People create or participate in funds for diverse reasons.   Our focus in this article is on those who want to invest and the options that are open to them.  We have written a separate article about entrepreneurs who want to set up a fund to support their new business or project over here.

A family might set up an education fund for their children’s education. A couple might establish or participate in an established retirement fund so that they receive income on their retirement. People can choose to establish funds themselves or invest into existing managed funds.

A person might invest money into a mutual fund, also known as a managed fund, managed by fund managers. A benefit of such funds is that investors can access a wider range of investments that they would be able to if investing as an individual. These can be passive, meaning they follow the market automatically, for example following the S&P or NZX Top 50 companies. Active managed funds, as the name suggests, involve a manager actively watching the market to identify opportunities for better returns and taking the opportunities. There is typically higher risk and higher fees attached to active manged funds.

Investors seeking low-risk investment might choose to invest in government bond funds. The investment supports government speeding and obligations. The flip side of low-risk is also typically lower yield on the investment.

Other investors (often high-net-worth individuals) might choose to invest in hedge funds. These aim to maximise returns, but also expose investors to greater risk by using strategies such as derivates and short selling.

Many investment funds invest in publicly listed assets; private equity is the term applied when investors’ money is pooled together and invested into private companies. Private equity investors often involve more than just funding. Some private equity funds purchase stakes in private companies so that the investors effectively become partners with the private company owners with a view to maximising its success.

An increasingly popular type of investment fund are those offering investors more than a purely financial return.  Impact investment funds use investor funds to support endeavours with social and environmental purposes. Investors receive a financial return as well as knowing they have contributed to other important societal causes. Find out more about impacting investing.

What do you need to know before investing in or founding a fund?

There is no one-size-fits all when it comes to funds, with different options providing advantages and disadvantages. Whether you are considering investing in or founding a fund, consider the following questions first to help choose the approach that best suits your circumstances:

  • What is the purpose of the fund?
  • How many people will be involved?
  • Do you want to manage the funds or have someone manage them for you?
  • What type of return do you want; purely financial, or financial + social?
  • Do you want to derive income or capital gains from the fund?
  • When and how often do you want to access any returns from the fund?
  • What is your risk appetite?

When creating a fund, the founder may want to ensure that the purpose it is being set up for is recognised and continues. We sometimes work to ensure this by setting up special share types or setting up “Kaitiaki” entities to hold some of the ownership and be involved in key decisions. We describe this in more detail in this paper on Steward Ownership.

We have helped many people who have questions about funds and are happy to discuss further.  Feel free to contact us on 03 348 8480 or by email to Steven Moe – or Kris Morrison – Please note that this is not a substitute for legal advice.


What is a fund?

In essence, a fund is a pool of money set aside for a particular purpose. Typically, multiple investors will introduce money into a fund for a common purpose.

People create or participate in funds for diverse reasons. Our focus in this article is on those who are creating funds for the purpose of kick starting an entrepreneurial idea and giving it life.  There are other contexts where a fund may be relevant that we will save for another day – for example, a family might set up an education fund for their children’s education. A couple might establish or participate in an established retirement fund so that they receive income on their retirement. We have written another article on those contexts, over here.

So how can funds be set up to be used to back a new idea / business?

Investment funds are pools of money set aside by people seeking a return on their investment. The  investors’ funds provide equity that can be used by others and then redeemed according to the terms of the fund. The targeted return might be purely financial, or financial + societal or environmental or cultural.  Increasingly such a broader conception of investment funds result in the term “Impact Investing” which we have written about separately here.

What structure might be used?

You might be able to get investors involved via debt – that is, they provide secured lending to you to undertake the project.   Another option is via equity which is where investors have an ongoing ownership stake.

