Aaron Martin, Immigration Lawyer at New Zealand Immigration Law

The government overhauled 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 more weighting given to direct investments over shares and bonds.

Immigration expert Aaron Martin from NZIL questions whether the NZTE is the right organisation to be running this system, if the process was rushed through, and if it’s really making New Zealand attractive to the migrant investor community?

A rushed process

As the government agency running this visa category, New Zealand Trade and Enterprise (NZTE) are clearly not ready for this new system.

The Live Deals platform, which is where they put up the offerings of direct investments, is not expected to be ready until March; the managed funds approval is also not up and running and in addition to this, INZ are already looking at having to amend some of the rules, due to their inflexibility and errors discovered in the reference to Discretionary Investment Management Services/managed funds.

With the new visa category announced in July and launched in September, these systems should have been ready to go much sooner. Their online system also seems clunky, with the inability to save an application and come back to complete it later. These are simple things they should be getting right, and it’s a sign of a rushed process and the old system being shut down too quickly before the new one was ready.

Additionally, NZTE staff are going to be adding this investment approval work to their existing workload, leaving question marks over how efficient the whole thing will be.

Onus on the investor

Part of the problem is that when the funds have been invested, the principal applicant must take direct ownership of the interest in the entity or have a sole beneficial interest in a trust whose trustee has a direct ownership in the entity. This is part of an aim to integrate them into the New Zealand business ecosystem, but how many investors want to have direct ownership in a business entity? Additionally, NZTE does not offer any due diligence service, still leaving it to the Investor applicant to deal with that and any contractual corporate governance arrangements flowing from them investing in the business.

Governance issues

After all, an investor making a $5m investment into a company is likely to want to have some protection by way of agreement with existing owners; their responsibilities and limitations of responsibility defined; how the investor can withdraw their investment.

The owners are also going to want to know what the exit process would be or look like when the Investor Visa applicant has come to the end of their investment period for immigration purposes. How will that be managed so as not to undermine the company?

The Government are acting as financial advisors without the expertise

Although they do very important work, NZTE staff are not financial advisors, and seem to be filling that role to a degree with this new visa, becoming the funnel through which these investments are made and managed. Meanwhile, there are many private sector organisations that are more experienced in this area, such as trading banks and investment firms that currently manage enormous portfolios for investor migrants. So why did the Government push NZTE into taking on this role and in a manner that left them little time to prepare for it?

It also carries significant reputational risk, if there are problems – if an investor loses a large amount of money for instance, based on an approved investment promoted by NZTE where will the finer be pointed. NZTE will say it is up to the investor to do their due diligence. But you only get to do that on the range of choice offered by NZTE or approved by them. When a visa holder’s choice of investment is heavily prescribed by a government organisation, this carries a serious reputational risk for the Government.

Migrants coming to New Zealand with the sort of money needed to invest do not need their hands held by the Government – they are more than capable of making their own financial decisions, and may prefer the visa categories of our competitors, which are more flexible with less government involvement.

Not enough advice or help

Investments are a big decision, which carry risks, and due diligence is essential. At the moment, NZTE is providing assistance on this, but they have (unfairly) been put in the hot seat by a Government in a rush. It has left them looking slow and under-prepared. That is not a good look when trying to attract Global investors to our country. NZTE simply should not have been put in that position. The former Investor categories should have continued to run until NZTE had all their systems in place to administer this aspect of the Investor policy.

How does it compare to our competitors?

The intent of a visa like this is to attract a certain migrant to New Zealand – in this case, an investor with plenty of money to bring to our economy. However, the countries that potential migrants might be considering alongside New Zealand are offering a more flexible investment visa scheme, without the government oversight and involvement, and with migrants having more control over their own investment choices. That to me is a key differential between systems that may or may not make New Zealand attractive to the migrant investor community or the global investor community.

Further information:

Aaron Martin – Principal Immigration Lawyer at New Zealand Immigration Law

Aaron Martin is one of New Zealand’s most highly regarded immigration law practitioners. He has extensive experience in assisting individuals, SMEs, and large multinational corporations.

With over 25 years in general legal practice and a thorough working knowledge of relevant tax law and commercial law, Aaron is skilled in assisting investor-category applicants and migrants planning to establish 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, professional advice and legal counsel on immigrating to New Zealand. We simplify the application process for our clients and eliminate the guesswork. We’re passionate about using our professional and people skills to help make our clients’ dreams a reality.

www.nzil.co.nz

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