Investors, Tier One ('Investor') Migrants and the need to invest

A new statement of changes in the Immigration rules, called HC607, implemented worldwide the whole of Tier One of the United Kingdom Border Agency’s “points based system”.

By HC607 the old immigration rules under which “investors” could apply for leave to enter the United Kingdom (rules 225 to 229) or to extend their stay in that capacity were deleted with effect from 30 June 2008. All that remains of the old rules is rule 230, under which people who were previously given leave to remain as an investor can apply for indefinite leave to remain.

Here we note the requirements which must be satisfied by people seeking either to enter the UK as an investor (or - to use the term in the new immigration rules – as a Tier One (“Investor”) Migrant) to extend their leave in this capacity or to apply for indefinite leave to remain as an investor. In order to show how the new rules have replaced the old ones while retaining the meaning of the old rules for some purposes, it is easier to begin with applications for indefinite leave to remain as an “investor”.

One of the most important requirements of the new rules is that people granted either an entry clearance or an initial grant of leave to remain as a Tier 1 (“Investor”) Migrant must invest £750,000 in the UK within 3 months of that grant. If they fail to do so they will be unable to qualify for further leave to remain in that capacity.

1. Indefinite leave to remain as an investor

Rule 230 of the immigration rules which are now in force states:

“Indefinite leave to remain for an investor

230. Indefinite leave to remain may be granted, on application, to a person admitted as an investor provided he:

(i) has spent a continuous period of 5 years in the United Kingdom in this capacity; and

(ii) has met the requirements of paragraph 227 throughout the 5 year period including the requirement as to the investment of £750,000 and continues to do so; and

(iii) has sufficient knowledge of the English language and sufficient knowledge about life in the United Kingdom, unless he is under the age of 18 or aged 65 or over at the time he makes his application.”

By an amendment to the definition section of the rules – rule 6 - the word “investor” as it appears in rule 230, and anywhere else in the immigration rules, has the following meaning:

““Investor” means a migrant granted leave under paragraphs 224 to 229 of the Rules in force before 30th June 2008.”

By contrast people granted leave in a similar capacity after 30 June 2008 are not called investors. Instead somebody in this capacity is a “Tier 1 (Investor) Migrant”. This is reflected in rule 6 as follows:

“Tier 1 (Investor) Migrant” means a migrant who is granted leave under paragraphs 245V to 245ZA of these Rules”

The reference in paragraph 230 (ii) to “paragraph 227” is to the old rule 227 which stated:

“227. The requirements for an extension of stay as an investor are that the applicant:

(i) entered the United Kingdom with a valid United Kingdom entry clearance as an investor; and

(ii) (a) has money of his own under his control in the United Kingdom amounting to no less than £1 million; or
(b) (i) owns personal assets which, taking into account any liabilities to which he is subject, have a value exceeding £2 million; and

(ii) has money under his control in the United Kingdom amounting to no less than £1 million, which may include money loaned to him provided that it was loaned by a financial institution regulated by the Financial Services Authority; and

(iii) has invested not less than £750,000 of his capital in the United Kingdom on the terms set out in paragraph 224 (ii) above and intends to maintain that investment on the terms set out in paragraph 224 (ii); and

(iv) has made the United Kingdom his main home; and

(v) is able to maintain and accommodate himself and any dependants without taking employment (other than his self employment or business) or recourse to public funds.”

(The old rules did provide also (at rules 227A to 227E) for people who had previously been granted leave to enter or to remain as either a work permit holder, a highly skilled migrant, a person in the United Kingdom to establish themselves or remain in business, an innovator or a Tier 1 (General) Migrant, to switch into the category of investor when they applied to extend their stay in the UK).

As rule 230 (ii) emphasises, people applying for indefinite leave to remain in the UK must have already invested £750,000 in the UK. This investment must have been made on the terms set out in the old paragraph 224 (ii), which stated:

“(ii) intends to invest not less than £750,000 of his capital in the United Kingdom by way of United Kingdom Government bonds, share capital or loan capital in active and trading United Kingdom registered companies (other than those principally engaged in property investment and excluding investment by the applicant by way of deposits with a bank, building society or other enterprise whose normal course of business includes the acceptance of deposits);”

2. Leave to enter as a Tier 1 (Investor) Migrant

New applications for leave to enter are considered under rule 245Q of the rules which came into force on 30 June 2008. The relevant rules (245O to 245R) are set out here:

"Tier 1 (Investor) migrants

245O. Purpose

This route is for high net worth individuals making a substantial financial investment to the UK.