Typically a project that needs funding will be structured so that there is financial return for investors and this is often done with one of the following methods:

  • Limited Partnerships – in this model for a fund there are those with money who invest but have little say in the project (limited partners) and there is an entity which guides the project (the general partner). This type of legal vehicle is useful when there is a distinct one off project, such as a housing development.  There are often tax reasons why investors prefer this option as well.   We go into more detail on this option here.  An LP might also make loans to another entity which undertakes the project (so a combination of debt/equity structures).
  • Companies – this is a traditional vehicle used to have investment and sees the money flow into the entity from shareholders who will then get return from the dividends that get issued when it is profitable. There will be directors of the company who make the key decisions for the project / business.
  • Unincorporated Joint Ventures – another legal vehicle we see used from time to time is to have different parties involved in a joint venture which is set up for a specific project or purpose. While this is an option in terms of setting up a fund we would typically see that being overseen by an LP or company, mentioned earlier.

Other options may be worth considering, and we talk about different structures in this article here.

Ensuring you comply with fundraising rules

Whichever structure is chosen compliance with the rules set by the Financial Markets Conduct Act is critical – it sets out who you can solicit investment from.  For example, if you only ask for investment from wealthy people (who are ‘wholesale investors’ as defined in the legislation) then you do not have as many compliance requirements in terms of the information provided to them.  Depending on what the fund will do there may be other compliance which is needed, for example if financial services will be provided.

If you want to know more about this area, we suggest looking over our Capital Raising Guide here.

Please note that this is not a substitute for legal advice. We’d be delighted to discuss your situation with you, so feel free to contact us on 03 348 8480 or by email to Steven or Kris



We both spend most of our days with start-ups and have realised we often get asked the same questions – what does this legal word actually mean?  Sometimes legal terminology becomes its own language and so we want to demystify that and make it clear.

We are starting with 10 words that we often explain to people when we are involved in legal transactions for start-ups raising capital.  Let’s dive in!

  1. Vesting – this is a mechanism which means that the founders and key people of a start-up don’t get all of their shares at once, but instead receive a little bit every month or year. A “vesting schedule” sets out the timeframe over which their ownership rights to shares are earned.  Also, if they leave prior to their shares vesting, they forfeit a portion of their ownership rights and if they don’t contribute in the way agreed, they might not get their shares.  Vesting is used as a way to keep the founders and key people committed to the start-up’s success.


  1. SAFE – an acronym for: ‘Simple Agreement for Future Equity’ this is a financing tool which allows early-stage investors to provide funding to start-ups in exchange for the promise of future equity in the company, but without determining the exact ownership stake at the time of investment. This offers start-ups a way to access early-stage capital without having to immediately determine the value of the company, while investors get the promise of future equity on potentially more favourable terms compared to later investors.


  1. Tag & Drag – Drag-Along rights allow a majority of shareholders to compel a minority of shareholders to participate in the sale of the start-up. This prevents minority shareholders from blocking a beneficial exit and ensures that if a favourable sale opportunity arises all shareholders can participate. Tag-Along rights are designed to protect minority shareholders and mean that if a majority shareholders intends to sell their shares to a third party, then a minority shareholder has the option to include their shares in the same transaction.


  1. Indemnity –A “legal promise” where one party agrees to compensate another party for any loss, damages, or liabilities coming from a specific event or circumstances. In venture capital deals, the legal promise is by the start-up to compensate the investor for any losses, damages, or liabilities arising from certain events. This is typically included in the investment documents and relates to unforeseen matters such as legal disputes, IP issues, tax or undisclosed obligations. Generally the indemnity is limited to the investment amount which the investor has made.


  1. Warranty –A legal statement by the start-up regarding the accuracy and truthfulness of information and representations made about the business. Warranties typically cover areas like the company’s financial statements, IP, and legal compliance. Warranties provide a level of protection in case the start-up’s provided information is incorrect or misleading.


  1. Liquidation Preference – specifies the terms under which preferred shareholders will be paid if the start-up is sold, dissolved, or undergoes any other form of liquidation. Liquidation preferences are designed to protect the investors’ downside risk and ensure that they have a certain level of financial security in the event of a less-than-ideal exit for the start-up.  These can be “non-participating preferred” or or “participating preferred” (the difference relates to whether after being preferred they also have rights to participate as shareholders after getting their preference amount).


