The potential relocation to Bermuda by a New Zealand company has sparked controversy in that country.

Brierley Investments Ltd. (BIL) has announced that it is to depart from New Zealand in favour of Bermuda and Singapore.

"It is possible that (the move) might raise issues as to whether the Brierley shareholding in Air New Zealand is held by an overseas company,'' said Bill Wilson, chairman of BIL NZ Assets, one of the BIL companies.

While Sir Selwyn Cushing, chairman of both BIL and Air New Zealand, has said the way is clear, concern has been raised that BIL's departure may jeopardise the airline's international landing-rights agreements with other countries.

The structure was set up in 1996, when it became clear that BIL was foreign-controlled. More than 70 percent of the company is owned overseas, with Camerlin Group Bhd, a consortium under the loose control of Malaysian tycoon Quek Leng Chan, holding a 20 percent stake, reports said.

Last month, BIL confirmed plans to incorporate in Bermuda and rebase its headquarters from Wellington to Singapore.

Air New Zealand's stock is split into A and B shares, with A shares not allowed to be owned by non-New Zealand residents.

BIL NZ Assets is critical to any migration overseas because it holds the voting rights of BIL's 172 million Air NZ A shares, which account for two-thirds of its 47 percent holding in Air NZ.

Mr. Wilson, a commercial law specialist, said he was confident that any potential difficulties could be overcome "so that the BIL NZ Asset structure isn't imperilled by Brierley itself going offshore''.

If the proposed set-up is not deemed acceptable under New Zealand law, rival airlines such as Qantas might challenge some New Zealand landing right agreements established for New Zealand airlines.