245P. Entry to the UK

All migrants arriving in the UK and wishing to enter as a Tier 1 (Investor) Migrant must have a valid entry clearance for entry under this route. If they do not have a valid entry clearance, entry will be refused.

245Q. Requirements for entry clearance

To qualify for entry clearance or leave to remain as a Tier 1 (Investor) Migrant, an applicant must meet the requirements listed below. If the applicant meets these requirements, entry clearance will be granted. If the applicant does not meet these requirements, the application will be refused.

Requirements:

(a) The applicant must not fall for refusal under the general grounds for refusal.

(b) The applicant must have a minimum of 75 points under paragraphs 42 to 50 of Appendix A."

So there are only two requirements of rule 245Q. They are that the applicant’s application doesn’t fall to be refused under any of the general grounds for refusal (these are found at rule 320) and that he or she can claim 75 points against the criteria listed at Appendix A paragraphs 42 to 50.

Appendix A paragraph 43 makes it clear that the necessary points for an entry clearance application as a Tier 1 (“Investor”) Migrant are scored against the criteria listed in Table 7 of the Appendix A. These are:

“The applicant:

(a) has money of his own held in a regulated financial institution and disposable in the UK amounting to not less than £1 million; or

(b) (i) owns personal assets which, taking into account any liabilities to which they are subject, have a value exceeding £2 million, and

(ii) has money under his control held in a regulated financial institution and disposable in the UK amounting to not less than £1 million which has been loaned to him by a financial institution regulated by the Financial Services Authority.”

Applicants get the necessary 75 points if they satisfy these conditions. If the two requirements of rule 245Q are met Tier 1 (“Investor”) Migrants will be granted 3 years’ leave to remain under rule 245R, which states:

"245R. Period and conditions of grant

(a) Entry clearance will be granted for a period of 3 years and will be subject to the following conditions:

(i) no recourse to public funds,

(ii) registration with the police, if this is required by paragraph 326 of these Rules, and

(iii) no Employment as a Doctor in Training."

3. Leave to remain as a Tier 1 (“Investor”) Migrant

Applicants for leave to remain in this capacity must satisfy the requirements of rule 245S. This states:

“245S. Requirements for leave to remain

To qualify for leave to remain as a Tier 1 (Investor) Migrant, an applicant must meet the requirements listed below. If the applicant meets these requirements, leave to remain will be granted. If the applicant does not meet these requirements, the application will be refused.

Requirements:

(a) The applicant must not fall for refusal under the general grounds for refusal, and must not be an illegal entrant.

(b) The applicant must have a minimum of 75 points under paragraphs 42 to 50 of Appendix A.

(c) The applicant must have, or have last been granted, entry clearance, leave to enter or remain:

(i) as a Highly Skilled Migrant,

(ii) as a Tier 1 (General) Migrant,

(iii) as a Tier 1 (Entrepreneur) Migrant,

(iv) as a Tier 1 (Investor) Migrant,

(v) as a Tier 1 (Post-Study Work) Migrant,

(vi) as a Businessperson,

(vii) as an Innovator,

(viii) as an Investor,

(ix) as a Student,

(x) as a Student Nurse,

(xi) as a Student Re-Sitting an Examination,

(xii) as a Student Writing Up a Thesis,

(xiii) as a Work Permit Holder, or

(xiv) as a Writer, Composer or Artist.

(d) An applicant who has, or was last granted, leave as a Student and:

(i) is currently being sponsored by a government or international scholarship agency,
or

(ii) was being sponsored by a government or international scholarship agency, and that sponsorship came to an end 12 months ago or less,

must provide the written consent of the sponsoring Government or agency to the application.”

So, as with applications for leave to enter, the application must not fall to be refused under the general grounds of refusal (245S (a)). Also applications from illegal entrants are barred. The applicant for leave to remain must also gain 75 points under paragraphs 42 to 50 but paragraph 44 of Appendix A tells us, crucially, that it is the criteria in Table 8, not Table 7 as it is for applications from Tier 1 (“Investor”) Migrants for entry clearance, against which these points must be scored.

The criteria and points scores for Table 8 are as follows. 30 points are scored if

“The applicant:

(a) has money of his own under his control in the UK amounting to not less than £1 million, or

(b) (i) owns personal assets which, taking into account any liabilities to which they are subject, have a value of not less than £2 million, and

“The applicant has invested not less than £750,000 of his capital in the UK by way of UK Government bonds, share capital or loan capital in active and trading UK registered companies other than those principally engaged in property investment.”

