BJ5.50 Definition of ‘acceptable investment’ (24/03/2014)

1. An acceptable investment means an investment that:
   1. is capable of a commercial return under normal circumstances; and
   2. is not for the personal use of the applicant(s) (see BJ5.50.1 below); and
   3. is invested in New Zealand in New Zealand currency; and
   4. is invested in lawful enterprises or managed funds (see BJ5.50.5) that comply with all relevant laws in force in New Zealand; and
   5. has the potential to contribute to New Zealand's economy; and
   6. 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 and venture capital funds); or
      • bonds issued by New Zealand registered banks; or
      • equities in New Zealand registered banks; or
      • residential property development(s) (see BJ5.50.10) or
      • bonds in finance companies (see BJ5.50 (c));or
      • eligible New Zealand venture capital funds (see BJ5.50.15).

        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.

2. 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.
3. A Business Immigration Specialist may consider bonds in finance companies as an acceptable investment where the finance company:
   1. is a wholly-owned subsidiary of,
   2. raises capital solely for, and
   3. has all its debt securities unconditionally guaranteed by a New Zealand Stock Exchange listed company or a local authority.

      Note: The value of an investment is based on the net purchase price (for example, less any accrued interest, commission, brokerage and/or trade levy), not on the face value of the investment.

BJ5.50.1 Personal use of investment funds

Personal use includes investment in assets such as a personal residence, car, boat or similar.

BJ5.50.5 Managed funds

1. For the purposes of these instructions, managed funds are defined as either:
   1. a managed fund investment product offered by a financial institution; or
   2. funds invested in equities that are managed on an investor's behalf by a fund manager or broker.
2. In order to be acceptable as a form of investment managed funds must be invested only in New Zealand companies. Managed fund investments in New Zealand with international exposure are acceptable only for the proportion of the investment that is invested in New Zealand companies.

Example: Only 50 percent of a managed fund that equally invests in New Zealand and international equities would be deemed to be an acceptable investment as set out in BJ5.50.5

BJ5.50.10 Residential property development

For the purposes of these instructions, residential property development(s) is defined as property(ies) in which people reside and is subject to the following conditions:

1. the residential property must be in the form of new developments on either new or existing sites; and
2. the residential property(ies) cannot include renovation or extension to existing dwellings; and
3. the new developments must have been approved and gained any required consents by any relevant regulatory authorities (including local authorities); and
4. the purpose of the residential property investments must be to make a commercial return on the open market; and
5. neither the family, relatives, nor anyone associated with the principal investor, may reside in the development; and
6. the costs associated with obtaining any regulatory approval (including any resource or building consents) are not part of the principal applicant’s acceptable investments.

BJ5.50.15 Venture capital funds

1. For the purposes of these instructions, a venture capital fund is defined as a fund that invests capital in an early-stage or start-up (or seed) company or companies in exchange for an equity stake in that company or companies.
2. In order for a venture capital fund investment to be deemed acceptable by a business immigration specialist, nominated funds can be placed in approved on-call accounts or venture capital funds, subject to the following conditions:
   1. applicants must have entered into a binding fund investment contract with an approved venture capital fund manager and into an approved fund structure (for example a New Zealand limited partnership), to supply an agreed amount of funds as committed capital; and
   2. the committed funds are a fixed commitment, managed on an applicant’s behalf by a fund manager or broker, to be drawn down over a stated period; and
   3. nominated funds can either be committed to an acceptable investment or placed into on-call accounts which meet the specifications in BJ5.50.15(e); and
   4. applicants must maintain a level of funds in any approved on-call account equal to the nominated amount minus any funds already committed to the venture capital fund; and
   5. applicants must be able to demonstrate that all funds placed into on-call accounts are in those accounts pending call-up by their nominated venture capital fund.
3. In order to be approved, all on-call accounts or venture capital funds must be managed on an applicant’s behalf by a fund manager or broker and held in New Zealand in New Zealand dollars.
4. Funds and fund administrators or managers must be able to provide confirmation that both funds and managers are fully compliant with any legislative and regulatory obligations, applicable codes of practice and licensing or registration requirements under New Zealand law, including any requirements imposed by the Financial Markets Authority.
5. For the purposes of these instructions, acceptable on-call accounts are defined as an investment that can be liquidated to meet the needs of the venture capital fund, including trusts, bonds, or shares in equities.

Effective: 24/03/2014