Some overseas investment consent applications are subject to a national interest assessment. The Minister of Finance reviews these transactions to determine whether they are contrary to New Zealand’s national interest.
While this assessment is only mandatory for transactions that meet certain criteria, ministers may use their discretion to call in any transaction.
Transactions notified under the temporary emergency notification regime
The national interest assessment also applies to transactions notified under the emergency notification regime (ENR), which ceased on 7 June 2021, but still applies to any relevant transactions that were entered into before this date. The assessment process for these is described further down this page.
Transactions subject to mandatory national interest assessment
Transactions that are subject to mandatory national interest assessment involve either:
- land or assets used for strategically important business, including:
- critical direct suppliers to an intelligence or security agency
- businesses involved in military or dual-use technology
- ports or airports
- electricity, water, or telecommunications businesses
- important financial institutions, or organisations involved in financial market infrastructure,
- media businesses with significant impact
- businesses involved in an irrigation scheme, or
- certain levels of investment by an overseas investor that are made by, or associated with, a foreign government, for example, the acquisition of a controlling interest in an asset.
There are 2 stages to our process:
- Preliminary assessment – during which we determine if a transaction requires a national interest assessment.
- National interest assessment – during which we assess whether a transaction is contrary to New Zealand’s national interest, and the Minister of Finance makes a decision.
Stage 1: Preliminary assessment
A transaction may be of national interest if:
- it falls within the mandatory criteria detailed in section 20A of the Act, or
- the Minister of Finance exercises discretion to call in the transaction under section 20B of the Act.
Stage 2: National interest assessment
The starting point for the national interest assessment is that overseas investment is in New Zealand’s national interest. There is a high bar to taking mitigation action, particularly to prohibit a transaction. The Minister of Finance has broad discretion as to whether a transaction is contrary to the national interest.
For the national interest assessment, we prepare advice for the Minister of Finance that sets out the positive impacts, risks, and risk mitigations for the transaction – including advice about the options, and trade-offs between those options.
We run the investment assessment and the national interest assessment in parallel to minimise any additional time needed to prepare advice and get decisions from the different decision-makers.
The ministers responsible for determining the consent application must determine whether the ‘core’ tests are met before the Minister of Finance determines whether the investment is contrary to New Zealand’s national interest.
We prepare 2 assessment reports:
- The investment assessment report to the relevant consent ministers or delegated decision-maker. This determines the ‘core’ tests for that application pathway, for example, whether the investor and benefit tests for a sensitive land application have been met.
- The national interest assessment report to the Minister of Finance. This separate report sets out the national interest assessment and is provided after it has been determined that the investment assessment has met the core tests.
We don’t provide national interest assessments to investors for comment before they are sent to the Minister of Finance. This is due to the sensitivity of the considerations and information they contain.
However, in most cases information that is prejudicial to an investor will be tested with the investor before we submit our assessment to the minister. Additionally, we may seek further information from the investor beyond that which is provided in the notification, to ensure that the minister is sufficiently well-informed.
A standing committee – which includes participants from across government – meets to contribute towards and review national interest assessments. The committee looks across the government system to obtain and use a wide range of information.
This cross-government perspective ensures that the Minister of Finance has the information necessary for decision-making on national interest, including national security and associated risks.
When determining whether a transaction is contrary to New Zealand’s national interest, the Minister of Finance will consider a range of factors, depending on the investment.
The minister may consider:
- national security, public order, and international relations
- competition, market influence, and the economy
- economic and social impact (the existing benefit test serves as a guide for this)
- alignment with New Zealand’s values and interests (consideration is given to broader considerations – for example, environmental policy, and giving better effect to Te Tiriti o Waitangi)
- the character of the investors.
The minister will also determine whether action is required to mitigate any risks to national interest associated with the transaction.
After the Minister of Finance has considered the transaction, they may:
- indicate that they consider that the transaction is not contrary to the national interest and may proceed, with or without conditions
- prohibit the investment if they consider it is contrary to New Zealand’s national interest under section 20C of the Act, or
- give a disposal order requiring the disposal of the whole or any part of sensitive assets that have already been acquired under section 93 of the Act.
The national interest assessment decision is noted on the consent decision summary, which is published on our website.
The national interest assessment process for transactions notified under the temporary emergency notification regime (ENR) is, for the most part, the same as that for consent applications. Any differences are described below.
Note: The ENR was replaced by the national security and public order (NSPO) notification regime on 7 June 2021, but still applies to any relevant transactions that were entered into before this date.
Stage 1: Preliminary assessment
For transactions notified under the temporary emergency notification regime:
- we assess the information provided by investors in their online notification form against national security, public order, and economic risk factors
- we provide the results of our assessment to the responsible minister – currently an Associate Minister of Finance
- the responsible minister determines whether to call in the transaction for a national interest assessment.
Stage 2: National interest assessment
For transactions notified under the temporary emergency notification regime, only the report to the Minister of Finance is required.
After the Minister of Finance has considered the transaction
If the Minister of Finance considers that there are potential risks to the national interest, then conditions or risk mitigations can be applied to enable the transaction to proceed.
They may make a:
- direction order, which allows the transaction to proceed either unconditionally or subject to conditions
- prohibition order, which bans the transaction from proceeding
- disposal order requiring the investor to sell any assets already acquired under the transaction, or
- recommendation that a person be put into statutory management to manage national security and public order risks, including by removing the overseas person’s access to or control over sensitive assets.
National interest decision summaries online
Decisions to grant direction orders without conditions are not published.
Decisions to grant a direction order with conditions, or to issue a prohibition or disposal order, may be published, unless the minister or delegated decision-maker is satisfied on reasonable grounds that good reason for withholding the decision would exist under the Official Information Act. For example, for national security or commercial sensitivity reasons.