Entrepreneurs Beware

Posted:  13 August 2014

 

For most people, the Immigration New Zealand website is usually the first place they look for information about moving to New Zealand.  The vast majority of information on the INZ website is accurate, easy to understand and a satisfactory summary of what is required for any applicant to be successful.

 

But beware, some of the information is grossly inaccurate.  When in doubt, consult a lawyer or licensed immigration adviser.  For those that are not interested in the analysis, we recommend you scroll to the summary at the bottom.

 

For those interested in the step-by-step analysis, we look first at the INZ website summary detailing Residence for Entrepreneurs.  Here's the page that our client found to be puzzling:

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Preliminary Assessment Service

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Has your application been declined?

 

Have you received a letter from Immigration New Zealand?

What puzzled our client was the very first paragraph of this summary for Entrepeneur residence. Here's the passage with our emphasis:

 

"The Entrepreneur Residence Category enables migrants to be granted residence if they have established a high growth and innovative business with export potential in New Zealand..."

 

What type of business has high growth, innovation and export potential?  Does an applicant need to satisfy all three criteria?  What happens if I want to run a cafe/restaurant business which has no export potential?  What about an import only business?  What does high growth mean?

 

So many valid questions, all of great concern and importance.  Simply put, if the Entrepreneur residence category were restricted to those businesses which achieved all 3 criteria (High Growth, Innovation and Export Potential), then the vast majority of applicants would not succeed.  This would be somewhat problematic.

 

Immediately, we went to consult the "tome", also known as the Immigration New Zealand Operational Manual, a set of immigration instructions certified by the Minister of Immigration as being the applicable policy and law of the land.  Here is what we found while searching for the wording used in the 3 criteria:

This is the objective clause for the Entrepreneur Work Visa category.  This is not the Entrepreneur residence category.  Why are we looking at this?  Because it is the only paragraph in the entire Manual which contains the wording of all 3 criteria.  

 

Let's compare it to the Entrepreneur Residence Visa category's objectives:

Can we see anything remotely resembling the 3 criteria?  Not at all.  Zilch.  Nada.

 

It appears the objective of the Entrepreneur residence visa category has nothing to do with granting residence to migrants only if they have established a "high growth and innovative business with export potential in New Zealand".

 

We looked further at the summary of requirements under the Entrepreneur residence visa category.  Here is the certified immigration instructions (read: the real requirements) for obtaining residence under this category:

Any mention of high growth, innovation and export potential?  Nothing.

 

Perhaps it is buried inside the requirements for a business plan (BH2.1a) or it has something to do with the business needing to benefit New Zealand significantly (BH4.10).  Let's look at BH4.10 first:

As trained lawyers, we always look at the word at the end of the semi-colon to see whether it is conjunctive ("and") or disjunctive ("or").  Quite clearly, the business is considered to add significant benefit to New Zealand if the business has any of the attributes from (i) to (vi).  

 

As a general note, most businesses use (iv) and create one or more full time employment as their criteria for benefiting New Zealand.  Suffice to say, there is no absolute need to create new export markets.  Remember one of the 3 criteria is the need for "export potential"?  Apparently this is not required.

 

Remember when we said above that the 3 criteria may be buried inside the requirements of the business plan? We didn't forget about that.  Let's look at it now:

We know this may be getting a bit confusing but bear with us.  This section (BB3.15.5) is part of the Entrepreneur Work Visa category.

 

For most applicants, the Entrepreneur Work Visa (EWV) category is the gateway to obtaining residence.  If you satsify INZ that you have a suitable business plan, you are granted a work visa to establish that business.  After 2 years (or 6 months depending on how much you invest, and how many people you employ), you become eligible to apply for residence subject to proof that you did everything you should have during the preceding 2 years (generally if you stuck with what you said you would do in your business plan, you would be eligible).

 

So this means that if the 3 criteria are somehow part of the requirements of the business plan, then it would make sense that the 3 criteria form part of the Entrepreneur residence visa requirements.  Here is where it gets tricky.

 

At BB3.15.5(a)(i), we see the words "high growth" and "innovative business".  There is nothing in this section about "export potential".  So at the very least, out of the 3 criteria, we know that "export potential" is really not featured anywhere, and is not in fact an absolute criteria.

 

In terms of the other 2 criteria, it doesn't seem to us that they are absolute criteria either.  It seems that the business immigration specialist will base his assessment on the entire application (not just the business plan) on the applicant's "capacity" to establish a "high growth and innovative business".  This seems to us to be another way of asking whether the applicant has experience in running a good business.  It is very different from requiring that the business itself has "high growth and innovation".  

 

Summary

 

The INZ summary on Entrepreneur residence is wrong.  It is not an absolute criteria that an applicant must establish a business which has high growth, innovation and export potential in order to qualify for residence. Where there is a conflict, the INZ Operational Manual (as certified immigration instructions) trump everything else.

 

What INZ really mean is that applicants should have the capacity to establish a high growth and innovative business.  In other words, that applicants should have a reasonable amount of relevant business experience, which is already one of the requirements under the Entrepreneur Work Visa category.

 

When INZ talk about export potential, what they really mean is they would like for your business to have export potential but it is not completely necessary for every business to have export potential in order to qualify for either the Entrepreneur Work Visa or subsequent residence under the Entrepreneur category.

 

None of this makes sense?  Did we get something wrong?  Come talk to us.

 

Addendum (27 August 2014):  LCL sought clarification with Immigration New Zealand about this issue. There is now a part 2 of this article which provides INZ's perspective on this issue.