Expansion of acceptable investments for migrant investor categories to include registered bank bonds/equities, residential property developments, and finance-company bonds

Policy effect

Effective 25/07/2011, the definition of acceptable investments for migrant investor categories was expanded. Previously, direct or indirect investment in residential property development and deposit-taking financial institutions (including banks and finance companies) was prohibited. Under the updated rules, acceptable investments include bonds issued by New Zealand registered banks, equities in New Zealand registered banks, residential property developments, and bonds in finance companies, which a Business Immigration Specialist may consider acceptable where the finance company is a wholly-owned subsidiary of, raises capital solely for, and has all its debt securities unconditionally guaranteed by a New Zealand Stock Exchange listed company or a local authority. Residential property developments are subject to specific conditions: they must be new developments on new or existing sites, cannot include renovation or extension of existing developments, must have gained required regulatory consents and approvals, must aim for a commercial return on the open market, and cannot be resided in by the principal investor's family, relatives, or associated persons. Furthermore, costs associated with obtaining regulatory approval do not count towards acceptable investments. General conditions continue to apply: investments must be capable of a commercial return, not for personal use, invested in New Zealand in New Zealand currency, invested in lawful enterprises or managed funds complying with New Zealand law, and have the potential to contribute to New Zealand's economy. Managed funds qualify only for the proportion invested in New Zealand companies; international exposure does not count towards that proportion. The investment value is based on net purchase price, excluding accrued interest, commission, brokerage and trade levy, and a business immigration specialist retains case-by-case discretion where a failure to meet requirements was beyond the principal applicant's control.

Conditions and exceptions

Validated condition or limit: Residential property developments are subject to specific conditions: they must be new developments on new or existing sites, cannot include renovation or extension of existing developments, must have gained required regulatory consents and approvals, must aim for a commercial return on the open market, and cannot be resided in by the principal investor's family, relatives, or associated persons.; General conditions continue to apply: investments must be capable of a commercial return, not for personal use, invested in New Zealand in New Zealand currency, invested in lawful enterprises or managed funds complying with New Zealand law, and have the potential to contribute to New Zealand's economy.; Managed funds qualify only for the proportion invested in New Zealand companies

Official source excerpt

Quoted verbatim from the official source below. Ellipses indicate omitted text.

BJ3.10 Investment funds (25/07/2011) BJ3.10 Investment funds (25/07/2011) The principal applicant must invest a minimum of NZ$10 million in New Zealand for a period of three years. The principal applicant must: nominate funds and/or assets equivalent in value to NZ$10 million; and demonstrate ownership of these funds and/or assets (see BJ3.10.1); and demonstrate that the nominated funds and/or assets have been earned or acquired legally (see BJ3.10.1 (c) below). All invested funds must meet the conditions of an acceptable investment as set out under BJ3.10.25. BJ3.10.1 Ownership of nominated funds and/or assets Nominated funds and/or assets may be owned either: solely by the principal applicant; or jointly by the principal applicant and partner and/or dependent children who are included in the resident visa application, provided a business immigration specialist is satisfied the principal applicant and partner have been living together for 12 months or more in a partnership that is genuine and stable (see R2.1.15 and R2.1.15.1 (b) and R2.1.15.5 (a)(i)). If so, the principal applicant may claim the full value of such jointly owned funds or assets for assessment purposes. If nominated funds and/or assets are held jointly by the principal applicant and a person other than their partner or dependent child, the principal applicant may only claim the value of that portion of funds and/or assets for which they provide evidence of ownership. The principal applicant may only nominate funds and/or assets that they earned or acquired legally, including funds and/or assets which have been gifted to them unconditionally and in accordance with local law. Where nominated funds and/or assets have been gifted to the principal applicant a business immigration specialist must be satisfied that the funds and/or assets being gifted were earned lawfully by the person/s gifting the funds and/or assets. The nominated funds and/or assets must be unencumbered. The nominated funds and/or assets must not be borrowed. BJ3.10.5 Definition of 'funds earned or acquired legally' Funds and/or assets earned or acquired legally are funds and/or assets earned or acquired in accordance with the laws of the country in which they were earned or acquired. Business immigration specialists have discretion to decline an application if they are satisfied that, had the funds and/or assets been earned or acquired in the same manner in New Zealand, they would have been earned or acquired contrary to the criminal law of New Zealand. BJ3.10.10 Definition of 'unencumbered funds' Unencumbered funds are funds that are not subject to any mortgage, lien, charge and/or encumbrance (whether equitable or otherwise) or any other creditor claims. BJ3.10.15 Funds already held in New Zealand Funds held in New Zealand at the time the application is made may be included in investment funds. However, periods of investment in New Zealand before approval in principle cannot be taken into account when … three-year investment period. Funds held in New Zealand must originally have been transferred to New Zealand through the banking system, or a foreign exchange company that uses the banking system from the country or countries in which they were earned or acquired legally, or have been earned or acquired lawfully in New Zealand (see BJ7.10 ). BJ3.10.20 Evidence of the principal applicant's nominated funds and assets Principal applicants must provide evidence of net funds and/or assets to the value of the required investment funds. Principal applicants must provide evidence to the satisfaction of a business immigration specialist that the nominated funds and/or assets were earned or acquired legally. All documents provided as valuations of assets must be: no more than three months old at the date the resident visa application is made; and produced by a reliable independent agency. A business immigration specialist may seek further evidence if they: are not satisfied that the nominated funds and/or assets were earned or acquired legally; or consider that the nominated funds and/or assets may have been gifted or borrowed without being declared; or are not satisfied with the valuation provided; or consider that the nominated funds and/or assets fail in some other way to meet the rules for investment funds. BJ3.10.25 Definition of 'acceptable investment' An acceptable investment means an investment that: is capable of a commercial return under normal circumstances; and is not for the personal use of the applicant(s) (see BJ5.50.1 below); and is invested in New Zealand in New Zealand currency; and is invested in lawful enterprises or managed funds (see BJ5.50.5) that comply with all relevant laws in force in New Zealand; and has the potential to contribute to New Zealand's economy; and is invested in either one or more of the following: bonds issued by the New Zealand government or local authorities; or bonds issued by New Zealand firms traded on the New Zealand Debt Securities Market (NZDX); or bonds issued by New Zealand firms with at least a BBB- or equivalent rating from internationally recognised credit rating agencies (for example, Standard and Poor's); or equity in New Zealand firms (public or private including managed funds); or bonds issued by New Zealand registered banks; or equities in New Zealand registered banks; or residential property development(s) (see BJ3.10.40); or bonds in finance companies (see BJ3.10.25 (c)). Note: For the purposes of these instructions, convertible notes are considered to be an equity investment. New Zealand registered banks are defined by the New Zealand Reserve Bank Act 1989. Notwithstanding (a) above, where an investment fails to meet one of the acceptable investment requirements, a business immigration specialist may consider, on a case by case basis, whether the failure was beyond the control of the principal applicant and if satisfied that this was the case, may consider the investment acceptable. A Bus …

Review method

Source-based draft with independent Gemini 3.8 Flash verification

Other New Zealand changes operative in 2011

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• 2011-04-18SSE work visa applicants required to demonstrate genuine intention to work for an approved employer
• 2011-07-25Investor 1 annual physical-presence requirement reduced from 73 to 44 days
• 2011-07-25SMC job-search visa barred for onshore recent Study-to-Work visa holders
• 2011-07-25SMC New Zealand qualification bonus points tied to degree level and duration
• 2011-07-25SMC recognised-qualification points redistributed by qualification level