  1. Anti-Dilution– a start-up might issue new shares at a lower price per share than what the investor paid, so anti-dilution protection adjusts the investor’s share price or conversion rate, ensuring they maintain their ownership level and are less likely to be diluted. Dilution refers to the reduction in the ownership percentage of existing shareholders when a company issues additional shares, often during subsequent financing rounds as more shares being issued means the number you hold amounts to a lower percentage.


  1. Valuation – The price used to determine the start-ups market value, which is critical for setting investment terms like the share price and conversion rate. Investors use valuation to assess the equity they will receive for their investment, a higher valuation typically means investors will get a smaller ownership stake in the company for their investment, while a lower valuation offers them a larger stake. Accurate valuation is essential to strike a fair deal for both the start-up and investors.


  1. Due Diligence – this is usually undertaken by the lead investor and involves the investor thoroughly investigating a start-ups financial, legal and operational aspects of their business to assess any risks before investing. The depth and scope of due diligence can vary depending on the specific deal and the investors risk tolerance.


  1. Term Sheet – a document outlining the key terms and conditions of the proposed investment deal. It is a preliminary (but non-binding) agreement that creates the base for further negotiations, it is also used for the drafting of the final investment documents. It’s the ‘getting to know you’ stage in the relationship.  The term sheet helps both parties to understand the key terms and expectations of the investment and includes matters including (but not limited to) the investment amount, valuation, investors rights, conditions, governance and decision making, board structure and confidentiality requirements.


We hope this initial list of 10 key terms is helpful and would like to create another list in the future– what terms or concepts have confused you that we should unpack next time?  Drop us a line…


This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. 


Elise O’Halloran, Senior Legal Counsel at Icehouse Ventures –

Steven Moe, Partner at Parry Field Lawyers and host of Seeds


Let us know your questions below!

There are essential requirements that must be met under New Zealand law in order for a company to be incorporated. One such requirement is that a company must have at least one director. In this article we will explain what exactly is needed and who can qualify.

Before doing that it is worth noting that a company must also have a name, one or more shares (equity) and one or more shareholders. These essential requirements must be met in order for a company to exist.

We often get asked whether the directors of New Zealand companies have to be in New Zealand. The simple answer is yes, generally speaking, they must be a resident in New Zealand.

However, directors of New Zealand companies can also be living in Australia, provided they are also a director of an Australian incorporated company. This is because Australia is an “enforcement country” that New Zealand has reciprocal arrangements with.

Apart from that exception – who counts as a “resident director”? It has been accepted by the High Court that it is someone physically present in New Zealand for a minimum of 183 days per year.

However, if this 183 day test has not been met, it may still be possible as other relevant factors include:

  • The amount of time spent in New Zealand;
  • The person’s connection to New Zealand;
  • Their ties to New Zealand; and
  • The person’s manner of living when in New Zealand.

In summary, a director needs to be someone living in New Zealand (generally for at least 183 days). Additionally, directors can be persons who live in Australia if they are a director of a company incorporated in Australia. People can also be directors even if they have not been in New Zealand for 183 days provided they have strong connection or ties here.

We help many companies get set up and can answer other questions you may have about that.  Also check out our guide to Doing Business in New Zealand.


This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. 

We help with capital raising and answering questions all the time. If you would like to discuss further, please contact one of our team on or at Parry Field Lawyers

We have reviewed many hundreds of NDAs (aka Non-Disclosure Agreements or sometimes called Confidentiality Agreements).  What are the points that we are reviewing to check for?

These are often used when one party wants to share secrets it has with another – this could be as they are seeking investment, or perhaps they want to explore entering into a long term contract together.

We have a lot of information for companies at our information hub over here, but in this article we want to set out some of the provisions that you should know about, to stay safe.  If you’d like us to look over one you have been sent before you sign it, then just let us know as we can often spot things that are unusual quickly.

