Simon Laurent: The aim of it is directed towards encouraging investment, not just in things like stocks and bonds, but actually investment in companies, in organizations that do things that generate wealth.

Salman Siddiqui: Welcome to the Investment Immigration podcast by you Uglobal.com with weekly in-depth interviews with the world's leading investment immigration professionals. Welcome to another episode of the Investment Immigration podcast. I'm your host, Salman Siddiqui, live from Berlin. Today we are going to focus on New Zealand and the investment immigration opportunities there. So New Zealand has this program called the Active Investor Plus Visa Program. I mean, a lot of people know about this program in the sense that they always consider this as a very expensive program. They're going to find out in this episode whether that is really the case and what are the benefits if one puts so much amount of money in that program. Do you get the dividends for it? To help us explain this program, the details about how one can become eligible for it, I have a very special guest today in my show. His name is Simon Laurent. He's the principal at Laurent Law, Barristers and Solicitors. He's joining us live from Auckland. Thank you so much for joining our show today, Simon.

Simon Laurent: It's a pleasure. Salmon. Thank you for having me on.

Salman Siddiqui: Thank you. So, Simon, please give us a brief overview of the Active Investor Plus Program in New Zealand and what is the background of it? When did it start? What are its objectives?

Simon Laurent: Sure. The Active Investor Plus, as they call it, is a relatively new scheme, which was opened in September 2022, and that's about ten months ago as of now. And it replaced a previous call, the Investor 1 and the Investor 2, which the flagship of that required a NZD $10 million investment. It was a scheme that started in 2009 and continued what we thought reasonably successful, but it was mothballed in July of 2022, and this new scheme was then brought out a couple of months later and marks a significant departure in the way that operates. The objective, according to the immigration instructions that are related to it, is essentially to encourage investors from overseas to participate in the New Zealand industry in an active fashion and to bring significant contributions to New Zealand quote unquote. So that's the aim, it is directed towards encouraging investment, not just in things like stocks and bonds, but actually an investment in companies, in organizations that do things that generate wealth. So that's the government's aim in opening this up so far, I could say. But the take-up on it has not been that rapid. So, there's plenty of opportunity for people to make up those applications and take up the opportunity of residence.

Salman Siddiqui: Right. And Simon, if you could explain to us, you mentioned just now that it's a departure from the previous program that we had. So, what is the difference now in this program compared with the previous version of it? And how big is that departure from the previous program?

Simon Laurent: Beforehand. It was a simple matter of bringing a certain sum of money into New Zealand, investing it in pretty much what you wish to put it into. Of a nature of something that would generate a commercial return and leaving it that sum of money here for three years or four years, depending on which category you went under. This one is also time-based in the sense that a sum of money needs to be brought in and invested for four years in total tied up in New Zealand for that period. But the difference here is that the way in which people can invest is much more tightly controlled, and there are several classes of investment that one can make going from buying shares in listed companies, which are seen as more of a safe investment. And so, you need to put more money in up to what is described as direct investment, which is investing in companies that have been identified as suitable by the government. And these are companies that are not publicly traded. There is obviously a certain amount of risk attached to trading in such companies, but the list of companies that you can invest in is, in fact, maintained and curated by New Zealand Trade & Enterprise, which is a government agency, so that hopefully, some due diligence has been done about the viability of those companies as being an investment target. You can put in a mix of investments in different types of investment class, and you can actually change that mix, which adds a level of complication to the strategy. So, there is some flexibility in what one can do, but it is not a straightforward investment approach and requires a bit of thought before going into it. And during the course of running that investment. That's the biggest change. I would say that it's much more of a shifting-the-levers kind of investment on the part of the potential investor.

Salman Siddiqui: So, let's now talk about the eligibility criteria for the Active Investor Plus Visa program and how does it say differ from other residency options that are there in New Zealand, if you could explain that?

