Investor visa shake-up – The new Active Investor Plus visa

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As part of its immigration rebalance strategy, the Government has announced a major overhaul of the investor visa programme to encourage more direct investment by migrant investors who are seeking residency in New Zealand.

The existing Investor 1 and Investor 2 resident visa categories have been criticised for allowing investors to invest in passive, low-risk investments (such as equities, bonds and properties), which in turn are seen to deliver limited benefits to the New Zealand business ecosystem.

The existing investor resident visas will soon be replaced by a single ‘Active Investor Plus’ visa. As the name suggests, this new visa category incentivises applicants to take a more hands-on involvement with their investment in New Zealand.

Although the full eligibility requirements will be announced before applications open for the new visa category on 19 September 2022, we are advised that:

Investment amount Minimum investment threshold will range between NZ$5 million and NZ$15 million. A weighting system will apply to ‘reward’ investors that are making direct investments with the ability to make a smaller minimum investment, while a higher amount will apply to those making indirect investments.
Investment type Investment in bonds or property will no longer be permitted. Passive investment in listed equities will be capped to 50% of the total investment.
Minimum investment period Investors will be permitted to make their investment(s) over a three-year period.

They will be required to maintain their investment up to the end of the fourth year.
Minimum time required in New Zealand Investors will need to spend at least 117 days in New Zealand over the four year investment period.
Other matters Investors will need to speak, read, write and understand English to at least Level 5 under the International English Language Testing System (or equivalent).

What we like about the change

Some of the clear positives include:

  • The ongoing recognition that investor migrants can add significant value to New Zealand businesses beyond financial capital.
  • The focus on attracting active and high-value migrants with international expertise, which can benefit New Zealand in a productive and sustainable way.
  • The acknowledgement that a more hands-on investment by migrant investors may ultimately deliver greater benefits to New Zealand.
  • The scope to stagger investment(s) over a three-year period. This should provide a realistic timeframe for investors to become better accustomed to the New Zealand business ecosystem, and to identify and execute investments that present a good fit based on their skills and experience.
  • The transfer of the investor visa marketing and promotion, and aftercare services, to New Zealand Trade and Enterprise (NZTE). There is a clear policy alignment between NZTE’s mission to help New Zealand businesses grow internationally, and the types of applicants that the Active Investor Plus visa is designed to attract. This will also enable Immigration New Zealand to focus on the processing of applications.

We expect that investments driven by this new resident visa category to be welcomed by growth stage businesses as it provides an alternative avenue to access capital and business know-how. Private equity and venture capital firms should equally be receptive to their potential access to additional capital and opportunities for co-investment that this visa category may encourage.

What we would like to better understand

Some immediate questions we have include:

  • How the different investment opportunities in New Zealand would be marketed. NZTE’s Live Deals platform seems like a reasonable place to start, but how comprehensive would that platform be. Would NZTE be sufficiently resourced to engage with New Zealand businesses across various stages of their lifecycle across the full range of sectors, and to become the originator of the right opportunities.
  • How the Active Investor Plus visa category will stack up with comparable visas in other similarly attractive jurisdictions, such as Australia. Have we actually made New Zealand a more attractive destination for migrant investors through this new visa category – or have we instead raised the bar at a time when competition for international capital has intensified.
  • Whether New Zealand businesses are ready for hands-on involvement from migrant investors, who may have a different cultural perspective on business strategies.
  • The shape of the screening process for the Active Investor Plus visa, and the extent to which Immigration New Zealand’s application processing timelines will improve. What would the weighting system for assessing the investments be formulated, and how future-proofed would that system be.
  • Whether the additional costs that investors will need to incur for direct investments (such as due diligence costs), and the costs of playing an active role in managing those investments, will be credited towards calculating the amount of their investment. We do not believe that this will be the case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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