In order to upskill you on some key points to watch out for, consider these:

Mutual or one way?
If it is a mutual one then typically it will be more “fair” – as you both need to comply with the provisions.  Even if it is mutual look out for any special carve outs that only apply to one party and not the other eg rights of termination or liability provisions that are more favourable (usually for the person who prepared the draft).

Who holds the power
Like most commercial agreements these are all about negotiating power.  Some companies will only deal with you to explore whether they will talk more if you sign their NDA.  If you are happy with the security you have then it is probably the “key” to enter into those discussions and you just have to weigh up the commercial risks as not having the ability to talk to them will certainly not lead to a contract.

Clear definitions
Spend some time checking how confidential information is defined – most agreements will include things which are labelled as confidential, but does it go as far as to say anything you should know was confidential or anything that was said by phone?  It becomes harder to prove later on if the definitions go that far.  For certainty it can be a strategy to ask that confidential information is written and labelled that way.  Unless it suits you to have a wider definition as you are providing most of the information.

The Purpose
It is common for a purpose of the disclosure to be identified and then reference made to that purpose – that is, the confidential information disclosed needs to be used for the purpose (eg evaluating if the parties will enter into a contract of some kind).  Any time there is a purpose or definition of permitted use check if it is going too far and covering things that are too wide.  Typically there is also a statement about how entering into the NDA is not obligating a party to sign additional agreements related to the purpose – one or both sides might decide to walk away.

Standard of protection
Most agreements will say something about how each party will keep the information safe.  A common standard is that the level of protection is the same level you would use with your own confidential information.

Carve outs for permitted disclosures
An NDA should have some specific carve outs in relation to disclosure that is permitted – typically this will cover sharing with advisors, if required to disclose by a Court or Government body (usually need to notify the other party if this happens), was already in the public domain, later was released by the disclosing party publicly, was already known by the receiving party or was independently developed by the receiver (though that might be hard to prove). Another common carve out covers affiliates of the signing party, provided that the signing party ensures that the affiliate abides by the same obligations under the NDA.

Return or destruction of information
There will usually be a clause saying that at the end of the agreement confidential information will be returned, or destroyed.  While understandable, this is probably hard to comply with given most information is transmitted via email so back ups likely exist on a server, somewhere.  A reference to taking the steps that they can but not requiring a search of all back up files is a practical solution (with a commitment that they will maintain the confidentiality and not use it).

IP Ownership
We would want to see that the original owner of the IP retains ownership of it even if shared with the other party.  There may be a provision about what happens to new IP created based on disclosed information – those usually indicate how a party will want additional agreements to work so can be a good test of the new relationship eg will they own new IP developed based on what you disclose?  NDAs also often make it clear that there is no license granted by the NDA for the information to be used.

Warranties, Indemnities, Remedies
It is common to have provisions that say there is no warranty regarding the information provided (ie that it is accurate, full, fitness for purpose etc).  There is often an indemnity for the discloser if the recipient were to breach the agreement and they suffered loss, and it will often set out what the remedies are if there is a breach (applying to a court to enforce it).

Typically there will be a period of the agreement, so how long is appropriate – 6 months, 1 year, 3 years?  It is common for the obligations to continue on indefinitely, and it is also common for an NDA to be superseded by a later agreement that will set out more about how the parties treat each other.

Who is the counterparty?
It is worth asking this before you sign any contract – is it with the “main entity” or is it with a subsidiary.  If so, does that entity have any assets? Also consider whether the likely harm of breach of the NDA would be financial and/or reputational as this may influence which entity you prefer to be the counterparty.

Governing law
This is actually important just because if you are based in New Zealand but the governing law is California, or Germany, or Japan, then you cannot really know what the law is going to decide over there unless you engage a local lawyer. Your ability to quickly enforce the NDA may also be compromised if a foreign law and/or court is chosen.