Simon Laurent: The main difference, I think really, is the ability to bring, identify that you have funds that you can invest, that they're yours, and that you're able to liquidate those and bring those into New Zealand. That's really the difference between this and other types of visas that people can apply for. There are the usual things, such as needing to establish that you're of good health and good character and that you have a certain English standard that is the equivalent of the IELTS 5.0. There is one other requirement, which is a little bit different from some of the other categories, and that is the requirement to show that you're a fit and proper person for investment purposes. That means that you don't have a history of having committed fraud, of having become bankrupt, or allowing your companies to have failed. That is a test that is applied as a matter of course, in any of the investor categories, and it's probably the same in other countries as well. I can't really comment on that, but there's a significant factor that needs to be identified as a difference here.

Salman Siddiqui: I see. And the thing you just mentioned about how can these checks, about whether the money is coming through the proper channels, the due diligence is right. How does one do that? Is the client going to employ a certain agency in New Zealand to do those checks for them so that they can meet the government requirements? How does this process really work?

Simon Laurent: Now what we're talking about, I believe, or your question I believe, was in respect of the legitimacy of the funds that someone is planning to invest. New Zealand is quite strict on this point. The applicants need to demonstrate that the funds belong to them. That's the first one. And that the funds have been lawfully earned. Now, the first point about the funds belonging to a person means that they belong to the applicant or the applicant and their partner if the partner is included. This can sometimes be a real challenge for a high net-worth-individual because their funds may be distanced from them for asset protection purposes, for tax purposes, and so on. That is not an acceptable structure for the purpose of this type of application. The applicant actually needs to personally own those assets rather than them being held by a trust over which they don't have complete control or held in a company of which there is only one of the shareholders. Of course, some people have a fairly complex set of structures. If they own a lot of assets, they will spread them around.

So that is a bit of a challenge for some of the applicants to overcome, and we have to work with them on that. The second point is about proving that the person has lawfully earned those funds. And that can involve quite a tracing exercise in terms of the applicant showing how they earned the money to make the money that they are now planning to bring into New Zealand. For example, they might need to show that they have traded on the stock market and have built their portfolio, and that can require going back over a number of years of trading history. They may need to show the tax returns of companies that they have operated to show that those companies have been profitable. And that's how the wealth has been generated. Again, it can be quite a lengthy exercise of going back over a number of years to show the history, which has led to the point where someone has X million dollars available that they can transfer to New Zealand.

Salman Siddiqui: Right. And talking about millions of dollars. Let's talk about the minimum investment requirements for the Active Investor Plus Visa program. And if you could explain the amount that one has to have Also, if you could explain why this is a question that a lot of people ask about New Zealand's program? Why is the investment threshold so high compared to so many other countries? What's the logic behind this? So just the type of acceptable investments under this program.

Simon Laurent: The starting point is that someone is required to invest NZD $15 million. That's the equivalent of about $9 million or $10 million or about €9 million or something like that. But that is just the starting point. And this is where the different classes of investment become important. If you play it safe and you buy entirely into shares of listed companies on the New Zealand Stock Exchange, then you will need to bring over NZD$15 million. The other extreme is if you decide to invest entirely in what's called a direct investment, which is a privately held company that has been identified as suitable for investment by New Zealand trade and enterprise in order to carry out an investment solely made up of that, you only need to bring NZD $5 million or about $3 million. There are gradations between that. And just going back to this, there's a weighting system applied so that NZD $1 of the direct investment into a private company is equivalent to $3 bought into shares, public shares in between that, you have another class which is a managed fund. These are like unit trust fund investment programs. And the way those work is that every NZD $2 spent in investing in one of those managed funds is equivalent to $3 of the public share purchase. So the idea here is that the more you go towards the active investment, that is, the direct investment into a private company, and the more risk that's attached to that, the less money you need to invest.

