Lane Neave’s Corporate team published an article on our website on 18 May 2020 (see here) giving a summary of incoming changes to New Zealand’s overseas investment regime brought on by the economic impact of COVID-19.
Since the article was published, the Overseas Investment (Urgent Measures) Amendment Act 2020 was enacted and some of the changes have already come into force.
- Emergency notification: Since 16 June 2020, if an overseas investment (regardless of value) results in a New Zealand business or its assets (including land) having more than 25% overseas ownership, or if an existing overseas holding is increased to or beyond 50%, 75% or 100%, then the Overseas Investment Office (OIO) must be notified of the investment. The OIO will assess whether the investment is in the national interests and may decide to block the investment or delay it pending further investigation. Notifications are free, can be done online and an initial decision will be made within 10 working days. The emergency notification measure will be reviewed by the Government every 90 days and shall apply as long as the effects of COVID-19 justify its use by the OIO.
- Low risk transactions: Along with the introduction of the emergency notification regime, the OIO has streamlined the screening process so that certain low risk transactions can go ahead without consent. Such transactions include those relating to land adjoining sensitive land, certain dealings with debt securities and certain transactions entered by New Zealand-listed investment schemes.
- National interest test: A ‘national interest’ test has been introduced by the OIO as an additional safeguard against overseas investments which gives the Government ultimate discretion to block certain investments. The test is intended to only be used in rare circumstances involving transactions affecting businesses that are strategically important to the country such as military, technology or transport related businesses. The test will also be applied to certain investments by foreign governments or their associates.
- Future changes: By 2 June 2021, the OIO will introduce a new investor test which simplifies the current test which potential investors are assessed against. It will look at measurable benefits thus being less theoretical, will simplify the current ‘good character’ requirements and will no longer apply to New Zealanders or repeat investors.
If you would like to find out more about the OIO changes and how they may affect you or your business, get in touch with the Lane Neave team.
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