What is the real value?
We seldom see NDAs actually enforced because the cost of doing so in a Court is often prohibitive – but what they are good for is signalling intent and a “moral obligation”, showing how the parties will respect intellectual property.  They also start a pattern of relationship and indicate that each party sees it as being important to deal with each other fairly.  Relationships are the real key in business, and they get built through interactions and you get a “sense” of their approach.  For these reasons they are an important part of growing a relationship with the other side.


We hope this has been a helpful overview to upskill you on key things to look for in an NDA.  If you get one that has some “unusual” looking provisions, then feel free to drop us a line to have a look over.

We also have many resources for companies over at our “Start-ups and Capital Raising Information Hub” including downloads like the “Start-ups Legal Toolkit” and the “Capital Raising Guide”.  We hope these are helpful to build up the ecosystem.


This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. 

The Supreme Court has recently decided the case of Yan v Mainzeal Property and Construction Limited which has direct implications for company directors. What can directors learn from this case and how will it affect how directors undertake their duties? We set out the key facts and principles so that you can stay safe.

Mainzeal was a property focussed company that went into liquidation owing approximately $110 million to creditors. As the Board was chaired by a former Prime Minister it has gotten a lot of attention. There were five directors and four were held liable for breaches.

This case primarily looked at directors’ duties under sections 135 and 136 of the Companies Act 1993. These sections recognise creditors interests that are to be considered by directors where a company is insolvent or near insolvent.[1] Section 135 provides that a director must not carry on a company’s business in a manner likely to create substantial risk of loss to its creditors. Section 136 outlines the duty of a director not to agree to incurring obligations unless they reasonably believe it will be able to be performed on time.

The Court upheld the Court of Appeals finding that the directors had breached their duties under these sections and compensation was granted under s 136 for new debt incurred but not under s 135 as net deterioration to creditors was not proved.[2]

The Supreme Court summarises the implications for directors of their approach to ss 135 and 136 liability. Three key takeaways for directors from this case are:

  1. Don’t rely on assurances
  2. Get advice early
  3. Know your duties


1. Don’t rely on assurances

Mainzeal had been balance sheet insolvent for years yet continued to trade because its directors primarily relied on assurances of support from companies it was associated with.[3] One company provided a formal letter of support, otherwise known as a “letter of comfort”, while other assurances were less formal.[4] However, these ‘assurances’ were far from sure and critically they were not legally enforceable.

The Supreme Court stated that where assurances are not legally or practically enforceable and not honoured, relying on them will raise questions as to the reasonableness of doing so.[5] In this way it may be found that relying on such assurances is unreasonable and may result in a breach of directors’ duties which may also lead to potential liability.

Key point: Assurances should be documented and legally binding.


2. Get advice early

The Court does consider this when looking at the actions a director took. Directors should seek professional or expert advice early and from sources that are independent from the company. This can help directors be sure of their duties and how to avoid potential breaches, and in turn avoid personal liability. It means they can squarely address whether there are potential risks of loss to creditors or doubt as to whether it is reasonable to believe that obligations incurred will be able to be honoured.[6] By engaging external advice early, directors allow themselves reasonable time decide the course of action they should take.[7]

Section 138 of the Companies Act 1993 specifically allows directors to rely on such advice where they act in good faith, make proper inquiries where circumstances require it and have no knowledge that relying on the advice is unwarranted.[8] Directors should ascertain whether the relevant risks can be avoided or a plan for continued trading can be used to avoid the serious loss or creditors and meet the obligations agreed to.

Directors that do this will be appropriately considering creditors interests and it may help prevent personal liability. Furthermore, the courts take into consideration whether directors obtained advice when determining the reasonableness of a director’s actions.[9]

We help directors stay safe by understanding their duties. Check out our free guides or arrange a conversation with one of our team on the support we can provide you.

Key point: If you are wondering about getting advice, that means you probably should.