So, we have a scale between NZD $5 million minimum to NZD $5 million minimum. And the thing is, you could decide to develop a portfolio which is a mixture of those. One of the other classes is investment in philanthropic charitable investments. There is a cap on how much you can invest in that, but it might suit some people who feel that they want to fulfill one of their ESG requirements to demonstrate that they are taking a socially conscious approach to their investing. You have these four classes and they have different weightings attached to them. And people may decide that, for instance, they're going to partially invest in privately held New Zealand companies, which have a higher risk level, and they might put a few million there, and they might put the rest into a portfolio of managed funds. They need to put more into the managed funds proportionately than they would for the active investment, but there might be a certain amount of reduction of risk in doing so. So, the answer to your question is not straightforward, and that's one of the things which is possibly might be a disinclination on the part of some potential investors in looking at this and saying, gee, this is a bit complicated to me.

Salman Siddiqui: Exactly. And also, a lot of questions that I see about the program online is this constant comparison that it's maybe too expensive. You know, maybe I have better options in some other country nearby. Does that make your job a little bit more difficult to convince clients or do you get clients who are dead set on investing in New Zealand anyway, so they just look at the options and see what's the best suited to them and they just go for it?

Simon Laurent: I don't think an investor invests in New Zealand for a commercial return. They invest in New Zealand because of the opportunity to live here. There's going to be a certain tranche of potential investors who might not wish to put their money into New Zealand because they feel like it could be a risk for them. Then there are other investors who don't care. They have the funds they can spend basically as a way of it doesn't sound very nice, but purchasing the security of being able to potentially live in New Zealand in the future, and there are some arguments in favor of doing so. One of them is that New Zealand is compared to a lot of other countries, a very safe place to live, and it is relatively free of corruption. The social institutions are stable by comparison with some other countries that one could name. And the environment of the country in terms of the physical environment is pretty clean. So, we have some advantages in terms of. Lifestyle in terms of social cohesion and so on, which make New Zealand an attractive place to consider. One of the other things that has occurred to me recently is that New Zealand could well become a very attractive destination for people who are concerned about the dramatic effects of climate change around the world.

Geographically, New Zealand has an advantage because of the fact that it sits in the middle of a very significant heat sink the Pacific Ocean, so that the more dramatic and extreme effects of climate change are mitigated around New Zealand. And that I think, is going to become much more significant as the years pass, especially with some of the things that one has been hearing about what's been happening in the Northern Hemisphere, the larger continental landmasses, and think that's actually something that people should factor into their considerations about where they might want to make a future. I'm not sure if that answers your question, but it certainly has come back to my point that as far as a commercial investment option for New Zealand is not the easiest and it's not the cheapest. But I think there are for people who are of a high net worth, there are other criteria that they might weigh up in making that decision.

Salman Siddiqui: No, those were all excellent points, and especially the point about climate change. I hear this actually point raised in other countries' programs, especially I heard this from countries in Latin America where a lot of people are moving in or interested to move in. Let's also talk about the trends which particular you listed for investment classes so where most of your clients are putting their money in. Is it mostly in direct investments into approved businesses? Is it into the managed funds you talked about? So, if you could share some trends in that.

Simon Laurent: As I said, the policy was only opened in September. The flow of potential investor migrants has been very slow, I have to say, at this point. This is what sometimes happens with these schemes where it takes a while for the news to get out of what's available and for people to even understand what's involved. We haven't actually seen so far where people are landing their investments. Now, to understand why that might be the case, even though nearly a year is passed, it's necessary to explain how it works in terms of the timeline of making such an application. And there are several stages to this. So, first of all, an applicant puts forward their case and says, I have such and such assets which I wish to nominate as the funds that I'm going to use to invest in New Zealand. Now that application is assessed, and if it seems to be suitable, then the person is issued an approval in principle letter which says these are your nominated funds. You now have six months to transfer those funds into New Zealand. Having received that and then having made the arrangement to make the transfer, the funds initially, or most of them, go into what are called holding investments. These are not the final investments, but they are an investment which could even be putting funds into a bank account which has a fixed interest arrangement. And they really are in a holding position from where the funds can then be allocated to the final acceptable investments. And those are the investment classes I was talking about before.

