The Minister of Land Information, Hon Louise Upston has this week led a series of workshops aimed at improving New Zealand’s Overseas Investment regime. At the workshops, stakeholders were asked to provide feedback on ways in which the Overseas Investment Office (OIO) consent process could be improved and how regulations could be amended to better focus resources on investments that are truly “sensitive”.
The workshops marked a further step in the process that began last year with a consultation on fee increases and will hopefully culminate in substantive amendments to the regime, benefiting investors. The willingness of Ministers and officials to engage through the workshops is a positive sign. The workshops also confirmed that the Directive Letter from the Minister of Finance is being updated to reflect the new approach to be taken by the OIO to the application process.
As previously reported in May, the Minister of Finance, Hon Bill English, and Minister Upston announced substantial increases to OIO fees aimed at improving processing times for applications. This release also foreshadowed some “targeted exemptions” from the regime, resulting from feedback received during the consultation process. More detail of these targeted exemptions has now been released as part of materials relating to the Government’s decision making process on these changes. Briefly, these targeted exemptions include exempting:
- acquisitions of leasehold farmland (where the cumulative duration of the lease is for a term of not more than 20 years) from the requirement to first advertise land on the open market,
- lease renewals from screening where a previously consented lease is being renewed or re-granted on the same terms and conditions, and the substantive ownership and size of the property in question is unchanged,
- transactions from one overseas person to another for specified land that is of a small scale, incidental to a larger global transaction and that has previously been screened,
- certain transactions where consent is required as a result of certain Public Works Act 1981 actions and consent has previously have been obtained to acquire the adjoining land, and
- overseas owned custodians who hold shares on behalf of New Zealand investors from the requirement for consent for those shareholdings only.
While the scope of the proposed exemptions is not yet entirely clear, an exposure draft of the amendment regulations is expected to be released later this year. These are certainly welcome developments, but also leave much room for further improvement.
Bell Gully submission – have your say
In conjunction with a number of its clients, Bell Gully is preparing a submission on further improvements that could be made to the regime. It is clear at this stage that any amendments to the regime will need to be introduced through amendments to the Overseas Investment Regulations 2005 (the Regulations). The Government will not be considering amendments to the Overseas Investment Act 2005 itself and remains firmly committed to the purpose of the Act, which provides that it is a privilege for overseas persons to invest in sensitive New Zealand assets. However, this still presents a significant opportunity to make changes to what is often seen as a complex and time consuming regime.
There are a range of possible changes that could be made to the Regulations to improve the regime without cutting across the primary legislation. Improvements that we would like to see include exemptions or having a fast track application process for:
- NZX listed companies that are ‘overseas persons’ for the purposes of the Act, but where shareholdings by overseas persons in that listed entity are small and widely held,
- an increase by an overseas person of its existing shareholding in a New Zealand entity where the overseas person has previously obtained OIO consent for its initial investment, and
- acquisitions of minority shareholdings in sensitive land (e.g. where the overseas person has no practical control over the land).
Submit your comments and suggestions
There are many more possibilities and Bell Gully invites comments and suggestions from interested parties to feed into its submission to the Minister. It aims to make the submission by 31 July 2016 so we would appreciate any feedback prior to that date.
Please contact Andrew Petersen, Glenn Shewan, or Elena Chang with any comments or suggestions.
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.