own companies, which was more uncertain or challenging under prior interpretations. It promotes entrepreneurship while requiring evidence of a legitimate employer-employee relationship. Nevertheless, USCIS will still scrutinize the petition for a bona fide specialty occupation, ability to pay the prevailing wage, and legitimate business operations.

Disclaimer: This is not legal advice. Immigration and corporate rules can be nuanced based on each person’s specific situation. Please consult a U.S. immigration attorney experienced in beneficiary-owner H-1B cases and a business attorney/CPA for entity formation and tax setup (LLC vs. C-Corp has major tax and fundraising implications).