3. Know your duties

Governance is all about continual learning. While the concept of limited liability protects directors from some liability it does not protect them from their breach of duties. All the more reason for directors to know their duties and learn how to effectively discharge these duties.

This case outlines some of the duties that directors should be aware of. But they are not the only ones. Directors are required to exercise the care, diligence and skill a reasonable director would exercise in the same circumstances.[10] To do this, they need to continue to monitor the company’s performance and prospects and must not carry on trading in a way that creates a likelihood of substantial risk of loss to the company’s creditors.

[11] This is objectively assessed and directors are at fault if they allow the company to keep trading when they recognised this risk or where they would have recognised it if they had acted reasonably and diligently.[12] Further, directors should not take on new obligations without measures in place to ensure they will be met or without the belief on reasonable grounds that they will be honoured.[13]

If you are a director it is vital to ensure you know what duties who owe to the company, shareholders and creditors in order to avoid breaching them and finding yourself personally liable for it.

Key point: Keep learning individually and as a board about your duties.


Mainzeal will be talked about for a long time to come and it perhaps signals that there is a broader need for reform of the Companies Act.  In the meantime there are some practical steps which you can take as a director to ensure you keep on the straight and narrow and avoid liability if you are involved in governance of a company which is getting close to insolvency.


Parry Field Lawyers could help with each step of the process. If you would like to find out more, get in touch to arrange a call or meeting.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact us at Parry Field Lawyers:


[1] Yan v Mainzeal Property and Construction Limited (in Liq) [2023] NZSC 113 at [359].

[2] Yan v Mainzeal Property and Construction Limited (in Liq) at [371]-[375].

[3] Yan v Mainzeal Property and Construction Limited (in Liq) at [2].

[4] Yan v Mainzeal Property and Construction Limited (in Liq) at [36]-[37] and [42].

[5] Yan v Mainzeal Property and Construction Limited (in Liq) at [363]. 

[6] Yan v Mainzeal Property and Construction Limited (in Liq) at [270].

[7] Yan v Mainzeal Property and Construction Limited (in Liq) at [271].

[8] Companies Act 1993, s 138(2).

[9] Yan v Mainzeal Property and Construction Limited (in Liq) at [273].

[10] Companies Act 1993, s 137.

[11] Yan v Mainzeal Property and Construction Limited (in Liq) at [270] and [360].

[12] Yan v Mainzeal Property and Construction Limited (in Liq) at [360].

[13] Yan v Mainzeal Property and Construction Limited (in Liq) at [273] and [369].

When is a charitable company the best option?

It is a common understanding that Charities must be trusts.  However, of the 28,000 total registered charities many of them are other entity types such as incorporated societies, associations and companies.  What did you have for breakfast?  A famous example that probably was involved in supplying some part of that is the registered charitable company is Sanitarium.

It would be suitable for a charitable company to be used where the entity has a purpose that is capable of fitting one of the four heads of charity: advancing education, relieving poverty, advancing religion or other purposes that benefit the community.  In describing this purpose, it will need to be ensured that it does not stray into “helping entrepreneurs” as the entity should not be about individuals making more profit.

Setting up a new legal entity that is a charitable company does two things.  Firstly, it helps to crystallise the identify for a project in mind which will be helpful when talking with collaborators, customers, other unions and government.  Secondly, it will “ring fence” liability so if something goes wrong, only that new entity ends and it does not cross infect to other persons or entities.

As the entity has a hybrid structure it also has hybrid obligations. The new entity would need to register with Charities Services.  A registered charity will ensure:

  • Credibility with others such as philanthropic trusts or Councils;
  • A better tax position; and
  • The ability to give donation receipts to those who donate (as they get 1/3 back).

The company would also need a constitution that sets out how it operates and importantly makes clear the charitable purpose and prevents private gain.  You can pay salaries from the company but they must be at market rate.

There are many times when a charitable company will be the best legal structure to choose – don’t just assume that you should set up a charitable trust.

