BN7.10 Acceptable investments

1. An acceptable investment means investment of funds that:
   1. are not for the personal use of the applicant(s) (see BN7.10.25); and
   2. are invested in New Zealand, in New Zealand currency; and
   3. are invested in either one or more of the following assets classes:
      • listed equities (see BN7.10.1); or
      • philanthropy (see BN7.10.5); or
      • managed funds (see BN7.10.10); or
      • direct investments (see BN7.10.15).
2. An acceptable investment:
   1. is determined at the time the investment is made; and
   2. must continue to meet the requirements to be an acceptable investment during the 48-month investment period (except where these instructions provide otherwise).

      Note: When an investment no longer meets the requirements of acceptable investments, the principal applicant must invest into another acceptable investment as set out in BN9.5, except where BN7.10.1(c), BN7.10.10(d) and BN7.10.15(d) applies.

3. The investment value is determined at the time it is made, except where BN6.15(c) applies, inclusive of investment fees (such as management fees), brokerage fees and transaction fees charged on the funds invested.

   Note: Investment fees do not include legal or advisory costs outside of the investment.

BN7.10.1 Listed equities

1. For an investment in listed equities to be considered an acceptable investment, the funds must be invested either directly or through an exchange traded fund or managed fund, managed by someone licensed by the Financial Markets Authority to provide that service, in the equities of a New Zealand resident entity that:
   1. are listed by a market operator licensed by the Financial Markets Authority; or
   2. are offered through a crowdfunding provider licensed by the Financial Markets Authority; and
   3. is not engaged in the acquisition, development, ownership, leasing, management, and operation of property (see BN7.10.30) except if (b) below applies.
2. Equities in entities engaged in the acquisition, development, ownership, leasing, management and operation of property assets, which are held through an exchange traded fund or managed fund, may be counted towards the principal applicant’s investment in listed equities provided they comprise no more than 20 percent of the value of the total assets held by the fund.
3. The requirement of no more than 20 percent of the value of the total assets held by the fund, in (b) above, will only be determined at the date the investment is initially made, and if met at that time, remains an acceptable investment eligible for treatment as listed equities.
4. A maximum of NZ$7.5 million can be invested in listed equities.

BN7.10.5 Philanthropy

1. For philanthropic investments to be considered acceptable investments, the funds must be donated to organisations that:
   1. are a registered charity with at least two years of annual returns; and
   2. have Inland Revenue donee status, which has not ceased.
2. A maximum of NZ$7.5 million can be invested in philanthropy.

BN7.10.10 Managed Funds

1. For an investment in a managed fund to be considered an acceptable investment:
   1. the investment must be in either:
      • the managed investment products issued by a managed investment scheme which is on the acceptable managed fund list maintained by NZTE; or
      • a discretionary investment management service which is on the acceptable managed fund list, maintained by NZTE; and

        Note: The criteria for inclusion on the acceptable managed fund list is set out in Appendix 15.

   2. there must be:
      • a legally binding, non-revocable contract made under New Zealand law under which the principal applicant has agreed to acquire managed investment products in an acceptable managed investment scheme; or
      • a legally binding client agreement and investment authority made under New Zealand law under which the principal applicant has agreed to receive a discretionary investment management service.
2. For the purposes of these instructions:
   1. managed investment product, managed investment scheme, discretionary investment management service and investment authority have the meanings given to those terms in the Financial Markets Conduct Act 2013; and
   2. the total committed capital specified in the legally binding contract (see (a)(ii) above) is considered funds invested.

      Note: For the avoidance of doubt, actual investment of the funds is not required except as stipulated in the legally binding contract.

3. Where funds have been committed, under a legally binding fund investment contract, but have not yet been called upon by the fund manager, the principal applicant must invest the amount of any committed but uncalled funds into holding investments (see BN7.5).
4. An investment in a managed fund is considered to be an acceptable investment if it meets the requirements of managed funds under the Active Investor Plus immigration instructions at the time the investment is made and if met at that time, remains an acceptable investment eligible for treatment as a managed fund.

BN7.10.15 Direct investments

1. For an investment to be considered an acceptable direct investment:
   1. the principal applicant must invest in:
      • listed equities that are considered an acceptable investment as set out in BN7.10.1(a) as a wholesale investor; or
      • an equity security in an investee entity; or
      • another financial product that will be converted, or is or may become convertible, into an equity security in an investee entity; and
   2. NZTE must confirm that the:
      • investment by the principal applicant in acceptable listed equities as a wholesale investor was pre-approved by NZTE prior to funds being invested; or
      • investee entity is an acceptable direct investment.

        Note: The criteria for acceptable direct investments, as determined by NZTE, are set out in Appendix 15.

2. When the funds have been invested, the principal applicant must:
   1. have a direct ownership interest in the entity; or
   2. have a sole beneficial interest in a trust whose trustee has a direct ownership interest in the entity.
3. For the purposes of these instructions:
   1. Equity security means a share in a company or an equivalent interest in a body corporate but does not include a debt security.
   2. Debt security has the meaning given to that term in the Financial Markets Conduct Act 2013.
   3. Investee entity means a body corporate that:
      • is a New Zealand resident entity; and
      • is not listed on any securities exchange or stock exchange.
   4. Wholesale investor has the meaning given to that term in the Financial Markets Conduct Act 2013.
4. If the investee entity becomes domiciled outside of New Zealand after the funds are invested, such that it is no longer a New Zealand resident entity, the investment of funds remains an acceptable investment eligible for treatment as a direct investment.
5. For the purposes of (a)(i) above, BN3(a)(vii), and BN9(a)(ii), funds are able to be treated as funds invested in an investee entity when the principal applicant has entered into a legally binding non revocable contract made under New Zealand law with the investee entity or other legal person to acquire an equity security in an investee entity; or another financial product that will be converted, or is or may become convertible, into an equity security in an investee entity.
6. The terms of that legally binding contract must comply with the timeframes and minimum amounts set out in BN9.1(a) and the principal applicant must place the funds into a holding investment (see BN7.5) until invested into the acceptable direct investment.
7. Notwithstanding (e) and(f), in order to satisfy the conditions imposed on the resident visa under section 49(1) of the Immigration Act (see BN9.1), the funds must be invested into the direct investment. An undertaking to make an investment in the direct investment is insufficient.

BN7.10.20 New Zealand resident entity

For the purposes of these instructions, a New Zealand resident entity is a body corporate that:

1. is incorporated in New Zealand; and
2. has its head office in New Zealand; and
3. has its centre of management in New Zealand; and
4. has control, by company directors, exercised in New Zealand.

BN7.10.25 Personal use of investment funds

Personal use includes but is not limited to investment in assets such as a personal residence, car, boat or other personal assets.

BN7.10.30 Property and real estate development

Property and real estate development is determined by membership of the S&P/NZX All Real Estate Index which comprises members of the S&P/NZX All Index that are classified within the real estate sector of the Global Industry Classification System.

Effective 09/12/2022