Jurisdiction: NEW ZEALAND - Hesketh Henry
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Jurisdiction: NEW ZEALAND
Firm: Hesketh Henry
Authors: Kate Telford and Christine Leung
1. What are the main reasons foreign by an overseas person or where the right
investors invest in your jurisdiction? to exercise or control the exercise of more
than 25% (per cent) of the voting power
New Zealand has a market-focused economy at any meeting of that body corporate is
which encourages foreign investment, not held or owned more than 25% (per cent) by
only through its laws, but indirectly through an overseas person.
government policy and its foreign exchange
and financial markets. This is evidenced by The definition of “sensitive land” is set out in
the significant level of foreign investment full in Part 1, Schedule 1 of the OI Act. Broadly
in New Zealand’s stock exchange and in speaking, there are two types of sensitive
land, being residential land (but not otherwise
New Zealand properties.
sensitive land) and sensitive land (but not
residential land). Residential land (but not
2. What foreign investment legislation is in
otherwise sensitive land) is property that has
place in your jurisdiction (e.g. Foreign
the category of residential or lifestyle in, or for
Investment Law or Foreign Investment
the purpose of, the relevant district valuation
Catalogue)? Please provide a brief
roll. Sensitive land (but not residential land)
overview of such legislation.
includes (without limitation) any:
Foreign investment is controlled in New Zealand • non-urban land that exceeds five hectares;
by the Overseas Investment Act 2005 • land on islands which is not the main islands
(OI Act) and the Overseas Investment (North Island and South Island), and other
Regulations 2005 made pursuant to the islands listed in Part 2 of Schedule 1;
OI Act (OI Regulations). In essence, they
• the marine and coastal area; and
regulate investment by overseas persons in
New Zealand’s sensitive land, significant • land greater than 0.4 hectares which adjoins
business assets, fishing quotas and certain sensitive land.
forestry rights.
The definition of “significant business assets” is
set out in section 13 of the OI Act. Examples
The definition of an “overseas person” is set
include:
out in section 7 of the OI Act and includes any:
• establishing a new business for a period
• individual not a New Zealand citizen and not
exceeding 90 days in any year (either on its
ordinarily resident in New Zealand;
own or in partnership with another person)
• body corporate incorporated outside New where the total expenditure expected to be
Zealand or any New Zealand subsidiary incurred in setting up the business exceeds
owned more than 25% (per cent) by any such NZ $100 million or an alternative monetary
body corporate; threshold that applies in accordance with
• body corporate where either more than the OI Regulations;
25% (per cent) of any class of shares is held • acquiring more than 25% (per cent)
by an overseas person, where the power ownership or control of the securities of
to control the composition of more than a New Zealand company where the value
25% (per cent) of the governing body is held of the securities, the consideration for the
JURISDICTIONAL Q&A – NEW ZEALAND | 1transfer, or the value of the assets of the • be of good character; and
New Zealand target company, and any more • not be an individual of the kind referred to in
than 25% (per cent) subsidiaries, exceed the Immigration Act 2009 ss 15 or 16 (which
NZ $100 million or an alternative monetary lists persons not eligible for exemptions or
threshold that applies in accordance with permits under the Act, usually because of
the OI Regulations; criminal or terrorist records).
• increasing the proportion of ownership or
control of the securities of such a company There are additional criteria that are required
where the overseas person already has more to be satisfied by the investor as set out in the
than 25% (per cent) ownership or control; OI Act and the OI Regulations.
and
Further details regarding overseas investment
• acquiring property (including goodwill and in residential land are set out in response to
other intangible assets) used in carrying on
question 12. In addition, question 21 and
a business in New Zealand where the
23 set out further information in relation to
consideration provided for the acquisition
recent changes to New Zealand’s foreign
exceeds NZ $100 million or an alternative
investment regime (including as a response to
monetary threshold that applies in
the COVID situation).
accordance with the OI Regulations.
Note that these thresholds are increased for 3. What restrictions are placed on foreign
certain investors, including Australian investors. investment? Does this differ at local levels
Specifically, NZ $536 million in the case of of government?
Australian non-government investors and
NZ $112 million for Australian government As noted above, the OI Act places restrictions
on investments by overseas persons in relation
investors.
to sensitive land, significant business assets,
fishing quotas and certain forestry rights. Each
The criteria and tests to be satisfied by an
of these investments require consent under
applicant for consent for an overseas investment
the OI Act.
will vary depending on the type of investment.
