Examining the Long Term Business Visa

11th-immigration-conference

At the LexisNexis Pacific Immigration Law Conference on Friday 09 August, 2013. Queen City Law Lawyers Marcus Beveridge, (Principal) and Bradley So, (Lawyer), delivered a presentation which examined the Long Term Business Visa.

To download a PDF of the presentation click here. To read more about Marcus Beveridge click here. To read more about Bradley So click here. For more information about our immigration service click here. To contact us click here.

The recent changes have been the most significant in the last decade. The main driver for change is the high volume of marginal applications coming through. The Business Migration Branch (“BMB”) is currently processing about 1000 of these cases and it is understood 20% of the applications are of such dubious quality that they will be very quickly declined. Examine the relevant changes and discuss its practical implications.

Examining the Long Term Business Visa: Marcus and Brad discussed the Long Term Business Visa, the topics included:

  • What’s Changed? – BackgroundBusiness
  • – Why change?
  • Trend

  • – Approvals

  • – Decline

  • Changes

  • Specific Business Plan

  • Capital

  • Benefit to NZ

  • LTBV introduced in 1999

  • Objective – cater for business people

  • Why change?

  • Raise the quality of applications

  • Ensure the benefit to NZ

Some interesting trends have been emerging.

 TREND – APPROVALS

approvals

LTBV Approvals by industry type (previous 12 months)

Biggest slices are Food & Dining 15.0%, Tourism and Accomodation 7.0%, Building & Renovation 6.3%, and IT & Technology Services 10.6%

TREND – DECLINES

declines

Biggest slices are Food & Dining Wholesale 15.4%, IT & Technology Services 22.6%, Cleaning & Maintenance 4.3% and Tourism and Accomodation 5.3%

LTBV Declines by industry type (previous 12 months)

“BC4.1 Definition of a business plan (29/11/2010)

A business plan is a plan to establish a specific business in New Zealand, which contains information

as set out in the business plan form, and is supported by appropriate documentation.”

AFTER

“BC4.1 Definition of a business plan (8/04/13)

A business plan is a plan to establish or purchase a specific business in New Zealand, which contains information as set out in the business plan form, and is supported by appropriate documentation.”

CASE STUDY – PIZZA

pizzaType of Business

Buy or set up a new Pizza business.

Location

Auckland

Investment Fund

NZD $100,000.00 – NZD $150,000.00

Settlement Fund

NZD $100,000.00 (family of four)

Benefit to NZ

Creation of Employment

SPECIFIC BUSINESS PLAN

FACTORS TO CONSIDER

  • TYPE OF BUSINESS

    • Existing Business

      • Documentation – BC4.5.1

      • Benefit to NZ – Employment

    • Creating a New Business

  • CAPITAL REQUIREMENT

• Existing Business

  • Share Acquisition

  • Asset Acquisition

• LOCATION

• Forecast

• Market Research

Practical Implications

  • Offshore applicants will need to come to NZ before a visa is granted

  • Interim visa of 9 months is purely to set up the business

  • Minimal variation of business plan opportunities

  • Decrease in buying existing businesses (time constraint)

  • Pro forma business plans will no longer apply

  • Applicants are better prepared for Residency

CAPITAL

NEW DEFINITION

BH3.5 Consistency with business proposal under the Long Term Business Category

ii. the business that has been established required the same or a greater level of capital investment than a business proposal in respect of which the applicant was granted or issued a work visa under the Long Term Business Category;

c. For the purposes of BH3.5(b)(ii), account will only be taken of the amount of capital that has been actively invested in the business. No account will be taken of:

i. working capital (see BH4.5.15); or

ii. passive or speculative investments, such as reserve funds or term bank deposits; or

iii. expenditure on items for the personal use of the applicant(s), such as personal residence, cars or boats.

BH4.5.15 Working capital

For the purposes of Entrepreneur Category instructions, working capital is capital that is tied to assets used in the on-going maintenance or day-to-day running of a business.

CASE STUDY

  • Applicant’s proposed business is to establish a Restaurant for $500,000.00. $50,000.00 will be used as working capital for stock.

  • Does the applicant qualify under the Entrepreneur Plus category?

  • Question; Can stock qualify as a capital investment as opposed to a working capital?

    • Long Term Fashion

    • Maintain a minimum stock

    • Re-purchase stock to maintain Lowest inventory level

    • Practical Implications

  • Business Plan has to separate the capital that will be used as working capital and capital that will be used to purchase assets, equipment, fit out and shares.

  • Definition of working capital does not take into account the different type of businesses that required substantial amount of working capital e.g exporting businesses.

BENIFIT TO NZ

BH4.10 Criteria for a business benefiting New Zealand

a. A business is considered to add significant benefit to New Zealand if it can demonstrate that it has promoted New Zealand’s economic growth by for example:

i. introducing new, or enhancing existing, technology, management or technical skills; or

ii. introducing new, or enhancing existing, products or services; or

iii. creating new, or significantly expanding existing, export markets; or

iv. creating sustained and on-going full time employment for New Zealand citizens or residents; or

v. the revitalisation of an existing New Zealand business that has led to significantly increased financial performance; and

b. The business is trading profitably on the date the application is lodged or a business immigration specialist is satisfied that it clearly has the potential to become profitable within the following 12 months.

c. If the associated Long Term Business visa application was made before 30 November 2009 the ‘creating employment’ benefit can also include non-New Zealand citizens or residence class visa holders, with the exception of the principal applicant.

Note: For the purposes of BH4.10(a)(i) and (ii):

• “new” means new to New Zealand or the region of New Zealand in which the business would be located; and

• “existing” means existing within New Zealand or the region of New Zealand in which the business is located. For the purposes of these instructions, the employment of non-New Zealand citizens or residents is not considered an acceptable example of a business benefiting New Zealand.

Practical Implications

  • Significant is intended to ensure that the proposed business maximizes the benefit to NZ

  • Holistic approach

  • Creation of employment has a higher threshold

  • Revitalization of business requires significant increase in financial performance

CONCLUSON

REMEMBER – BEFORE SUBMITTING AN APPLICATION

  • “SPECIFICALITY” – IS IT SPECIFIC ENOUGH?

    • Existing or New

    • Benefit to NZ

    • Supporting Documents

  • “ADDITIONALITY” – SIGNIFICANT BENEFIT? • Primary

  • • Ancillary

  • ENOUGH CAPITAL?

    • Working Capital?

    • “Stock Test”

    For more information about business visas and long term business visas click here.