Aaron Martin, Immigration Lawyer at New Zealand Immigration Law
The government revised its migrant investor visa category this year in a bid to attract more wealthy migrants to New Zealand. The new Active Investor Plus visa category is also aimed at boosting New Zealand businesses, with a greater weight given to direct investments compared to stocks and bonds.
Immigration expert Aaron Martin of NZIL wonders if NZTE is the right organization to run this system, if the process has been rushed and if it really makes New Zealand attractive to the migrant investor community?
A rushed process
As the government agency managing this category of visas, New Zealand Trade and Enterprise (NZTE) is clearly not ready for this new system.
The Live Deals platform, where they offer direct investment deals, is not expected to be ready until March; the approval of managed funds is also not operational and in addition to this, INZ is already considering having to modify certain rules, due to their rigidity and the errors discovered in the reference to discretionary management services of the investments / managed funds .
With the new visa category announced in July and launched in September, these systems should have been ready to work much sooner. Their online system also seems clumsy, with the inability to save an application and come back to complete it later. These are simple things they should be doing well, and it’s a sign of a rushed process and the old system shutting down too quickly before the new one is ready.
Additionally, NZTE staff will add this investment approval work to their existing workload, leaving question marks over the effectiveness of the whole thing.
Charge to the investor
Part of the problem is that when the funds have been invested, the lead applicant must either become the direct owner of the interest in the entity or have a sole beneficial interest in a trust whose trustee has direct ownership in the entity. This is part of a goal to integrate them into the New Zealand business ecosystem, but how many investors want direct ownership in a business entity? Additionally, NZTE does not offer any due diligence service, always leaving it to the prospective investor to deal with this and any contractual corporate governance arrangements arising from their investment in the business.
After all, an investor who invests $5 million in a business will probably want some protection through an agreement with the existing owners; their defined responsibilities and limits of liability; how the investor can withdraw his investment.
Owners will also want to know what the exit process will look like when the investor visa applicant has reached the end of their investment period for immigration purposes. How will this be managed so as not to weaken the company?
The government acts as a financial adviser without the expertise
Although they do very important work, NZTE staff are not financial advisers and appear to fulfill that role to some degree with this new visa, becoming the funnel through which these investments are made and managed. At the same time, many private sector organizations are more experienced in this area, such as commercial banks and investment companies which currently manage huge portfolios for migrant investors. So why has the government pushed NZTE into taking on this role and in a way that has given it little time to prepare for it?
It also carries significant reputational risk, if there are any problems – if an investor loses a large sum of money for example, based on an approved investment promoted by NZTE, where the thinner will be pointed. NZTE will say it is up to the investor to do their due diligence. But you can only do this on the range of choices offered by NZTE or approved by them. When a visa holder’s choice of investment is heavily prescribed by a government organization, it poses a serious reputational risk to the government.
Migrants coming to New Zealand with the kind of money needed to invest don’t need the government to hold their hand – they are more than capable of making their own financial decisions and may prefer our competitors’ visa categories , which are more flexible with less government involvement.
Not enough advice or help
Investments are an important decision, which involves risk, and due diligence is essential. At the moment NZTE is providing assistance on this, but they have (unfairly) been put on the spot by a pressured government. It left them slow and under-prepared. This is not a good idea when trying to attract global investors to our country. NZTE simply should not have been placed in this position. The old categories of investors should have continued to operate until NZTE had all of its systems in place to administer this aspect of the investor policy.
How does it compare to our competitors?
The intention of a visa like this is to attract a certain migrant to New Zealand – in this case, an investor with a lot of money to contribute to our economy. However, the countries potential migrants might consider alongside New Zealand offer a more flexible investment visa regime, free from government oversight and involvement, and with migrants having more control over their own investment choices. ‘investment. For me, this is a key differential between the systems that may or may not make New Zealand attractive to the migrant investment community or the global investment community.
Further information :
Aaron Martin – Senior Immigration Lawyer at New Zealand Immigration Law
Aaron Martin is one of New Zealand’s most renowned immigration law practitioners. He has extensive experience in assisting individuals, SMEs and large multinational companies.
With over 25 years of general legal practice and in-depth practical knowledge of relevant tax and commercial law, Aaron is qualified to assist Investor Class applicants and migrants considering setting up a business in New Zealand.
NZIL – New Zealand Immigration Law
New Zealand Immigration Law is based in Te Atatu, Auckland.
NZ Immigration Law offers practical and professional advice and legal advice on immigration to New Zealand. We simplify the application process for our clients and take the guesswork out. We are passionate about using our professional and people skills to help make our clients’ dreams a reality.
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