New Zealand welcomes foreign investment. It is a country with an open economy which provides plenty of opportunity for investors with capital, entrepreneurial track record and international connections. The World Bank reports that New Zealand has been ranked as the easiest place to do business out of 185 countries. Ranking highly on the ease of doing business index means a country’s regulatory environment is more conducive to starting and operating a firm.
New Zealand’s national election is only a few weeks away and that several political parties have signalled a review of the Investor Plus Category.
This week Queen City Law Immigration lawyer Bradley So is looking at some of the investments in New Zealand that are considered acceptable by the New Zealand Immigration office and its relation to the Overseas Investment Office (“OIO”) requirements.
The OIO assesses applications from overseas persons who intend to invest in sensitive New Zealand assets. If you would like to read more articles by Bradley click here. To find out more about the Queen City Law Immigration services click here. To read this article as a print and tablet friendly PDF click here.
As a Philippine born New Zealander, Bradley has a keen understanding of the investment climate in New Zealand and a good perspective on some of the culture shocks businesses and families may face during the process of establishing themselves in New Zealand.Bradley is fluent in English and Tagalog. He has expertise in immigration, particularly business and skilled immigration and the structuring of commercial affairs. At Queen City Law Bradley helps to lead the Immigration and Commercial Law teams. To read more about Brad click here.
Selling New Zealand assets to overseas investors? Vendors have obligations under the OIO.
Overseas Investment Office
At present, overseas persons can invest in residential and commercial property in New Zealand. However, consent from the Overseas Investment Office (“OIO”) maybe required for certain transactions involving “overseas persons”. The screening regime is contained within the Overseas Investment Act 2005 (Act).
The starting point is to determine if the investor or the person of control falls within the definition of an overseas person under the act:
• An individual who is not a NZ citizen and who is not ordinarily resident in NZ
• Partner, body corporate or trust where an overseas person or persons have 25% or more ownership or control (or similar requirements are met), and
• A company incorporated outside New Zealand, or in which an overseas person or persons have 25% or more of any class of share, or the power to control 25% or more of the company’s governing body, or 25% of voting rights, or the right to exercise control over 25% or more of voting rights.
We note that an investor who holds a New Zealand resident visa may still require consent from the OIO. The test is whether the investor is ordinarily resident in NZ.
If the investor is considered an overseas person, then the Act will apply to the acquisition by the overseas person of 25% or more direct or indirect ownership and/or control of interest in:
• Significant business assets – generally speaking this means the total expenditure involved if investment exceeds NZ $100 million.
• “Sensitive” and “special” New Zealand land – this is expressly defined in the Act. The most common are non-urban land over five hectares in area, the foreshore or seabed and, any land which is over 0.4 hectares and is the bed of a lake;
• Farm land – the Act requires that farm land must first have been offered by the vendor to the public.
On the other hand, the Migrant Investment Programme may grant a residence visa without operating or establishing a business. However, the investment must meet the minimum investment criteria of at least NZD $1.5 million under the Investor 2 Category (plus one million in settlement funds) or NZD $10 million under the Investor Plus category.
The investment must be considered “acceptable investment”. It is not acceptable to use the nominated investment fund for personal use or to simply hold it on a term deposit. The definition of acceptable investment is outlined under the Immigration Instruction and it is very broad.
The most common form of investments is as follows:
• Managed funds with the funds being invested in NZ;
• Commercial property;
• Equity in New Zealand company;
• Residential Property Development.
It is important to ensure that the structure in place to acquire the above investment is compliant with the immigration instruction. Accordingly, please contact us to determine if the proposed structure of the investment qualifies. Queen City Law is, we believe, the most experienced law firm in all of New Zealand, in this space and we are able to provide a wealth of experience in such applications.
Note also that New Zealand’s national election is only a few weeks away and that several political parties have signalled a review of the Investor Plus Category.
For more information, check out the QCL Law Library for documents and checklists pertaining to migration to NZ.Contact Us