The applicant then, from the time that they've transferred all those funds over then has a total period of three years to decide where all of those funds are going to end up. Now they do need to apply half of the funds into an acceptable investment in the first 18 months after they've transferred the money over. And then the balance has to be finally invested by the end of the second 18 months.

So that takes you up to 36 months or three years from the time that you've transferred your funds into New Zealand. Now you can see, therefore, that the timeline is quite long before people actually make their final investments. Potentially. Now they could decide to put all their money into the final investment straight away. The sense of it is that is not what is happening. One of the reasons for that, of course, is the volatility of the economic situation. Right now, we're looking at relatively high inflation in New Zealand. We're looking at a recessionary environment, businesses are struggling. And so, it is understandable that a lot of investors would be cautious about tying their money up in an investment that they can't necessarily get out of and which could lose money. So, the sense that we're getting at present is that progress in making the final investments is quite slow and there is a timeframe in which that is allowed. So there's not much I can tell you about where those final investments are ending up.

Salman Siddiqui: I would like to also understand from you, so you talked about the timeline of this whole process. So, what happens then after three years? Does one get permanent residency? Once all the investment is in through this Active Investor Plus program, after three years, what happens? You get permanent residency. What happens then?

Simon Laurent: Thank you for asking the question, because what I'd neglected to mention in my description of the process was that after getting the approval in principle, and then transferring the funds, once all the funds are in New Zealand in holding investments or the actual acceptable investments, the resident visa is granted. But the resident visa is for the applicant and for any partner and children that have been included. So, they are able to be included in that application. Once the resident visa is granted, it comes with a set of conditions that enable the applicant to keep their residence. Those conditions are making the investments, spending a certain time in New Zealand, and keeping those investments in place for a total of four years. So, you have the first three years, which is the time in which the window in which you have to make the investments to put them in place, followed by an additional year in which the funds, and the assets need to continue in investment. At the end of the four years, the person can then apply to remove the conditions upon their resident visa. And the removal of those conditions means that the person then obtains what is called a permanent resident visa. That is a resident visa, which has no conditions whatsoever. And that is really, if you like, the end game. But during the period of investment, they actually do have residence. They're able to come and live here, they’re able to come and go from here as a resident.

Salman Siddiqui: Right. And they can do that with their families, I assume?

Simon Laurent: Yes, that's right.

Salman Siddiqui: Yeah, exactly. So, after four years, for example, if an investor decides to divest or pull the investment, they can do that, then?

Simon Laurent: Yes, after the four years, so long as they have kept the funds and those investments up to the point where they ask for the conditions to be removed, they can then divest, and they can send their money wherever they like. The reality of it, though, is, and this is some intelligence that I've had from people involved in the migrant attraction sphere and government, the pattern that investors have followed over the years is that they don't just maintain the investment that they've already made, but they will sometimes on average invest three times as much into New Zealand over the course of their stay in the country. So, in fact, while some people may pull their money and put it somewhere else, most don't, and they actually put more in because they see, having come to the country, they see, first of all, attractive opportunities for further investment, which they've discovered from living here, and also because they feel that they personally want to invest themselves in the country. So, you see a lot of loyalty develop in people who've come here and discovered that they like it here.

Salman Siddiqui: Yeah, and that makes sense. You know, once you've put in so much investment of not just money, but time, you would like to invest more there. So that makes perfect sense. But also, now please explain to us what happens after one gains permanent residency. Does it eventually lead to citizenship and what's the criteria for that?

Simon Laurent: The residence visa process is handled by immigration. New Zealand citizenship is handled by the Department of Internal Affairs, which is a different agency, and the application for citizenship is an entirely separate process. The normal requirement for citizenship for people who've come in as an investor is that they need to have spent a sufficient period of time actually in the country prior to making the citizenship application. The normal formula is that they need to spend eight out of 12 months each year for five years prior to their citizenship application. Now, if they've decided not to spend that much time in New Zealand during the investment process, then they're going to have to put that citizenship application off. But theoretically, a person who obtained their resident visa initially when they made their first investment and then just decided to spend most of their time in New Zealand from there could apply for citizenship as soon as five years after they get their initial resident visa, not the permanent resident visa, but the initial resident visa. And that's obviously a lifestyle choice. So the length of time it could take to acquire citizenship very much depends on the level of commitment that someone is going to make to living here.

