The date for the Select Committee to report to Parliament on the Overseas Investment Amendment Bill (the Bill) has been extended to 21 June 2018. The Select Committee's report was previously anticipated on 31 May 2018. This delay is unsurprising given the substantial number of submissions to the Select Committee, and it is encouraging to see the Select Committee taking more time to work through the potential unintended consequences for businesses from the Bill.
The Bill proposes to change the Overseas Investment Act 2005 to require overseas persons acquiring certain land interests in New Zealand (the Affected Interests) to obtain OIO approval. The Affected Interests include interests in residential land, forestry rights and profits-à-prendre (which enable a person to take something from land owned by another, such as minerals or crops). The Affected Interests are not currently defined as sensitive land, but will be classified as "sensitive land" following the passing of the Bill.
The Bill in its current form is not intended to be retrospective, meaning that agreements involving the Affected Interests dated prior to the Bill's commencement should not require consent. However, while we consider the risk of adverse changes to the transitional provisions being low, there is a possibility that drafting changes could result in some conditional agreements being caught, or some other trigger applying (such as the access date of the profit-à-prendre, or date of registration of the interest).
Accordingly, we recommend that until the next draft of the Bill is available, parties to any transaction involving land interests in New Zealand should consider an "if consent is required" condition whenever it is commercially viable to do so. The inclusion of such a condition will protect overseas purchasers in the event the transitional provisions change or the Bill receives royal assent before settlement/signing. This condition would typically give the purchaser the option to ensure compliance (seek consent) or terminate.
Further discussion of the Bill's effects on residential land purchases can be found here.
If you have any questions on the proposed changes or would like to discuss how the changes may affect your current or proposed transactions, please contact us.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.