This article is not a substitute for legal advice.  If you have any questions or would like advice on your specific situation and objectives feel free to contact one of our charity specialists Steven Moe, Michael Belay, Sophie Tremewan or Yang Su at Parry Field Lawyers.


Since 19 September 2022, applications for Investor 1 and Investor 2 visa categories were replaced by a new category: the Active Investor Plus Visa (“AIP Visa”). New Zealand Trade and Enterprise (“NZTE”) has published guidance about the eligibility and what are acceptable investments under the new Visa. The guide was set up to explain this investment program, and to assist deal makers and capital raisings who hope to have deals or funds approved as acceptable investments.

The Government’s aim is to attract experienced and high-value investors to encourage greater economic benefit to New Zealand companies and the economy. The AIP Visa allows experienced investors to add to opportunities for companies and start-ups. You get points toward your visa if you are willing to invest in companies here.

An investor must also have a reasonable command of English to qualify for an AIP Visa (a minimum of Level 5 under the International English Language Testing System or the equivalent). As explained in our article Immigration Changes Overview, “acceptable investments” for an AIP Visa are made between NZ $5 million and $15 million. Different investments carry different weightings for the purposes of an AIP Visa application.

Direct investments

These are direct investments into businesses, and they receive the highest weighting of 3x (every $1 invested counting as $3 towards their visa conditions). In this case, an investment of only $5 million is required.

To qualify as a direct investment, some conditions must be met:

  1. Firstly, a direct investment is an investment in a New Zealand resident entity and privately owned business;
  2. An application for approval may be made either before the AIP Visa applicant makes the investment (classified as a current direct investment), or retrospectively (classified as a historical direct investment);
  3. NZTE will consult an external advisory panel which helps them to determine whether the direct investment meets the AIP Visa eligibility criteria; and
  4. For each direct investment, you must apply and receive and approval letter from NZTE for such direct investment to qualify.

There is no cost to apply for approval as an acceptable direct investment and any decision made by NZTE is final.


Indirect investments

A. Acceptable managed funds

Investments into private funds, such as private equity or venture capital funds are also upweighted but only 2x and an amount of $7.5 million is required (every $1 an investor invests into managed funds, counts as $2 towards their visa conditions).

To qualify as an acceptable managed fund, additional conditions apply :

  1. The fund has to be a New Zealand resident, entity which means:
    • Be incorporated in New Zealand;
    • Have its head office in New Zealand;
    • Have its centre of management in New Zealand; and
    • Have control, by company directors, exercised in New Zealand.
  2. It must meet the criteria in the AIP Visa Immigration New Zealand Instructions. The applicant should provide:
    • Evidence of incorporation in New Zealand from the New Zealand Companies Office;
    • Evidence that the fund manager will be registered on the New Zealand Financial Services Providers Register (per Appendix 15 of the Immigration Instructions);
    • The full legal names and addresses of current directors;
    • A summary of the fund’s background, proposed activities, status, target fund size. It should contain details about how the Managed Fund supports New Zealand being a responsible member of the world community, and demonstrates that the Managed Fund will not invest in anything which may prejudice New Zealand’s reputation;
    • An overview of the investment thesis of the Managed Investment. The application form must detail how the Managed Fund will deliver on the requirements for actual or potential growth of investee entities and/or their contribution to positive social and economic impacts for New Zealand; and
    • A summary of any social, environmental or governance (ESG) policies applicable to the organisation.
  3. Submit an application using the NZTE Investment forms;
  4. Be assessed as an acceptable investment and be added to the Acceptable Managed Fund list maintained and published by NZTE;
  5. Pay the application fee of $1,500 NZD (GST inclusive) per application;
  6. Once the application is submitted, NZTE will provide an invoice for this charge via email.

To qualify as an eligible recipient of Indirect Investment, the applicants must be a New Zealand resident entity that invests in private New Zealand businesses, with no investment in listed equities and/or fixed income assets such as bonds.

