My Principal Simon Laurent, was recently quoted in a Radio New Zealand article regarding Immigration New Zealand’s new Active Investor category, announced by the Minister of Immigration and the Minister of Economic and Regional Development in September 2022.
This new category came into effect and replaced two older Investor categories on 19 September 2022.
Simon has published two blog articles on the new category previously, see here and here.
Our understanding is that, after over 2 months, only about 3 applications have been lodged under the new scheme.
I believe that one reason why there has been slow uptake of the new category is that it is complicated and difficult to understand, even for Immigration Lawyers and Advisers.
The detailed ‘Immigration Instructions’ for the new category are contained in the Immigration New Zealand Operational Manual here. I have reviewed these several times for the purpose of understanding their intention and effect.
I would go so far as to suggest that the category is badly written and confuses applicants.
In this blog I will try to “unpack” and give some practical examples of what a potential Investor can invest in, if they want to secure Residence in New Zealand under the new category.
I will focus on what is a ‘direct investment’, which is the most significant class of acceptable investment, because they receive 3x weighting. That is, a $3 million investment in ‘direct investments’ will count as $9 million towards the $15 million investment that the Active Investor category requires.
What is a ‘direct investment’?
The definition of ‘direct investment’ is given at Instruction BN7.10.15;
i. the principal applicant must invest in:
- listed equities that are considered an acceptable investment as set out in BN7.10.1(a) as a wholesale investor; or
- an equity security in an investee entity; or
- another financial product that will be converted, or is or may become convertible, into an equity security in an investee entity; and
ii. NZTE must confirm that the:
- investment by the principal applicant in acceptable listed equities as a wholesale investor was pre-approved by NZTE prior to funds being invested; or
- investee entity is an acceptable direct investment.
This definition is quite opaque. ‘Investee entity’ is defined as a body corporate, e.g., a company, which is Resident in New Zealand and which is not listed on any securities or stock exchange.
A body corporate is Resident in New Zealand if it is incorporated in New Zealand, has its head office and centre of management in New Zealand, and has control by company directors exercised in New Zealand.
Criteria for ‘investee entities’ to qualify for ‘direct investment’ are given at Appendix 15 of the INZ Operational Manual.
An ‘investee entity’ will be an acceptable direct investment if New Zealand Trade and Enterprise (NZTE) is of the view that;
- It has previously received, or will receive, capital from an acceptable managed fund;
- It is listed on the NZTE Live Deal platform (as updated by NZTE from time to time); or
- It is otherwise acceptable for the purposes of the Active Investor Plus Visa
Option 2 – Live Deals
The NZTE Live Deals platform website (https://www.nzte.govt.nz/livedeals/about) displays investment opportunities in New Zealand that investors can express interest to invest in.
For example, some of the investment opportunities that the NZTE Live Deals platform currently displays are;
- ‘Humble Bee’ is looking for NZD$5,000,000 of investment,
- ‘Eko360’ is looking for NZD$5,000,000 of investment,
- ‘TapiHQ’ is looking for NZD$3,500,000 of investment.
Option 3 – “Otherwise Acceptable”
There are some quite complex criteria that NZTE refers in determining whether an investee entity is “otherwise acceptable for the purposes of the Active Investor Plus Visa”.
The criteria include the following;
- Whether the direct investment capital is being used to grow the investee entity, create or save jobs, or deliver economic benefit to New Zealand
- If the investment is subject to Overseas Investment Office or Ministerial approved under the Overseas Investment Act 2005, whether that approval has been given
- Whether the entity is already operating and trading
- Whether the entity is compliant with NZTE’s internal know-your-customer (KYC) process used for verifying the legitimacy and lawfulness of individuals and organisations
These criteria are not straightforward to understand and apply.
I suggest that the effect has been to “bamboozle” applicants, as a well-known Immigration Adviser has recently commented regarding the state of New Zealand’s current Immigration settings.
The conclusion (for now…)
It is fair to say that the category is complicated, to the extent it may be badly written and may confuse applicants and even their professional advisers. This may be part of the reason why there have been so few applications so far.
Policymakers and writers of the category should take note, that if Government is serious about attracting investment to New Zealand, the category needs to be simplified and expressed in clear language urgently.
Meanwhile, New Zealand may be missing out.
Please contact us if you would like help with filing an application for Residence under the Active Investor category.