International investors could bypass NZ if problems with the Financial Advisers Act are not sorted out. Colin McKinnon, Executive Director of the NZ Private Equity and Venture Capital Association, is concerned about the requirement to have all financial advisers registered and qualified under definitions for parties giving investment advice under the new Act.

He warns if the Act is not amended, it will mean an embarrassing raft of unintended consequences with international investors likely to bypass NZ rather than having to comply with this legislation. This would be bad news for NZ businesses needing investment to grow. He says the changes need to carve out “wholesale” transactions or transactions involving sophisticated investors.

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Under the Act as it stands angel investors providing advice to management and other investors in young companies could be caught in its net. If angel investors - who in the past year invested almost $50m into young NZ companies - were required to hold valid practising certificates and be registered, few would bother.

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