And the remaining necessary 15 points are scored if:

“The investment referred to above was made within 3 months of obtaining entry clearance, leave to enter or leave to remain as a Tier 1 (Investor) Migrant and the investment has been maintained for the whole of the remaining period of that leave;

The migrant has, or was last granted, entry clearance, leave to enter or leave to remain as an Investor.”

The crucial point to take from this last requirement is that anyone who enters the UK as a Tier 1 (“Investor”) Migrant must invest his or her £750,000 within 3 months of obtaining entry clearance. Similarly anyone who switches from the long list of categories (245S (c) (i) to (xiv) from which it is possible to switch into leave to remain as a Tier 1 (“Investor”) Migrant must also invest this sum within 3 months of being given leave to remain.

Failure to invest this money within 3 months of entry clearance being granted under rule 245Q (entry clearance) or of leave to remain being granted rule 245S will result in the Tier 1 (“Investor”) Migrant’s being unable to apply for further leave to remain in that capacity. There is simply no other way to get the essential 15 points.

The only exception is people who switch from the (old) investor category (245S (viii)). All they need to do is to have invested the £750,000 in advance of making the application for leave to remain as a Tier 1 (“Investor”) Migrant.

Successful applicants for further leave to remain get either 2 or 3 years leave to remain depending upon whether they have previously held leave as a Tier 1 (“Investor”) Migrant. This is provided by rule 245T:

“245T. Period and conditions of grant

(a) Leave to remain will be granted:

(i) for a period of 2 years, to an applicant who has, or was last granted, leave as a Tier 1 (Investor) Migrant,

(ii) for a period of 3 years, to any other applicant.

(b) Leave to remain under this route will be subject to the following conditions:

(i) no recourse to public funds,

(ii) registration with the police, if this is required by paragraph 326 of these Rules, and

(iii) no Employment as a Doctor in Training.”

4 – Indefinite leave to remain as a Tier 1 (“Investor”) Migrant

As is made clear in paragraph 1 above – it is still possible to apply for and to be granted indefinite leave to remain as an investor as opposed to as a Tier 1 (“Investor”) Migrant.

The requirements for indefinite leave to remain as a Tier 1 (“Investor”) Migrant are set out in rule 245U. This states:

“245U. Requirements for indefinite leave to remain

To qualify for indefinite leave to remain, a Tier 1 (Investor) Migrant must meet the requirements listed below. If the applicant meets these requirements, indefinite leave to remain will be granted. If the applicant does not meet these requirements, the application will be refused, unless the applicant qualifies for leave to remain by virtue of paragraphs 33E to 33F of these Rules.

Requirements:

(a) The applicant must not fall for refusal under the general grounds for refusal, and must not be an illegal entrant.

(b) The applicant must have spent a continuous period of 5 years Lawfully in the UK, of which the most recent period must have been spent with leave as a Tier 1 (Investor) Migrant, and the rest may be made up of leave:

(i) as a Tier 1 (Investor) Migrant,

(ii) as an Investor.

(c) The applicant must have maintained the investment referred to in Table 8 of Appendix A throughout the period of 5 years referred to in subparagraph (b) above other than in the first 3 months of that period and, in relation to time spent with leave as a Tier 1 (Investor) Migrant, the applicant must provide specified documents to show that this requirement has been met.

(d) The applicant must have sufficient knowledge of the English language and sufficient knowledge about life in the United Kingdom, with reference to paragraphs 33B to 33F of these Rules, unless the applicant is under the age of 18 or aged 65 or over at the time the application is made.”

The guidance on the UK Borders Agency’s website says this about rule 245U (c) (maintaining the investment):

“You must also show that the minimum investment of £750,000 was maintained at that level throughout the period of your permission to stay (from the date that your investments were made). We do not intend to restrict investors to keeping the same investments that you made on entering this category, but you must keep the same level of investment.

If the value of any investment in stocks or shareholdings is reduced by changes in share prices, it must be corrected by the next reporting period, so that the overall value of these investments has been maintained throughout your permission to stay.”

The website also contains information as to the specified documents for applications made as a Tier 1 (“Investor”) Migrant.

Gherson has extensive experience of assisting its clients to make applications under the old investor category. Our solicitors have been carefully monitoring the introduction of Tier one of the points system from its conception back in 2006 to its gradual implementation since February of this year.