The restrictions under the OI Act are
To obtain consent for an overseas transaction
consistent across all levels of the New Zealand
in respect of land that is sensitive land (but
government.
not residential land), the investor will need
to show:
4. What are the most common business
• the relevant overseas person intends to vehicles for foreign investors? How long
reside in New Zealand indefinitely; or do they take to be set up? What are the key
• if the applicant is an entity, all the individuals requirements for the establishment and
with control of the overseas person are operation of these vehicles?
New Zealand citizens, ordinarily resident in
New Zealand, or intending to reside in Overseas companies or investors may establish
New Zealand indefinitely; or their presence in New Zealand through:
• the transaction will, or is likely to benefit • registering in New Zealand as a branch of an
New Zealand. In some cases, the benefit overseas company or enterprise;
must be substantial and identifiable. • establishing a local subsidiary in New Zealand
(as a limited liability company);
The investor will also be required to satisfy
the “investor test”. This test includes that the • the acquisition of a New Zealand registered
overseas person or, if that person is not an company, which would become a subsidiary of
individual, the individuals with control of the the overseas company;
relevant overseas person, must: • establishing a limited liability partnership or
• have business experience and acumen; general partnership;
• have demonstrated financial commitment;
2 | LEXISNEXIS ® FOREIGN INVESTMENT LAW GUIDE 2021• creating a trust; or financial statements unless they fall within
• pursuing a joint venture. certain categories. These categories include:
• “large” companies;
Incorporating a limited liability company • public companies;
The most common type of investment vehicle • “large overseas companies” that carry on
used in New Zealand is a limited liability business in New Zealand;
company. In order to incorporate a company • companies with more than 10 shareholders,
in New Zealand, the proposed company unless the company has opted out of
must have: compliance; and
• a unique company name; • companies with fewer than 10 shareholders
• one or more shares; if the company has opted into compliance.
• one or more shareholders, having limited
or unlimited liability for the obligations of Large companies, public companies and large
the company; and overseas companies will be required to file their
financial statements with the New Zealand
• at least one director who must be either a Companies Office. The financial statements
New Zealand or an Australian resident. filed with the Companies Office are registered
In the case of an Australian resident director, and are publicly available on the Companies
they must also be the director of a company Office website.
in Australia (excluding a branch).
All companies, regardless of size and
While there are a number of steps
shareholder numbers, are required to file an
required to incorporate a New Zealand
annual return with the New Zealand
company with the New Zealand Companies
Companies Office (confirming the information
Office (being the Government agency provided to the Companies Office is
responsible for administering New Zealand’s up-to-date) by the end of the company’s
business registers), the process itself is filing month.
relatively straightforward. Outside of special
circumstances, a New Zealand company can 5. Under what circumstances are foreign
typically be incorporated in one to two weeks. investments subject to government
The key steps to incorporate a company approvals? What is the process and
include:
timeline for such approvals?
• reserving a company name;
• providing company contact details; As discussed in respect of questions 2 and 3
above, foreign investors must obtain consent
• providing the names, dates of birth, addresses
under the OI Act for transactions which
of all of the directors and shareholders (and,
involve sensitive land and significant business
in most cases, evidence of such);
assets, except where a standing consent is
• providing the country of origin, company applicable.
registration number or identifier and address
of the ultimate holding company (if any); Applicants are expected to complete the
and application template provided by the Overseas
• providing the Companies Office with signed Investment Office (the regulatory unit within
consent forms from the proposed director(s) Land Information New Zealand, tasked with
and shareholder(s) of the company. the administration of the OI Act) (OIO).
The application and its supporting information
Financial reporting for companies must be submitted electronically.
Financial reporting in New Zealand is relatively The OIO will review the application before
straightforward for most small to medium-sized making a recommendation on whether the
companies. Companies are generally not application should be permitted, to the
required to prepare full, general-purpose
JURISDICTIONAL Q&A – NEW ZEALAND | 3relevant minister. The Minister of Finance, and are regulated by the Financial Markets
the Minister of Land Information (for sensitive Authority. Currently, New Zealand has
land applications), and the Minister of Primary one registered exchange, the New Zealand
Industries (for fishing quota applications) Exchange Limited, which operates the main
make the final decision on whether to allow a stock exchange (known as the NZSX), a
proposed investment to proceed and are not debt market (known as the NZDX) and an
bound by the OIO’s recommendations. alternative exchange (known as the NZAX)
for smaller issuers.
