New Zealand’s New Investor Residence Category

Active Investor Plus category: 11 August 2022

On 20 July the New Zealand Government announced that the Investor 1 and Investor 2 categories would close. Applications in process would be accepted only until 27 July. Applications that have already been lodged and are waiting in the queue will continue to be processed under the existing rules. New Zealand’s law requires cases to be processed in terms of the Immigration rules at the time of filing.

Many clients under the old settings of Investor 1 (with $10m invested) have become “actively” involved in New Zealand. However, there is no guarantee that an Investor 1 category resident will involve himself in the business world when they travel to New Zealand, or whether or not they will maintain their investment after the three-year investment period (or for Investor 2, four years). The New Zealand Government’s new policy rationale is to force clients to become “involved” in their investments. The only way to opt out of the higher risk categories (discussed below) is to invest $7.5m in shares and equities (bonds will not be permitted) and to make use of the $7.5m philanthropy option. We will discuss below the potential for $7.5m in shares and equities coupled with higher risk options (of which there are two distinct categories).

The applicant will choose how to make their investment(s) but clearly with high-risk venture-capital-style investments the client will either need to be involved in the business themselves or they will need to engage an agent who will do that for them. Further, careful due diligence will be critical.

Please note that at the time of writing, the Immigration New Zealand rules for the Active Investor Plus (AIP) category have not yet been released. At a seminar on 9 August it was indicated that the precise rules have not yet been finalised and that they may not be finalised until shortly before the category is due to open on 19 September 2022. We only, therefore, have some very broad indicators arising out of the press releases and website information on the Immigration New Zealand (INZ) and New Zealand Trade and Enterprise (NZTE) websites. The purpose of this provisional paper is to assist clients in their planning.

There has been some discussion as to whether the AIP category will involve a fast-track process. Where the case revolves around a “deal” involving $5m or more, then it will be critical for there to be prompt processing. The current Investor1-Investor 2 caseload involves as at August 2022 more than 800 cases in a queue with only 20 officers processing them. The queue is currently already overwhelmingly slow and probably will not be cleared for a year or more.

The Active Investor Plus program may involve a minimum of a $5 million investment but this must be in what is referred to as a “direct investment” in a private equity firm or firms seeking capital. A list of “approved” companies or firms will be published on the NZTE website (prior to 19 September). It has been suggested publicly that there may be opportunities for a particular company that has not yet been “listed” to apply for approval by NZTE. An investor could, therefore, in fact be “matched up” with venture-capital specialists or even through accounting or law firms, with a particular company seeking investors. Both the investor and the company seeking investment could seek approval. An unlisted “direct investment” could be approved without being listed in NZTE’s published list.

Although we do not have the precise rules of how this will occur both the investment “vehicle” and the investor need to be approved (the investor by Immigration New Zealand, the company or firm by NZTE) if the investment amount is just $5m.

A “direct investment” is given a weighting of x3 (and $5m is equivalent to $15m required where direct investments are not utilized).

Passive investment involving shares and equities (not bonds) cannot extend beyond $7.5m. However there is a middle category involving non-NZTE-approved private equity firms or venture capital funds. This is weighted at “2x”.


A high risk approved private equity firm investment of $3 million for example could be made (that will count as the equivalent of $9 million with a weighting of x3) in a package that must total $15m. A second level of investment (non-approved private equity as discussed) with a rating at x2 can also be added. This middle group level investment involves unlisted firms or companies, however, who have already received approved funding from Superannuation Fund Managers, ACC and other New Zealand financial institutions (confirming that the risk is not too high). It is assumed that such private equity firms would have already been vetted, by such agencies (this assumption may need careful due diligence). The precise definition of this middle tier will be defined in the rules that will be published. Basically, however, this “second tier” could form the basis of an investment, and if at a 2x the weighting could be as much as $7.5m, or a lesser amount (if stocks and equities are added). There can be a combination of high risk (x3), second tier (x2), and shares and equities (x1). A number of combinations become possible, but with listed shares and equities not exceeding $7.5m, and a notional total, using the multiplication factors, at $15m.

Effectively those who seek to manage their risk, could choose to minimise their “direct investment” but will then need to supplement or replace this with investments in the non-NZTE approved private equity firms or companies (from the middle tier x2), and/or listed shares and equities.

Some other changes will include:

  • English IELTS at 5.0 (probably for the principal applicant only).
  • 117 days presence during the investment.
  • Investment period to be four years.

The attractiveness of the New Zealand product arising out of the fact residence is then for life, without any further presence requirement, will remain.

However, the new system is clearly designed to force investors to be more heavily involved in their investments to incentivise growth in higher risk ventures. This might not suit everybody. Should an investment fail during the investment period, residence is still maintained. Perhaps high-risk ventures are notionally similar or equal to philanthropy?

Clients will still need to establish the source of their funds and to transfer these through the banking system. This will not change from the current requirements. Property speculation businesses will generally be excluded.

David Ryken.