What is a discretionary exemption?
A discretionary exemption is an exemption that may be granted by a decision-maker after considering the circumstances of the applicant and transaction. It is a power that can respond to unexpected or unusual circumstances that may not otherwise be provided for under the Overseas Investment Act.
A discretionary exemption, can apply to the:
- need for consent, or
- definition of overseas person, associate, or associated land.
It can be granted for any:
The power to grant exemptions is a limited discretionary power, and in many instances an application for consent is a more appropriate option.
We are required to publish all exemptions granted under section 61D on our website, and provide a statement of the reasons for each exemption.
Purpose of exemption
An exemption may be granted if it fits within one or more of the following purposes:
- to provide flexibility where compliance with the Act is impractical, inefficient, unduly costly or unduly burdensome
- to allow for exemptions that are minor or technical
- to allow for exemptions related to the 9 specified purposes listed in section 61B of the Overseas Investment Act.
Exemptions for fundamentally New Zealand entities
This is primarily intended to allow for persons, transactions, rights, interests or assets that are majority-owned and substantively controlled by New Zealanders but still fall within the definition of overseas person to apply for a discretionary exemption.
When considering applications for an exemption of this type we will consider why the relevant entity is an overseas person.
The ownership and control thresholds in section 7 of the Act are likely to be relevant to whether a discretionary exemption for a fundamentally New Zealand-owned or controlled person should be granted.
Other factors we consider
We will also consider other factors as required by section 61E(2) of the Overseas Investment Act, as relevant, including:
- the extent of ownership by a foreign government or its associates
- the applicant’s record of compliance with the law.
Section 61E of the Overseas Investment Act sets out the criteria for discretionary exemptions. The decision-maker can only grant an exemption if they consider that:
- there are circumstances that mean that it is necessary, appropriate or desirable to provide an exemption to achieve the purposes of exemptions set out at section 61B(a)-(c)
- the extent of the exemption is not broader than reasonably necessary to address those circumstances.
In considering whether these criteria are met, section 61E requires the decision-maker to take into account:
- the purpose of the Act
- ownership and control factors
- any other relevant factors.
Find information and resources to help you apply for an exemption online. We recommend you seek expert legal advice as early as possible and contact us for a pre-application meeting before applying for an exemption.