The time frame for obtaining OIO consent will
vary depending on the kind of application made. Foreign companies investing in certain sectors
On average, it takes approximately 95 working in New Zealand, such as tourism or the
days from start to finish. The expected time exportation of locally manufactured goods
frame for processing applications for a “Home (which directly contribute to foreign exchange
to Live In” (e.g. buying residential land that is earnings), are particularly welcomed by
not otherwise sensitive) is within 10 working the New Zealand government through
days. Applications which involve assessing such bodies as Tourism New Zealand and
substantial and identifiable benefits to New Zealand Trade and Enterprise, which
New Zealand take the longest, as it takes provide assistance in these areas. Some
approximately 183 working days from start regional authorities also provide limited
to finish. These time frames exclude days assistance to investors in their particular area.
where the OIO has put the application on
hold while (if applicable): 7. Are there any restrictions on doing
• the OIO is waiting for the applicant to provide business with certain countries or
further information; territories in your jurisdiction?
(For example, sanctions)
• the OIO is consulting with a third party about
the application; or New Zealand does not have its own legislation
• the recommendation is with the Ministers for that imposes standalone sanctions. However,
decision. as a UN Member State, New Zealand
implements the sanctions the UNSC imposes
6. What sectors are heavily regulated or under the United Nations Act 1946.
restricted in your jurisdiction, if any?
Conversely, what are some of the more 8. What grants or incentives are on offer to
open or unrestricted sectors, if any? foreign investors, if any?
Despite welcoming foreign investment, Aside from the New Zealand Screen Production
New Zealand was considered the most Grant (which incentivises international
restrictive country in the 2019 OECD Foreign production to take place in New Zealand),
Direct Investment Regulatory Restrictiveness there are limited grants or incentives on
Index. In particular, the following sectors/ offer to foreign investors specifically.
industries considered to be heavily restricted
in New Zealand are: Foreign investors may also apply to the
• primary industries; Callaghan Innovation, a Crown entity of
New Zealand which offers government
• fisheries;
funding and grants. To apply for research and
• air; and development grants, the business must be
• telecommunications. either registered under the Companies Act
1993 or the Limited Partnerships Act 2008.
Generally speaking, New Zealand’s financial New Zealand is also looking into offering tax
markets (equity, debt, futures and options) are incentives to encourage businesses in
principally regulated by industry regulators via undertaking more research and development.
a layer of statutory regulation. Securities and
stock exchanges are required to be registered
4 | LEXISNEXIS ® FOREIGN INVESTMENT LAW GUIDE 20219. Are there any free trade, special • income of NZ $70,001 or more – 33%
economic or industrial zones in your (per cent); and
jurisdiction and what are the requirements? • all companies pay a flat rate tax of 28%
(per cent).
New Zealand does not have any specific free
trade, special economic or industrial zones. If New Zealand is a party to a double tax
agreement with a foreign country, then the
10. What are the main taxes that could rate New Zealand imposes on dividend income
apply to foreign investors in your is generally 15% (per cent), with the maximum
jurisdiction? (For example, Personal being 15% (per cent).
Income Tax, Corporation Tax, Value Added
Tax and Social Security Payments) Goods and Services Tax
Income tax Goods and services tax (GST) is payable at
As a general rule, residents in New Zealand the rate of 15% (per cent) on the value of any
are taxed on their worldwide income, whereas goods or services supplied in New Zealand by
non-residents are only taxed on income derived a person registered for GST. It is an indirect
from New Zealand sources. Individuals are consumption tax based on a value-added
treated as New Zealand tax residents if they: principle.
• have a permanent place of abode in
GST is levied on goods and services supplied
New Zealand, whether or not they have such
by a person carrying on a taxable activity.
an abode outside New Zealand;
GST is also levied on imported goods. Persons
• are physically present in New Zealand for who are registered for GST must charge
more than 183 days within any 12-month GST on all of their taxable supplies (or sales)
period; or
and can claim a credit for any GST paid on
• are away from New Zealand in the service expenditure incurred in carrying on their
of the New Zealand government. taxable activity. The net difference results
in either a payment to or a refund from the
Companies are treated as New Zealand tax New Zealand Inland Revenue Department.
residents if:
• they are incorporated in New Zealand; 11. What are some of the employment
• they have their head office situated in regulations in your jurisdiction that foreign
New Zealand; investors should be aware of? Is it possible
to secure residency permits or work visas
• they have their centre of management in
for foreign nationals under investment?