NZTE considers whether the Managed funds invests wholly or substantially in entities with a New Zealand connection. A minimum of 70% of the net committed capital must be made available for the investment in entities with a New Zealand connection.

An external advisory panel makes recommendations to NZTE on whether the Managed Fund investments are acceptable. The panel sits monthly and the dates are published online.

Annual re-certification is required to maintain an “Acceptable Managed Fund” status. NZTE will notify any approved managed fund when annual re-certification is required.

 Property is not an acceptable investment, however it can be 20% or less of an exchange traded fund or managed fund’s total assets.

 B. Listed equities and philanthropy

These investments (such as investment in NZX listed companies) do not receive an additional weighting, and each are capped at 50% of the $15m investment requirement. An investor could meet the required investment amount by investing $7.5m into listed equities and $7.5m into eligible philanthropic causes.

Key time periods to consider are:

  • The minimum investment period: the investor should invest across three years and maintain the investment for a further fourth year;
  • The minimum time required in NZ: the investor should spend 117 days in New Zealand across the four-year conditional visa period, or around a month a year; and
  • Despite these requirements, New Zealand is still quite restrictive on home ownership and processing times. It means investing with this sort of wealth might look elsewhere.

We support investors moving to New Zealand so if you would like to discuss further, please contact one of our team at or at Parry Field Lawyers.

The term ‘director’ usually refers to people formally appointed to a Board. However, some people who are not formally appointed may operate as ‘deemed directors’ or ‘shadow directors’. They are increasingly likely to be treated by the law in the same way as formally appointed directors.

Justice Millett in a well-known case said a ‘de facto’ director “… is one who claims to act and purports to act as a director, although not validly appointed as such. A shadow director, by contrast, does not claim or purport to act as a director. On the contrary, he claims not to be a director. He lurks in the shadows, sheltering behind others who, he claims are the only directors of the company to the exclusion of himself.”[1]

Justice Millett’s description is perhaps a little cynical. Some shadow directors may be trying to avoid the accountability that attaches overtly to appointed directors, while others may be quite open about the influence they have on directors and boards.

What does the Companies Act say? What matters is that de facto and shadow directors are captured in the Companies Act definition of ‘director’ as  a person in accordance with who directors or instructions the board of the company may be required or is accustomed to act. This means that whether or not they regard themselves as directors, these ‘deemed directors’ may be held accountable as though they were directors for any breaches.

Who might this capture? Looking at the definition, whether or not a board is “required or accustomed to act” for a deemed director is a matter of fact. The court will look at any evidence that shows a pattern of behaviour that amounts to directors being “accustomed to acting” on a deemed director’s instruction.

One legal commentator has suggested that the statutory wording of “required to” might extend the accountability net to include people who can be shown to have exercised control over the board even without a pattern of behaviour,[2] although this has not yet been tested in court.

An example in practice could be a large shareholder who is not a director but who behind the scenes is directly what the Board does.

Key points to note:

  • Parliament implemented this definition intentionally. It makes sense that if deemed directors have been instrumental in action or inaction that breaches directors’ duties, they too should be held accountable; perhaps even more so if they did this to avoid attention and liability.
  • Boards often rely on the professional advice from lawyers or accountants. It is important that relationships with advisors are purely advisory in nature and that directors or boards are not controlled or directed by the advisors.
  • If you are a shadow director, or your company has a relationship likely to be deemed a shadow director, be aware of the implications. One question to ask might be whether or not shareholders are aware of the shadow director, and if not, why not. Should the person just be appointed?

[1] Re Hydrodan (Corby) Ltd [1994] 2 BCLC 180 Ch, at 183.

[2] Taylor Lynn “Expanding the pool of defendant directors in a corporate insolvency: the de facto directors, shadow directors and other categories of deemed directors” New Zealand Business Law Quarterly 16(2) Jun 2010:203.


Should you require assistance, please contact: Steven Moe, Michael Belay, Sophie Tremewan or Yang Su at Parry Field Lawyers.