On Monday 19 September, Immigration finally released the new rules around how to apply for NZ Residence as an offshore investor. It’s called Active Investor Plus (“AI+”). We knew this was coming because it was announced in very general terms in July. But we wanted to keep our powder dry until we saw the details in black and white. It is just as well that we did.

This post will cover some basics, which are also in the public domain if you know where to look. Next week we’ll get into the visa application process and some tricky features to look out for before you start.

Why the New Scheme?

The objective of AI+ is to get people away from traditionally “safe” investments like Government stock, and directly into funding New Zealand businesses. Investors are expected to take on more risk – and to hope that their money is still mostly there after up to 4 years. One has to wonder at the timing of this policy rollout when the world faces multiple threats to economic stability, and New Zealand is hardly immune to the danger of recession or worse.

This active investment focus reflects in how assets are classified. You must invest NZ$15 million (about US$9 million at the time of writing) or a “weighted equivalent” of a combination of the following asset classes:

  • Direct Investment – 3x weighting – $5 million = $15 million
  • Managed Funds – 2x weighting – $7.5 million = $15 million
  • Philanthropy and Listed Equities – no weighting

You can also create a mix of these, so long as the total comes up to the magic number 15. You cannot invest more than $7.5 million in Philanthropy, or $7.5 million in Listed Equities. We’ll come back to what these terms mean in a moment.

A new feature of this investment scheme is that it is spearheaded by New Zealand Trade & Enterprise (NZTE), which aims to bring investors and suitably vetted NZ companies together. It will set up lists of approved businesses for investment, and managed funds, in order to smooth the way to finding out where to invest more safely than just sticking a pin in the financial pages. Immigration New Zealand’s job is limited to processing the visas.

What Do These Asset Classes Mean?

This is why we wanted to see the devil in the detail:

Direct Investment: that is, buying into NZ companies. You can take shares in Exchange-listed businesses only if you are a wholesale investor – your main business is investment, or your assets or turnover in the last 2 years exceed NZ$5 million, and there are a couple of other definitions buried in the Financial Markets Conduct Act 2013. If you’re not a wholesale investor, you can only invest in acceptable “investee entities”, which are businesses which have been vetted by NZTE using their published criteria. These are companies or other structures which are not listed on any Stock Exchange. Trade & Enterprise is yet to identify who they might be. As it will be a few months before any AI+ applications are approved, they have a bit of time up their sleeve. But they shouldn’t leave it too long, because my suspicion is that these Residence applications will be given high and dedicated priority, and could be turned around fairly smartly in order to give the Government some good numbers to boast about in the leadup to the 2023 Election.

Managed Funds: but not all managed funds as we understand them. In November, NZTE will start a list of acceptable managed investment schemes and discretionary investment management services, again with published criteria. As AI+ is in its early days, this is also very much a work in progress right now.

Philanthropy: which means registered charities showing at least 2 years of annual returns and listed with Inland Revenue as having that charitable status – an important point, as not all organisations that claim to be charitable have that status unless IRD has granted it to them.

Listed Equities: basically means shares in a company listed on the NZ Stock Exchange, or indirectly through a managed fund that offers a portfolio of listed company shares. Remember that a maximum of $7.5 million can land in this basket. You are only allowed to hold 20% of your Listed Equities shares in businesses involved in the ownership, management or development of property.

How Do I Apply?

On the face of it, making the visa application is simple. Except that it’s not.

The application portal was also only opened on 19 September, so we had no advance notice of what it looked like or what it required people to do. I have to say that it looks cheap. It’s actually similar to the one hastily thrown together to manage the COVID-19 Critical Purpose visa requests – even down to the fact that there is no facility to save your work and come back later. That’s right, you must get through it completely in a single pass, or start again if you missed some piece of information and can’t put your hands on it.

Apart from plugging in data about you and the family, you also need to upload evidence that you own the nominated assets, and how you earned them. Presumably, if Immigration finds gaps in what they expect to see, they will ask you to send this in when the case is being reviewed. But that all means extra to and fro, and will slow down processing.

This is one way in which we can add value, by predicting what you will need to provide to back up your particular case, and collating that material so that the “story of your application” is as simple as possible.

Look out for Part 2 of this timely overview of the Active Investor Plus Residence programme. Or, if you want to cut to the chase, schedule an online meeting with us now.