New Zealand; or
• control of the company by their directors New Zealand’s employment relations are based
is exercised in New Zealand whether or on a legislative minimum code. The Employment
not decision-making by their directors is Relations Act 2000 is the main piece of
confined to New Zealand. employment legislation and requires the
employee and employer to deal with each
New Zealand residents pay the following rates
other in good faith. It oversees matters of
of tax:
employment, including:
• income up to NZ $14,000 – 10.5% (per cent);
• minimum terms and conditions in employment
• income from NZ $14,001 up to NZ $48,000 agreements;
– 17.5% (per cent);
• collective bargaining; and
• income from NZ $48,001 up to NZ $70,000
• processes and remedies for unjustified
– 30% (per cent);
dismissals and unjustified actions during
employment (in New Zealand, an employer
must justify every employee’s dismissal).
JURISDICTIONAL Q&A – NEW ZEALAND | 5There are further statutes which provide four-year investment periods for ‘Investor’
minimum entitlements for employees, including migrants, or in years two and three of the
the following: three-year investment period for ‘Investor Plus’
• the Human Rights Act 1993 which prohibits migrants.
discrimination on a wide range of grounds;
There are two ways an applicant may
• the Minimum Wage Act 1983 which
qualify for residence under the “Entrepreneur”
establishes minimum working wages;
category by:
• the Equal Pay Act 1972 which prohibits
unequal payment for work of substantially • establishing or purchasing a business in
New Zealand; and
the same type for men and women;
• the Holidays Act 2003 which provides • being self-employed in that business for
the last two years; and
sick leave, bereavement leave, annual
holidays and statutory holidays; • that business to have significantly benefited
New Zealand; or
• the Parental Leave and Employment
Protection Act 1987 which provides • the applicant investing NZ $0.5 million
parental leave; or more into its business; and
• the Wages Protection Act 1983 which • creating a minimum of three new full-time
sets out how wages must be paid and how jobs for New Zealand citizens or residents.
deductions (for example, union-related
deductions or Kiwisaver, New Zealand’s 12. Can foreign investors acquire real
superannuation scheme) are taken from property and land in your jurisdiction?
an employee’s wages; and Are there any restrictions or limitations?
• the Health and Safety at Work Act 2015
which sets requirements to keep people in As set out in respect of questions 2 and 5,
the workplace safe. the acquisition of “sensitive land” by an
overseas person requires consent under the
Residence permits and visas are required for OI Act.
potential migrants who wish to settle
permanently in New Zealand. New Zealand Residential land is included in the definition
residence permits and visas may be obtained of “sensitive land”. Residential properties and
land may only be acquired by foreign investors
through the ‘Investor’ category (in which an
in very limited circumstances. The consent
applicant may qualify for residence on the
options that are applicable will depend on the
basis of investments made in New Zealand).
type of residential land the foreign investor
To be eligible for the ‘Investor’ visa classes,
intends to acquire (including whether or
the applicant must either have at least not the residential land includes otherwise
NZ $10 million to invest into New Zealand sensitive land) and the purpose of the
for a three-year period or be an experienced investment. The consent options for foreign
business person who has a minimum of investors to acquire residential land are
NZ $3 million in available funds or assets to described broadly as follows:
invest into New Zealand over four years.
• Consents for increased housing – residential
land may be acquired for the development
If an “Investor” residence application is
of new residential buildings under certain
approved, the applicant must retain the
circumstances. This includes long-term
investment funds in an acceptable investment accommodation facilities and associated
for three years for Investor Plus (Investor 1 development works.