Salman Siddiqui: I also want to know from you as the kind of industries or the kind of investor that the Government of New Zealand wants to encourage and the kind of investments it wants to encourage. So you mentioned the four investment categories out of those categories. Is there any category where which would give a client a better chance of being successful or is that, you know, it doesn't matter really from the government's point of view? Or are they pushing a certain kind of, you know, maybe direct investment? It suits them better and they would want more applicants to apply for that.

Simon Laurent: The government wants. To encourage direct investment into private companies. That is the end game that they're really seeking to achieve with this policy. And the direct investment companies, as I mentioned earlier, are identified upon application by New Zealand Trade and Enterprise as being the suitable businesses that they wish foreign investors to invest in. Now those could be of all sorts, but NZ does have a focus on what they call sectors of strength. These are particular classes of industry that they want to encourage. These can be from tourism obviously to it to partnerships with businesses run by Maori who are the Indigenous people of New Zealand, and Forestry for example. And so those are industrial sectors that they wish to drive, they wish to get investment capital into and it has probably influencing the decisions on NZ is making about the types of companies that they are allowing as suitable direct investments. So for example, an IT company is more likely to be certified as being a suitable company for foreign investment over something else, which is not in one of those sectors of strength, but the only real control that they have over where people make those investments is in the choice of the direct investment private companies and in the choice of managed funds, which are also curated by NZ. And those are really fund managers who have a portfolio of New Zealand investment or New Zealand companies that can be invested in those can be from all sorts of sectors. So it really boils down now to encouraging investment in private companies which are in the sectors of strength. Beyond that, I think one of the other imperatives is to try and get foreign investment into the country, foreign funds that are available for use as capital in various different ways. So the amount of control the government exerts over that is, I'd say, not as great as they might like.

Salman Siddiqui: Okay, noted. And Simon, if you could also tell us, you know, this is also a question that comes up frequently. If an investor is listening to our show in the US right now and they are interested in investing in approved business, where do they go exactly? What are the resources to keep in mind in terms of finding, you know, these government approved businesses and these managed funds so that they don't get poor advice or scammed, basically?

Simon Laurent: Yeah, certainly. All right. So the go-to place for direct investment in private companies is New Zealand trade and enterprise, and that is found at Govt.Nz And someone who's interested in exploring the opportunities can register as an interested and interested party. They can get access to what is called the Live deals platform. And on this platform the approved companies can put themselves forward and say We're looking for $10 million of capital into a startup biotech, for example, or $5 million into a tourism operation in the ski fields. So the investor could then look around at what's available and what they might be interested in and what appeals to them. One of the important things about this is that all of the companies that get to list themselves on the live deals platform do go through a due diligence exercise with NZ first so that the hope is that if NZ has done its homework right, these are not a fly by night company, these are not a front for something illegal and these are not businesses that are going to fall over quickly. They need to be sustainable and robust. They need to have a vision for what they're doing. And there's obviously no absolute guarantee in all of this. Of course, because of the vicissitudes of economics and the economic climate. But it is at least a somewhat controlled environment in which investors can look at what to aim for.

Salman Siddiqui: Before I go, I also want to clarify that there's a lot of online chatter about maybe one could buy big properties in New Zealand and maybe have a golden visa route to New Zealand. And if you could clarify for our listeners that that is really not the case.

