The Court of Appeal hands downs its judgment in Anwar Sajjad v Secretary of State for the Home Department  EWCA Civ 720. The Court of Appeal considered the proper construction of Paragraph 46-SD of Appendix A to the Immigration Rules in relation to those who seek further leave to remain in the United Kingdom as Tier 1 (Entrepreneur) Migrants based on their investments “in cash directly into one or more businesses in the UK” by way of director’s loan. The Court of Appeal, in summary, held that:
(1) “The Rules do not limit the ways in which a migrant may choose to invest in a UK business, but they do limit the circumstances in which an investment may qualify for an award of points in support of an application for leave to remain” and “the phrase a director’s loan was intended to bear the simple and clear meaning of a loan made by a director to the company of which he or she is a director” .
(2) “In the context of the points based system, such a loan [a loan by a person who is a director to the company] is necessarily to be regarded as a director’s loan within the meaning of paragraph 46-SD(a)(iii)” .
(3) “The requirement that the loan be unsecured ensures that in the event of the company’s insolvency, secured creditors will have priority over the debt payable to the director. The requirement for subordination ensures that other unsecured creditors will have such priority. In the absence of such a provision, the loan to the director would rank equally with debts to other unsecured creditors and, if the amount of the loan represents a substantial proportion of the company’s debts, could mean that the director takes the greater part of whatever assets there are. Accordingly the requirement for subordination puts an applicant who chooses to invest in his company by making a loan in the same position, in the event of the company’s insolvency, as one who makes an equity investment” .
Zane Malik appeared for the Secretary of State for the Home Department.
The full judgment is here.