Category) or four years for Investor (Investor 2
Category). The principal applicant must meet • Consents for non-residential use – this
involves using the residential land for
the requirements for the minimum amount
non-residential purposes (e.g. building a
of time spent in New Zealand (44 or 146 days)
shopping complex).
each year in years two, three, and four of the
6 | LEXISNEXIS ® FOREIGN INVESTMENT LAW GUIDE 2021• Consents for incidental use – the use of • interest, profits and dividends earned
residential land in support of the foreign in New Zealand can be freely remitted
investor’s business (e.g. use of the land for to non-resident persons (subject to
as buffer land). non-resident withholding tax considerations
• Consents for investment in apartments – and other taxation issues); and
exemptions and consent pathways are • no approval is required in respect of
available for overseas persons buying the repatriation of non-resident capital,
apartments off large development plans including gains or capitalized profits.
for investment or residential purposes in
certain circumstances. 15. Are there any restrictions, approval
• Consents for investing in hotel units – requirements or potential penalties if
foreign investors may acquire hotel rooms a foreign investor withdraws their
and lease it back for hotel use in some investment in your jurisdiction?
circumstances.
There are presently no restrictions, approval
A foreign investor wishing to invest in residential requirements or potential penalties if a
land under one of the consent options set foreign investor withdraws their investment
out above will, in most cases, be required to in New Zealand.
meet the “investor test” set out in question 2.
In addition, the investor will need to show it 16. What contract enforcement and
has met various criteria set out in the OI Act investor protection mechanisms are in
and the OI Regulations. place in your jurisdiction, if any?
Further details regarding overseas investment Reciprocal Enforcement of Judgments Act 1934
in sensitive land that is not residential land (REJ Act)
is set out in response to question 2. For judgments that are from Australia,
the United Kingdom or a country in which
13. Are there any processes in your New Zealand has a reciprocal agreement
jurisdiction that can block foreign with (which includes countries such as
investment under specific circumstances? Hong Kong, Singapore and Malaysia),
parties may register a foreign superior
As set out in questions 2 and 23, foreign
court judgment for New Zealand courts to
investment can be blocked if the relevant
Ministry does not approve it under the OI Act. enforce a judgment for money.
Trans-Tasman Proceedings Act 2010 (TTP Act)
14. What foreign currency or exchange
controls should foreign investors be The TPP Act allows Australian judgments
aware of? which are final and conclusive to be enforced
in New Zealand. Unlike the REJ Act, the TTP
New Zealand has a largely unrestricted Act allows judgments from lower courts (and
currency exchange regime. Almost all exchange tribunals in specific circumstances) to be
controls were lifted at the end of 1984. enforced. Further, non-money orders may
Since March 1985, the New Zealand dollar, be enforced under the TTP Act.
sometimes known as the “Kiwi”, has been
allowed to float freely. The absence of Senior Courts Act 2016
exchange controls has had significant effects
on the New Zealand economy, including: If the judgment was entered into in any
Commonwealth court, and is a money order,
• all remittances of money can be made a party may also file a memorial judgment in
through registered banks (subject to United
the New Zealand High Court, and the court
Nations sanctions, disclosures required
may order that the judgment to be enforced
under New Zealand’s financial transactions
in New Zealand.
reporting rules, and anti-terrorism financing
rules);
JURISDICTIONAL Q&A – NEW ZEALAND | 7If the country is not in the Commonwealth Key legislation relating to intellectual property
or does not have a reciprocal agreement includes the:
with New Zealand, then the party may seek • Copyright Act 1994 which grants copyright
enforcement under the common law. protection to original works;
• Trade Marks Act 2002 which provides a
17. Does your jurisdiction have any bilateral system of trade mark protection;
or multilateral investment protection
• Designs Act 1953 which provides an
treaties with Asia-Pacific jurisdictions that
exclusive right to create a marketing
are commonly used for investing into the advantage from the visual design of
country? products; and
New Zealand has a number of free trade • Patents Act 2013 which provides a
agreements in force, including the: system for protecting patents. International
protection requires registration of the
• NZ-China Free Trade Agreement;
invention in each country of use.
• NZ-Republic of Korea Free Trade Agreement;
• NZ-Australia Closer Economic Relations; 19. Are there any environmental policies
• ASEAN-Australia-New Zealand Free Trade and regulations that (potential) foreign
Agreement; investors should be aware of prior to or
• NZ-Hong Kong, China Closer Economic throughout the investment process in your
Partnership; jurisdiction?
• NZ-Malaysia Free Trade Agreement;
The Resource Management Act 1991 sets out
• NZ-Singapore Closer Economic Partnership the laws relating to the use of New Zealand’s
Agreement; natural resources and each decision made
• NZ-Thailand Closer Economic Partnership under the act must promote the “sustainable
Agreement; management of physical and natural resources”.