Simon Laurent: Yeah, I can very simply answer that. No, just buying a piece of land is not going to do it. You do have to invest in something which is a going concern. Or we could say the alternative to that is to invest indirectly in a going concern by buying into managed funds into New Zealand companies or buying shares on the New Zealand share market. But buying land is constrained significantly for non-residents in a number of ways, including the provisions of the Overseas Investment Act, which. Prevent simple outright purchase and land and certainly what could be called sensitive land, which is ecologically diverse. And the purchase of land simply doesn't get you anywhere in the investment space. It is not an allowed class of investment. Those rumors are unfounded, and they always have been. Actually, the exception to that is if one is to purchase into something like a hotel development or a residential property development of a large scale where one might be able to buy a part, share in such a development and provide working capital for the building of that development for commercial return. But even that doubtful that that is actually really one of the things that's been advocated for through. I'd be very surprised if they were driving many of those through that system.

Salman Siddiqui: Simon In the end, I also want to ask you, I mean, I read your profile and it was mentioned that you've been a specialist in New Zealand immigration law since 1996. So with your depth of experience, want to learn from you is the kind of future outlook you have about the investment immigration space in New Zealand. What's to expect in the future you think, and what have you learned since those many years? The kind of trends that are shifting in New Zealand? What can you share with our listeners on that?

Simon Laurent: I think the overall flavor of how things have gone over the past many years is that the rules around migration and investment migration have become more complex over the years and they're probably not going to get any easier. I have to say. There are drivers of that, such as the concern about money laundering, illegal flow of money around the world, which has created considerable constraints around people's need to prove the source of their income, for example. The other complexities, I think, are really driven by the way that commerce and people's ways of life have gone over the years, increasing regulation, trying to plug the loopholes, trying to drive social and economic policy to get very targeted outcomes. What that means is that it just makes things more complicated to navigate, certainly much more complicated than when I started. And even the last few years, the pace of change and the nature of change has accelerated. So we had, of course, the Covid 19 emergency, which affected everybody around the world. We came out of that about a year ago and suddenly the doors opened again. A vast amount of change took place in the space of about six months, not just in investment, but in other areas as well.

Simon Laurent: There were infrastructure challenges for the government itself to try and deal with all of those changes and cope with them. So we saw things slow down. The implementation of new IT systems make things more complex. And so what I think is going to happen in the next couple of years is that the dust is going to settle the policies that have been brought in will be left running for a while to see if they're working. Not sure if the active Invest Plus policy is working. It's too early to tell. It's had a slow start, and it's not clear whether it's the pace is going to pick up because we said that about the investor category that was brought in in 2009, and that ended up going great guns after a few years. But I think the point is that we could expect that the policy as it stands and the rules around it are probably going to be the same in two years from what they are now. And at that point, there might be a re-evaluation, but I'd be surprised if much changed before that.

Salman Siddiqui: Assignment In terms of the Government's approach to attracting investment, immigration, and investors from around the world, do you see that being encouraged more in the future? And that's what I wanted to learn from you. How has that changed in your experience? Do you think the environment or the opportunities for foreign investors in New Zealand would continue to increase or is this program going to be the only option on the table for some time?

Simon Laurent: You think this is going to be the only option for a little while yet? I don't think there's any appetite for bringing out new schemes, too much change has already taken place. Personally, I don't think that the Government has made it particularly easy for investors to apply. They have made a lot of noise about wanting to attract investment, but the reality doesn't quite match up yet. Now my assessment of that may be too pessimistic, but my feeling is that there is actually scope for creating more attraction than there is at present. And so I'm not sure when that's going to happen. I'm afraid I don't think it's going to happen quickly, which is my previous point, that the rhetoric about encouraging investment into the country is not quite matched by the settings that the government has put in place. That is just what we've got to work with.

Salman Siddiqui: Thank you so much again, Simon, for sharing your thoughts with us and for explaining. About the options available for investors in New Zealand. I learned a ton from you, and I'm very grateful for you to taking the time for my episode.

Simon Laurent: Thank you. It's been a pleasure.

Salman Siddiqui: You've been listening to the Investment Immigration podcast by Uglobal.com. Join us again soon for more in-depth conversations exploring investment immigration opportunities from around the world.

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