• Trans-Pacific Strategic Economic Partnership Each investment proposal will, therefore,
Agreement; and need to be separately considered in the light
• Comprehensive and Progressive Agreement of this legislation and applicable regional and
for Trans-Pacific Partnership. district plans, and specialist legal and related
expert advice.
18. What intellectual property rights
protection are available in your jurisdiction New Zealand’s environmental policies are also
to foreign investors? found in legislation, including:
• Hazardous Substances and New Organisms
New Zealand’s intellectual property legislation Act 1996 — regulating harmful substances
is essentially derived from English legislation affecting human safety and the environment;
and common law. In accordance with the
Berne Convention, to which New Zealand is • Heritage New Zealand Pouhere Taonga
a signatory, copyright vests as soon as the Act 2014 — promoting, protecting and
work is created and it does not need to be conserving New Zealand’s historical and
registered. cultural heritage;
• Conservation Act 1987— promoting
In 2012, New Zealand adopted the Madrid conservation of indigenous biodiversity and
Protocol; this provides a single procedure for history resources;
the registration of a trade mark in a country • Maritime Transport Act 1994 – regulating
that is a party to the Madrid Protocol. In recent pollution from ships;
years, the New Zealand Government has been
reviewing the copyright legislation in light of • Biosecurity Act 1993 — regulating exclusion,
the new digital and electronic world. eradication and effective management
of pests and unwanted organisms in
New Zealand;
8 | LEXISNEXIS ® FOREIGN INVESTMENT LAW GUIDE 2021• Exclusive Economic Zone and Continental 21. Have there been any recent proposals
Shelf (Environmental Effects) Act 2012 – for reforms or regulatory changes that
assisting with sustainable management of will impact foreign investment in your
natural resources in the Exclusive Economic jurisdiction?
Zone; and
• Fisheries Act 1996 — managing fisheries in Overseas investment regime
New Zealand’s territorial sea and Exclusive Standing consents
Economic Zone.
The Overseas Investment (Urgent Measures)
A number of different regulatory bodies are Amendment Act 2020 (Amendment Act)
involved with managing the New Zealand has simplified the regime for lower-risk
environment and ensuring statutory and policy transactions that are captured by the OI Act
compliance. Key regulatory bodies include the: so that certain transactions qualify for
a standing consent. Transactions involving
• Parliamentary Commissioner for the
certain sensitive land that is sensitive merely
Environment;
because it adjoins other sensitive land and
• Minister and Ministry for the Environment; certain New Zealand listed issuers will be
• Minister and Department of Conservation; granted an automatic standing consent.
• Minister and Ministry for Primary Industries; Investors will not be required to apply for
• Minister of Energy and Resources consent through an application process
under the OI Act in relation to those
• Ministry of Business, Innovation and
transactions.
Employment;
• Environmental Protection Authority; Enhanced enforcement powers
• Maritime New Zealand;
The Amendment Act put in place new
• Heritage New Zealand Pouhere Taonga; enforcement tools for the OIO and increased
• Land Information New Zealand; the maximum penalty for breaches under
• local councils; and the OI Act. It is likely that the OIO will adopt
• Environment Court. a stricter enforcement approach to ensure
that foreign investors comply with the
20. Are there any government agencies conditions imposed on consents granted under
or non-governmental bodies that the OI Act.
(potential) foreign investors can turn to
for more information on investment in Call-in power
your jurisdiction? As further discussed in question 23, the
Amendment Act established a temporary
The New Zealand Trade and Enterprise is emergency regime in response to the COVID-19
responsible for attracting and facilitating situation. Once the temporary emergency
potential foreign investment opportunities in regime is removed, a permanent call-in regime
New Zealand. It provides case management will come into force. The call-in regime will
services, including: allow the New Zealand government to review
• information on investment opportunities; overseas investments not ordinarily screened
• assistance for companies during the under the OI Act where the transaction is an
investigation and due diligence phase; overseas investment in “strategically important
businesses”. The Minister may impose conditions,
• facilitating location visits by investment prohibit or require the disposal of
decision-makers; transactions if the proposed transaction
• referring investors to independent professional may give rise to a significant risk to national
advice; and security or public order.
• attracting private organisations and agencies
of central and local government to provide
support where possible.
JURISDICTIONAL Q&A – NEW ZEALAND | 9Modified investor test and key people involved in the business when
using these services in order for these
There are changes to the current assessment
professions to comply with their customer
criteria for the “investor test” in an application
due diligence requirements.
for consent under the OI Act which are expected
to come into effect in the near future. The new
test will remove some unnecessary or duplicate 22. Are there any other features regarding
screening of investors. It will also restrict foreign investment in your jurisdiction or
the scope of the screening criteria to matters in Asia that you wish to highlight?
set out in the OI Act.
There are no further features regarding
foreign investment in New Zealand we would
Overseas Investment Phase 3 reform
like to highlight.
Public consultation is underway for the third
phase of the OI Act reform. Key changes in the 23. What changes in foreign investment
Phase 3 reform include: law have been implemented in light of
• changes to farm land advertising; current events? Are there any “new normal”
• new tax disclosure requirements; practical tips in your jurisdiction parties
should be aware of when dealing with
changes to the “benefit to New Zealand” test;
foreign investments?
and
• implementing statutory time frames for Key changes in the foreign investment law
ordinary consent applications. regime implemented in light of current events
are set out below.
The above changes focus on reducing the
complexity of New Zealand’s overseas investment Temporary emergency notification regime
regime and aim to bring New Zealand’s foreign
investment regime in line with other global The Amendment Act introduces a temporary
benchmarks. emergency notification regime which allows
the New Zealand government to review
overseas investments which are not ordinarily
Anti-Money Laundering and Countering Financing
screened under the OI Act in the following
of Terrorism
circumstances:
The New Zealand government has increased • Where the transaction will result in an
the reporting obligations within various overseas person acquiring a more than
professions, including: a 25% ownership or control interest in a
• banks; New Zealand business or will increase an
• lawyers; existing more than 25% interest in a New
• businesses that provide trust and company Zealand business to either a more than
services; 50% or 75% interest, or a 100% interest,
• real estate agents; irrespective of the value of the transaction;
or
• accountants;
• conveyancers; and • Where the transaction will result in an
• high-value dealers. overseas person acquiring property in
New Zealand used to carry on business in
These changes are to ensure those professions New Zealand (whether by one transaction
comply with more stringent processes to or a series of related or linked transactions),
deter money laundering and the financing if the value of the property amounts to
of terrorism. This will likely result in foreign more than 25% of the value of all of the
investors being asked to provide evidentiary seller’s property before the acquisition
material confirming their identities and is made, also irrespective of the value of
information in relation to the source of funds the transaction.
10 | LEXISNEXIS ® FOREIGN INVESTMENT LAW GUIDE 2021A foreign investor must provide basic information relating to the investor, the nature and size of the business being purchased and the commercial rationale for the transaction. Upon review of the transaction, the Minister will give directions that the investment can go ahead, impose conditions on said investment, prohibit the investment or require the disposal of the investment. A direction order must be given within 40 working days from receipt of the notification (plus an extension period of 30 working days if required). In most cases, a direction order is provided within 10 working days. National interest test Where a transaction is notified, the relevant Minister may also review and determine whether the proposed transaction would be contrary to New Zealand’s national interest. The Minister may consider a broad range of factors, including whether the target business is under financial distress, and whether the consideration for the proposed transaction is at a fundamentally lower value than its pre-COVID position. The Minister may take various actions, including imposing conditions on, prohibiting or ordering the disposal of the investment. The temporary emergency notification regime is reviewed every 45 days to ensure that the classes of transactions subject to it are not broader than necessary. The Minister must also review whether the effect of COVID-19 continues to justify the emergency notification regime every 90 days. JURISDICTIONAL Q&A – NEW ZEALAND | 11
ABOUT THE AUTHORS ABOUT THE FIRM
Kate Telford Hesketh Henry
Partner, Hesketh Henry W: www.heskethhenry.co.nz
E: kate.telford@heskethhenry.co.nz A: Level 14, 188 Quay Street,
Auckland 1010, New Zealand
Christine Leung T: +64 9 375 8700
Solicitor, Hesketh Henry F: +64 9 309 4494
E: christine.leung@heskethhenry.co.nz
12 | LEXISNEXIS ® FOREIGN INVESTMENT LAW GUIDE 2021You can also read
